NEW DELHI: The RBI directive, to be implemented with immediate effect, says: "The interest rates on fresh repatriable non-resident (external) rupee (NRE) deposits for one to three years contracted effective July 17, 2003, should not exceed 250 basis points above the LIBOR/SWAP (risk free) rates for U.S. dollar of corresponding maturity." The move is aimed at providing consistency in the interest offered to non-resident Indians by different banks, a RBI statement said. "The maturity period of repatriable NRE deposits would continue to be one to three years and the interest rate as determined above for three year deposits would also be applicable in case the maturity period exceeds three years," the statement added. The changes in interest rates will also apply to repatriable NRE deposits renewed after their present maturity period, the RBI said. At present, banks can offer foreign currency non-resident deposits ({FCNR}B) in foreign currency and NRE deposits in domestic currency to non-resident Indians. NRE deposits are now fully repatriable. The interest rates on FCNR(B) deposits are subject to a ceiling of LIBOR/SWAP rates for the corresponding maturities minus 25 basis points, and generally conform to global interest rates, whereas interest rates offered by banks on NRE deposits are more or less on par with interest rates on domestic rupee deposits.
Source: IANS