RBI sets limit on NRE account deposit rate

To maintain consistency in the interest rates applicable for Non Resident External (NRE) account, the Reserve Bank of India said that interest rates on NRE account with effect from July 17, 2003 should not exceed 250 basis points above the LIBOR/SWAP rates for US dollar of corresponding maturity.

RBI in a statement said, "The interest rates on fresh repatriable NRE deposits for one to three years contracted effective July 17, 2003, should not exceed 250 basis points above the LIBOR/swap rates for dollar of corresponding maturity".

The rule will be applicable to fresh and renewal deposits. 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.

At present, banks can offer Foreign Currency Non-Resident {FCNR(B)} deposits in foreign currency and NRE deposits in domestic currency to non-resident Indians. NRE deposits are now fully repatriable.