Indian Banks Lure Foreign Capital with Bumper Interest Rates

The Reserve Bank of India (RBI) has opened a foreign currency swap window for banks until September 30, allowing them to attract foreign currency deposits from Indians living abroad.

This move aims to relieve banks of their currency hedging costs and give them room to increase deposit rates. Experts predict that approximately $60 to $70 billion of foreign capital will flow into India under this new scheme.

Banks such as ICICI Bank, State Bank of India (SBI), Bank of Baroda, Kotak Mahindra Bank, HDFC Bank, and AU Small Finance Bank have launched the Foreign Currency Non-Resident (FCNR-B) deposit scheme with increased interest rates for non-resident Indians (NRIs).

The SBI Advantage FCNR (B) deposit scheme in US dollars offers a 1-year lock-in period, with interest rates ranging from 5.50% to 6%. ICICI Bank is offering 6.50% interest on NRI FDs from June 11.