Bandhan Bank Surges FCNR(B) Rates to 7.1% in Response to RBI's Forex Swap Move

Bandhan Bank Surges FCNR(B) Rates to 7.1% in Response to RBI's Forex Swap Move​

Bandhan Bank Boosts Interest Rates for NRI Customers​

Private sector lender Bandhan Bank has increased the interest rates on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits targeted at non-resident Indian customers. The move was announced on Friday, June 19.

The revision aims to provide competitive returns and stability for NRIs looking at overseas investments. This strategic increase comes following the Reserve Bank of India's (RBI) recent decision regarding a USD-Rupee forex swap facility.

FCNR(B) Deposit Rate Structure Details​

The increased rates vary depending on the deposit amount. For US dollar-denominated FCNR(B) deposits of $1 million and above, Bandhan Bank will now offer an interest rate of 7.1 percent. These deposits are available for tenures ranging from 3 to 5 years.

For NRIs opting for smaller deposits, the interest rate has also increased. Deposits up to $1 million can secure a revised interest rate of 7 percent, according to the bank's official release.

Strategic Advantage Against Currency Risk​

Bandhan Bank emphasized that this attractive FCNR(B) offering is designed specifically for its NRI customers. The bank aims to help them lock in competitive returns over a medium- to long-term horizon.

Rajinder Kumar Babbar, executive director and chief business officer of Bandhan Bank, stated that the offering helps clients mitigate currency-related risks. This allows NRIs to secure value while utilizing their foreign currency holdings with the bank.

Context: RBI Forex Swap and Inflow Promotion​

The introduction of this deposit enhancement by Bandhan Bank is directly linked to a major move by the central banking authority. The RBI recently introduced a USD-Rupee forex swap facility. This facility applies to banks that mobilize fresh FCNR(B) deposits for a minimum tenor of three years up to five years.

The Reserve Bank of India's action serves a dual purpose. It aims to encourage greater foreign currency inflows into the domestic banking system. Additionally, it helps ease pressure on liquidity within the market.