SBI and Bank of Baroda Surge FCNR Rates Up to 6% Following RBI's Move to Boost Foreign Inflows

SBI and Bank of Baroda Surge FCNR Rates Up to 6% Following RBI's Move to Boost Foreign Inflows​

Major Banks Hike FCNR Deposit Rates Amidst RBI Stimulus​

State Bank of India (SBI) and Bank of Baroda (BoB) have significantly increased interest rates on their Foreign Currency Non-Resident (Bank) or FCNR(B) deposits. These moves target Non-Resident Indians (NRIs), offering returns up to 6 percent specifically on US dollar deposits. This sharp rate revision follows recent measures by the Reserve Bank of India (RBI) designed to attract greater foreign currency inflows into the banking system.

The new rates represent a considerable increase from earlier levels, which were around 3.35 percent for long-term US dollar deposits. The maximum rate of 6 percent offered by SBI and BoB translates to an enhancement of 265 basis points on these deposits.

This latest wave of interest rate hikes is part of a broader trend, occurring just one day after HDFC Bank, Yes Bank, and AU SFB also aggressively increased their FCNR deposit rates.

How State Bank of India Structures the FCNR(B) Advantage Deposit Scheme​

SBI has introduced its comprehensive FCNR(B) Advantage Deposit Scheme, detailing specific rewards based on tenure and principal amount for NRIs. Deposits up to USD 1 million can earn 5.25 percent over a three-year period, rising to 5.50 percent for tenures spanning four years to less than five years.

For deposits exceeding USD 1 million, the bank offers an enhanced return of up to 6 percent for a full five-year tenure.

Bank of Baroda Expands FCNR(B) Rate Increases Across Multiple Currencies​

Bank of Baroda (BoB) has also revised its FCNR(B) rates across several major foreign currencies. The updated offerings include the US Dollar, British Pound Sterling (GBP), Euro, Australian Dollar, and Canadian Dollar. Customers can earn up to 6 percent on USD deposits with BoB.

The bank's scheme provides fixed returns of 4.75 percent for GBP and AUD deposits. NRIs can also secure 5.15 percent on Canadian Dollar (CAD) deposits or 3.75 percent on Euro deposits, as per the official press release.

Bank Commentary Highlights RBI's Strategy to Strengthen Rupee​

Beena Vaheed, Executive Director at Bank of Baroda, emphasized that the RBI's recent actions provide an enabling environment for banks to enhance their FCNR(B) offerings. She stated that this multi-pronged measure is specifically aimed at attracting FCNR(B) deposits and ultimately strengthening the Indian Rupee.

BoB’s new deposit scheme is presented as an attractive opportunity for NRIs to secure enhanced returns on their foreign currency holdings, according to Vaheed.

Understanding Premature Withdrawal Rules Under SBI's Scheme​

SBI has laid out specific guidelines regarding premature withdrawal under its FCNR(B) Advantage Deposit Scheme. The initial year of the deposit mandates that premature withdrawal is not permitted.

For withdrawals made after the first year but within three years, interest will be calculated at 3.50 percent for the period the deposit was held with the bank. For withdrawals occurring between three and five years, the applicable rate will be reduced by one percentage point for the duration of the deposit.