South Indian Bank Boosts FCNR Deposit Rate to 6.5% After RBI Forex Swap Window Opens
Banks Leverage RBI Forex Swap Facility for FCNR (B) Deposits
South Indian Bank has significantly increased the interest rate on US dollar deposits under the Foreign Currency Non-Resident (Bank) or FCNR(B) segment. The bank announced that it has revised the deposit rate to 6.5 per cent per annum. This enhanced offer is specifically designed for tenures lasting three to five years.The increase comes as a direct response to the Reserve Bank of India's (RBI) introduction of a USD/INR forex swap facility. This facility directly benefits banks that mobilize fresh FCNR(B) deposits. The RBI's scheme allows these institutions to manage currency risks while securing stable foreign currency resources.
How the RBI Swap Facility Works
The central bank's initiative is designed to stabilize and boost the market for long-term foreign currency deposits. Through this facility, banks can effectively swap eligible FCNR(B) deposits with the RBI in US dollars. This action helps banks strengthen their ability to raise overseas funds efficiently.South Indian Bank stated that the revised deposit rate provides a dual benefit to Non-Resident Indians (NRIs). NRIs now have an opportunity to earn attractive returns on their foreign currency savings. Furthermore, these deposits maintain protection against volatile exchange rate fluctuations.
Deposit Tenures and Facility Availability
The FCNR(B) deposits under this scheme are available until September 30, 2026. This provides a long runway for customers looking to secure stable international currency assets. The crucial swap window provided by the RBI will remain open until October 16, 2026.The introduction of such schemes underscores the commitment of financial institutions and the central bank towards supporting growth in foreign currency deposit mobilization. The facility is expected to enhance stability within the long-term foreign currency deposit market across the banking sector.
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