Axis Bank has increased interest rates on foreign currency non-resident bank deposits exceeding $1 million to 6.40%, making it the top offering among large Indian private lenders following the RBI’s recent policy change. The move signals a competitive response as banks mobilise billions through the concessional swap window, which has now shortened its tenure.
Axis Bank has lifted the interest rate on foreign currency non-resident bank deposits of more than $1 million to 6.40% for a three-to-five-year tenor, taking effect on August 17, according to Business Standard. The move makes India’s third-largest private sector lender one of the first major banks to respond after the Reserve Bank of India shortened by a month the concessional swap window for FCNR(B) deposits, a facility that helps banks raise foreign currency funds. Axis Bank is now offering the highest rate among large lenders on these deposits.
The bank had previously paid 6.25% on such larger accounts, having earlier started the scheme at 6%. For FCNR(B) deposits below $1 million, the rate remains unchanged at 6.25%. HDFC Bank and ICICI Bank are still offering 6.25%, while State Bank of India is paying 6% on deposits above $1 million for a five-year tenor, Business Standard reported.
Banks had mobilised more than $52 billion under the RBI’s swap window by August 13, and bankers and economists quoted by Business Standard expect the total to reach $60 billion to $70 billion by the end of August. The paper also said government data presented to parliament showed Axis Bank had collected nearly $1.59 billion in net FCNR(B) deposits as of July 31. Analysts and bankers expect more lenders to follow Axis Bank’s lead as the remaining window closes.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
