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The effect of the incentives given by the Reserve Bank of India (RBI) to increase the foreign exchange reserves in the country and strengthen the rupee at the international level is now clearly visible. The country’s largest public sector banks—State Bank of India (SBI) and Bank of Baroda (BoB)—have introduced foreign currency non-resident (NRI) loans to woo their NRI customers. FCNR(B) Deposit Scheme But there has been a huge increase in interest rates.
After this historic change, Indians living abroad will be able to get higher and more attractive returns on their dollar deposits than before. Under the new rules, NRI customers can now make direct deposits in US dollars (USD). Annual return up to 6 percent Can achieve, which earlier used to be only around 3.35 percent. That means banks have directly taken a big jump of up to 2.65 percent. Let us tell you that before this, HDFC Bank, Yes Bank and AU Small Finance Bank have also updated their interest rates.
Mathematics of SBI’s new ‘FCNR Advantage Scheme’
To take advantage of this opportunity, State Bank of India has specially ‘FCNR(B) Advantage Deposit Scheme’ Have presented. The interest rates under this scheme have been decided in a very smart manner according to the amount to be deposited and the tenure:
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On deposits up to 1 Million USD:
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For tenure from 3 years to less than 4 years: 5.25 percent Interest.
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For tenure from 4 years to less than 5 years: 5.50 percent Interest.
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For full fixed term of 5 years: 5.75 percent Interest.
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On large deposits over $1 million: If an NRI customer deposits an amount of more than 10 lakh dollars for full 5 years, then he will be given a maximum 6 percent Bumper returns will be given at the rate of Rs.
Bank of Baroda (BoB): New rates on different foreign currencies
Bank of Baroda has increased its interest rates not only on the US dollar but also on many other major currencies of the world. According to the bank’s executive director Beena Waheed, due to the recent relaxation given by RBI in the rules of FCNR (B) deposits and foreign commercial loans (ECB), it has become much easier for banks to raise foreign funds.
You can easily understand the new rates of Bank of Baroda from the table given below:
Rules for premature withdrawal: Understand the lock-in period
Even though the interest rates are very attractive, before investing in this new FCNR(B) Advantage Scheme of SBI, you must know its strict rules of ‘pre-mature withdrawal’. The bank has fixed a whole chain of penalties depending on the time limit for withdrawal of money:
1.Within the first 1 year (0 to 12 months):Complete ban.
You cannot withdraw your money prematurely under any circumstances during the first one year after making the deposit. Complete lock-in will be implemented in this.
After 2.1 years but before 3 years:Fixed rate of 3.50%.
If you withdraw money after the completion of one year and before the end of the three-year period, you will not get the fixed rate of the scheme. you only 3.50 percent Interest will be given only at the rate for which the money remains in the bank.
After 3.3 years but before 5 years:Deduction of 1% (Penalty).
If you withdraw your deposit after completion of three years but before maturity (5 years), the bank will charge the interest rate that was applicable for that specific period. 1 percent reduction After doing this he will hand over the remaining money to you.
Expert Tech (Takeaway)
If you are an NRI and want to earn strong returns while keeping your hard-earned money safe amid global market fluctuations, then now is the best time to open an FCNR(B) account with Indian banks. Just assess your liquidity (need for money) before investing, so that you do not have to pay premature withdrawal penalty.