Indian lenders have sharply raised rates on foreign-currency deposits to lure the nation’s overseas residents, offering an early test of the central bank’s recent measures to bring in capital flows to support the rupee.
Yes Bank Ltd. and AU Small Finance Bank are offering a rate of 7.1% on five-year deposits, while HDFC Bank Ltd. and Central Bank of India are giving as much as 6% on comparable tenures to non-residents. The rates are dynamic and subject to change.
The Reserve Bank of India last week unveiled measures allowing lenders more room to offer attractive rates on overseas deposits while containing funding costs — part of wider efforts by policymakers to attract foreign capital and strengthen the rupee. The currency has slipped to a series of record lows, despite multiple attempts to support it, as high oil prices hurt the nation’s balance of payments.
The measures also provide relief to lenders facing an intensifying competition for deposits as households channel more savings into mutual funds and other investment products.
