A week after the Reserve Bank of India (RBI) relaxed rules for mobilising non-resident Indian (NRI) deposits and allowed banks to offer higher rates on such deposits, banks have swung into action to chase NRIs for dollars.
From sending teams overseas and setting up core committees to issuing advertisements, banks are trying hard to attract NRIs.
"We have already started targeting and are putting up ads in papers in Dubai for FCNR (Foreign Currency and Non Resident) deposits," said Ashwani Kumar, chairman and managing director, Dena Bank.
Last week banks were allowed to hedge their FCNR deposits over 3 years maturity with doing a swap transaction with RBI.
Also on August 14, the RBI allowed freedom to banks to offer rates as per their cost structure, by delinking Non Resident External (NRE) fixed deposits of three year and more tenor from domestic fixed deposits.
It also revised the cap on interest rate on FCNR accounts to Libor (London Interbank Offered Rate) plus 4 percentage points from the earlier cap of Libor plus 3 percentage points. Most banks have now hiked interest rates and are offering interest of up to 10% on such deposits.
"We aim to raise around Rs. 1,000 crore in such deposits by the end of November this year," said A Surendran, head- retail and international banking, Federal Bank which on Thursday, launched a special-term deposit of 1,111 days for non-resident customers which is offering a peak rate of 10%. Syndicate Bank will soon send a team of official in the gulf region to meet NRIs.
The recent rupee and higher interest rates have further raised hopes from abroad for most of the banking firms.