In order to ensure uniformity and transparency in interest rates on NRI deposits, the Reserve Bank of India today said that the Foreign Exchange Dealers Association of India (FEDAI) would display the LIBOR/SWAP rates which will be used by banks in arriving at the interest rates for such deposits.
FEDAI will publish the deposit rates for five maturities in six currencies on the last working day of each month using a web page that can be accessed by all the subscribers to the Reuters screen, a RBI notification said here.
The first such rates would be indicated by FEDAI for the last working day of February 2006. FEDAI will shortly inform the relevant details in this regard, it added.
Notably, some of the banks had represented that in the absence of any directions on how to set rates based on LIBOR/SWAP rates, banks were using different methods and sources to decide the interest rates on NRE/ FCNR (B) deposits, resulting in significant variation in interest rates offered to non-resident depositors.
In terms of extant guidelines, RBI said interest rates on Non-Resident External (NRE) deposits of one to three years' maturity should not exceed the LIBOR/ SWAP rates as on the last working day of the previous month for US dollar of corresponding maturity plus 75 basis points.
{{/usCountry}}In terms of extant guidelines, RBI said interest rates on Non-Resident External (NRE) deposits of one to three years' maturity should not exceed the LIBOR/ SWAP rates as on the last working day of the previous month for US dollar of corresponding maturity plus 75 basis points.
{{/usCountry}}Similarly, rates of interest on Foreign Currency Non-Resident FCNR (B) deposits of one year and above should be within the ceiling rate of LIBOR/ SWAP rates for the respective currency corresponding maturities minus 25 basis points.