In order to attract more capital inflows, the RBI has decided to increase the interest rate ceilings on FCNR(B) deposits. These are foreign currency term deposits that non-resident Indians can open with Indian banks. Effective from Friday, banks are permitted to raise fresh FCNR(B) deposits of 1 year to less than 3 years maturity at rates not exceeding the ceiling of overnight Alternative Reference Rate (ARR) plus 400 bps as against 250 bps at present. “Similarly, for deposits of 3 to 5 years maturity, the ceiling has been increased to overnight ARR plus 500 bps as against 350 bps at present. This relaxation will be available till March 31, 2025,” the RBI said.
Net FPI inflows to India stood at US$ 9.3 billion in 2024-25 so far (April-December), supported mainly by inflows in the debt segment. External commercial borrowings and non-resident deposits, on the other hand, witnessed higher net inflows compared to last year. Read more
Source: Indian Express