The Reserve Bank of India has decided to place non-resident external (NRE) deposits on par with FCNR(B) deposits.
"Whereas the maturity period in case of FCNR(B) scheme is 1-3 years, in case of NRE deposits, the minimum maturity is six months. Banks are free to offer fixed and floating rates in both the schemes."
"The interest rates on FCNR(B) deposits are subject to a ceiling of LIBOR/swap rates for the corresponding maturities minus 25 basis points, and thus conform to global interest rates in foreign currency deposits," the statement said.
The interest rates offered by banks on NRE rupee deposits are also more or less at par with domestic interest rates on rupee deposits, the statement added.
"In order to provide uniformity in the maturity structure for all types of repatriable deposits whether they are in foreign currency or in rupees, it is proposed that the maturity period of fresh NRE deposits, with immediate effect, will be one to three years in line with FCNR(B) deposits. This will also apply to NRE deposits renewed after their present maturity period," the statement said.