Indian Overseas Bank (IOB) will take a formal decision on increasing interest rates on its FCNR(B) and NRE deposits early next week. Though a decision on that will be formally taken by the bank’s asset-liability committee, it is quite clear that the bank will raise the rates on both the types of deposits.
These are deposits in which foreign residents can keep their moneys in foreign currency. In FCNR(B), the deposited amount is kept denominated in the foreign currency and the depositor assumes no exchange rate risk.
IOB has about $ 260 m in its FCNR(B) account and another Rs 1,400 crore in NRE account. This move is aimed at making it attractive for people abroad to park their money with Indian banks, so that more foreign exchange flows into India.