RBI/2004-05/269
RPCD.No.RRB.BC.56/03.05.33(C)/2004-05
November 01, 2004
All Regional Rural Banks/Sponsor Banks
Dear Sir,
Interest Rate on Non-Resident (External) Rupee (NRE) Deposits
Please refer to the paragraph 71 of the statement
on 'Mid-term Review of the Annual Policy Statement for the year 2004-05' (copy
of the paragraph enclosed).
2. In this context, please refer to tem 2(i)
of our Circular RPCD.No.RRB.BC.89/ 03.05.33(C)/2003-04 dated June 08, 204 on
the Interest rates on NRE deposits. On a review, it has been decided that until
further notice, the interest rates on NRE deposits for one to three years maturity
contracted with effect from November 01, 2004 should not exceed the LIBOR/SWAP
rates, as on the last working day of the previous month, for US dollar of corresponding
maturity plus 50 basis points. The interest rates as determined above for three
year deposits would also be applicable in case the maturity period exceeds three
years. The changes in interest rates will also apply to NRE deposits renewed
after their present maturity period.
3. An amending directive RPCD.RRB.DIR.246.03.05.33(C)/2004-05
dated November 01, 2004 is enclosed.
( G. Srinivasan )
Chief General Manager
'Interest Rate Policy
(a) Ceiling on Interest Rates on NRE Deposits
- With a view to aligning interest rates on Non-Resident (External)
Rupee (NRE) deposits with international interest
rates, ceiling on NRE deposit rates linked to the US
dollar LIBOR / SWAP rates of corresponding maturities
was introduced effective July 17, 2003. The ceiling
interest rates on NRE deposits have since been revised from time
to time. On a review, it is proposed:
*To raise the ceiling on NRE interest rates to LIBOR/SWAP
rates of US dollar of corresponding maturities plus
50
basis points from the existing level of US dollar
LIBOR/SWAP rates'
RPCD.No.RRB.DIR. 246 /03.05.33(C)/2004-05 November
01, 2004
Interest rate on Non-Resident (External) Rupee
(NRE) Deposits
In exercise of the powers conferred by Section
35A of the Banking Regulation Act, 1949, and in modification of our Directive
RPCD.No.RRB.DIR. 90/03.05.33(C)/2003-04 dated June 08, 2004 on interest rates
on deposits, the Reserve Bank of India being satisfied that it is necessary
and expedient in the public interest so to do, hereby directs that item 2(i)
of the aforesaid Directive relating to the interest rates on NRE deposits shall
be substituted by the following :
2. The Interest rates on Non-Resident (External)
Rupee (NRE) Deposits for one to three years maturity contracted with effect
from November1, 2004 shall not exceed the LIBOR/SWAP rates of the last working
day of the previous month for US dollar of corresponding maturities plus
50 basis points. The interest rate as determined above shall also be applicable
in case the maturity period exceeds three years. The above changes in interest
rates will also apply to NRE term deposits renewed after their present maturity
period.
( A.V. Sardesai )
Executive Director