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29 March 2024

NRI alert: Indian bank offers to double money in 91 months

Published
By Parag Deulgaonkar

With remittances to non-resident external (NRE) accounts on the rise, Indian banks are now competing to cash in on the free fall of the rupee by wooing non-resident Indians (NRIs) to deposit with them.

Remittances to NRE (non-resident external) accounts have gone up since the rupee hit an all-time low of 60.72  in June. Federal Bank officials have stated in Indian newspapers that their daily NRI remittances have risen to Rs200 to Rs250 crore from Rs125 crore in the past month.

Though a few national and cooperative banks currently still offer 9.50 per cent on NRE deposits of 365 to 730 days, rates for long-term deposits (three years to seven years) hover in the 8 to 8.5 per cent range since banks don’t want to lock their liabilities at higher interest rates.

In contrast, banks in the UAE offer between 1.5 per cent and four per cent on fixed deposits.

Union Bank of India (UBI) has fired the first salvo in the battle of luring NRI depositors, assuring doubling of their deposits in 91 months with annual interest rate of 9.25 per cent and an annualized yield of 13.37 per cent.

The bank, in its latest promotion with the tagline “Saat Ka Jadoo” (Magic of Seven), states it will double NRE deposits in seven years and seven months, which is tax-free and fully repatriable (principal and interest).

“The response to our new campaign has been very good,” claimed bank’s Chief Representative in Abu Dhabi Satyajit Mohanty while talking to Emirates 24|7.

“Overall, our deposits have increased by 25 per cent in the second quarter 2013 compared to the same quarter last year,” he added.

Under the new offer, NRIs can invest a minimum amount of Rs100,000 with the maximum being Rs10 million.

In early July, Sudesh Giriyan, vice-president, Xpress Money Service, run by UAE Exchange, told Business Standard that their monthly turnover, which was about $600 million, had sharply increased after the rapid fall in the rupee value.

Depreciating Rupee does benefit NRIs in terms of getting good exchange rates, however, the Indian economy actually suffers, making imports costlier and stoking inflation.

According to World Bank, remittances to the South Asia region are estimated to have increased sharply in 2012, growing 12.3 per cent to $109 billion. India remains the largest recipient in the world, receiving $70 billion in remittances in 2012.