AU Small Finance Bank raises NRI deposit rates by 30-60 basis points

Kolkata: AU Small Finance Bank has on Monday raised non-resident deposit rates by up to 60 basis points.

The country's largest small finance bank has increased the peak interest rate on foreign currency non-resident bank (FCNR-B) deposits to 7.4% from 7.1% for a three-to-four year tenure. It has raised the rate on non-resident external (NRE) deposits to 7.6% from 7% earlier for 36-45 months.

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FCNR-B deposits are serving as a key channel to attract dollar inflows while protecting against exchange rate fluctuations. NRE deposits are rupee-denominated deposits largely used for local use As NRE deposits are not for repatriation, there is no question of foreign exchange risks.

While FCNR-B deposits would be a small part of AU Bank's deposit base, the bank is looking for a liability-led asset growth, executive director Vivek Tripathi told ET.

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Mobilisation through the FCNR-B channel is likely to have crossed the 2013 level of $26 billion, according to State Bank of India's economic research report. "Overall, we believe, FCNR-B deposits in the range of $65-70 billion should be received overall in scheme," the report said.