Taking advantage of the Reserve Bank of India’s (RBI) easing of norms to aid incremental foreign fund inflows, private sector lender Yes Bank hiked interest rate on its non-resident external (NRE) fixed deposits by 50-75 basis points.

The bank has also raised the rate on foreign currency non-resident (FCNR) deposits. The RBI had earlier increased its peak interest rate on FCNR deposits by 20 basis points.

After restructuring charges for savings accounts, private sector lender Yes Bank hiked interest rates on its Non-Resident External Account (NRE) fixed deposits by 50 to 75 basis points.

Yes Bank has revised the NRE fixed deposit rate for 12-18 months tenure to 7.01% per annum. The interest rate for tenure exceeding 18 months has been revised to 7.25%. The new rates are applicable for deposits less than Rs 5 crore.

The bank is also offering an interest rate of 4.05% per annum on USD FCNR deposits with 12-24 months’ tenure and 4.25% for 24-36 months’ tenure.

“The recent relaxation announced by the RBI to attract forex inflows has allowed us a window to hike interest rates on our NRE and FCNR fixed deposit offerings, thus extending the benefit to our customers. This initiative is in alignment to the various strides the bank has taken in the recent past to benefit customers, which will allow us to further diversify and grow Yes Bank's retail portfolio,” said Yes Bank managing director and CEO Prashant Kumar.

In order to attract dollar inflows, the RBI exempted banks from maintaining the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) for incremental NRE and FCNR (B) (foreign currency non-resident-bank) deposits with effect from the reporting fortnight beginning 30 July.

This relaxation will be available for deposits mobilised up to 4 November. Banks also have been allowed to raise fresh FCNR (B) and NRE deposits without reference to the regulations on interest rates, with effect from 7 July. This relaxation will be available for the period up to 31 October 2022.