Private sector lender Federal Bank on Thursday introduced special rates for its Non-Resident External (NRE) term deposit account. These special rates are available till August 4, 2022, the bank said in a statement.

"The rates are applicable for NRE term deposits opened for a period of 15 months and are 80 basis points (bps) above the existing rates," the bank said.

Here are the rates on offer:

The interest earned here is exempt from income tax and loan can be availed up to 90 percent of the deposit amount, the bank said.

A NRE account is a rupee dominated account opened by an NRI to facilitate deposit of foreign currency earnings. In this, foreign currency is converted into rupees at the time of setting up the account. In such an offering, the currency conversion risk at maturity is borne by depositors, and an option to withdraw prematurely is not available.

On Wednesday, HDFC Bank also invited deposits of Rs 2 crore and above in NRE accounts of certain tenures at higher interest rates under a special two-day window. The lender is offering a 50 basis-point higher interest rate in NRE deposits of a minimum Rs 2 crore to less than Rs 25 crore under the special window.

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This announcement comes at a time when the Federal Reserve officials raised interest rates by 75 basis points for the second straight month.

It is also in line with the RBI's moves to attract more foreign inflows into the country.

Earlier this month, the RBI liberalised certain norms to boost forex inflows, in a move aimed at arresting a sustained fall in the rupee. It allowed commercial banks to garner FCNR(B) and NRE deposits from the Indian diaspora without any cap on interest rates, till October 31 and November 4 respectively.

(Edited by : Anshul)

First Published:Jul 28, 2022 2:20 PM IST