SBI, PNB hikes NRI deposit rates

State Bank of India (SBI), India's largest public sector bank hiked term interest rates on non-resident (external) rupee (NRE) deposits, reflecting the central bank's move to withdraw cap on rates for these deposits.

The bank revised interest rates on NRE deposits to 9.25% for deposits below Rs 10 million and for deposits above Rs 10 million for 1-2 years maturity, it revised rates to 9% from previous of 3.82%.

Punjab National Bank (PNB), the country's second largest public sector bank also raised the interest rates on NRE deposits for 1-5 years maturity to 9.25%.

The rate hikes by SBI and PNB will be effective from January 1, 2011.

Last week, the country's major private sector banks also revised rates on NRE deposits. HDFC Bank, Yes Bank, Dhanlaxmi Bank, Federal Bank, Dena Bank, IndusInd Bank, Allahabad Bank, etc were among the ones to attract overseas Indians.

The move came after the Reserve Bank of India (RBI) freed the rates on non-resident external accounts. The RBI's decision was to curb fall of Indian Rupee.

The Indian Rupee has been depreciated more than 17% against US dollar this year, which is one of the main reason behind the rising inflation.

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