SBI for 2 NRI schemes to retain RIB funds

The new scheme will be able to retain about 30 to 35 per cent of the RIBs, SBI officials say, adding, ‘‘the interest rate here is higher when compared to other countries.’’ SBI raised the RIBs on behalf of the Union government to shore up the country’s foreign currency reserves after the US and other developed countries slapped economic sanctions on India following its nuclear tests in 1998.

Pravasi Vaibhav will be denominated in rupees but the payment on maturity will be in US dollars, SBI said. Under this scheme, the bank will convert the foreign currency received from the customer into rupees and issue a special one-year term deposit receipt. The bank will then book a one-year forward contract to convert the deposit’s proceeds into dollars on maturity. The yield on this scheme will be a function of the interest rate on the bank’s non-resident external (NRE) deposits and the cost of forward cover on the date of issuing the receipt.

SBI resets the interest rate on its NRE deposits every month. For September, the rate is 3.9 per cent for deposits with maturities of between one and two years. The other scheme—Pravasi Samriddhi—will be denominated in US dollars and euros and have one, two, three and five-year terms, it said. The interest rates on this scheme can be fixed or floating, cumulative or non-cumulative, depending on the depositor’s choice, SBI said. The bank offers 1.18 per cent on existing one-year dollar deposits and 2.68 per cent on three-year deposits. On deposits denominated in euros, it offers 2.07 per cent for one-year maturities and 2.92 per cent on three-year deposits.

Under the RIB scheme, depositors were protected against exchange fluctuations besides being offered an attractive interest rate of 7.75 per cent on dollar deposits.