Reserve Bank of India deregulated non-resident external (NRE) deposits, allowing banks  to offer higher interest rates to dollar-denominated accounts, five Indian banks, including HDFC Bank and Yes Bank upped their interest rates on such deposits in order to lure foreign money.

State Bank of India (SBI) and a few other banks, including Kotak Mahindra Bank, today announced a sharp hike in interest rates offered on non-resident external (NRE) deposits.

• SBI raised the interest rates on fixed deposits bynon-resident Indians of less than Rs 1 crore with a maturity of one to two years to 9.25 per cent, as against 3.82 per cent earlier
• Kotak Mahindra Bank has also hiked interest rates on NRE deposits with a maturity of one to two years to 9.25 per cent with effect from today, while the rate for deposits of 2-3 years’ tenure will be 9 per cent, the bank said in a release.
• Federal Bank also revised the interest rate on NRE deposits of select maturities. NRE deposits with a maturity of less than year will earn 8.25 per cent to 9.10 per cent interest at the bank, depending on the amount.
• Punjab National Bank (PNB), the country’s second largest public sector lender, Tuesday said it will hike interest rates on non-resident external (NRE) accounts to 9.25 percent – effective from the beginning of next year.