Canara Bank launched a new FCNR(B) Special Deposit Scheme that offered up to 6.50% per annum on US dollar deposits, and included tax benefits for non-resident Indians along with a loan facility secured by the deposits.
SCHEME FEATURES AND OFFERING
The scheme is aimed at non-resident Indians. The bank set a headline interest rate of up to 6.50% per annum on deposits denominated in US dollars, and the offering was described as carrying tax benefits and a loan facility against the deposited funds. Executive Director Bhavendra Kumar said the scheme was "tailor-made to provide our NRI customers with the benefit of earning competitive interest on their foreign currency deposits."
Details published alongside the announcement indicated that the scheme was structured under the Foreign Currency Non-Resident Banked or FCNR(B) framework, which allows eligible non-residents to hold fixed deposits in specified foreign currencies. The launch followed measures announced by the Reserve Bank of India on 5 June to attract foreign currency inflows, under which the central bank will bear the full hedging cost on fresh three- to five-year FCNR(B) deposits mobilised by banks up to 30 September.
FCNR(B) CONTEXT AND REGULATORY FRAMEWORK
Interest earned on FCNR(B) deposits is exempt from tax in India, and both principal and interest can be repatriated.
In an interview published by Business Standard on 8 June, Canara Bank's chief executive said the bank expected ₹1,000-2,000 crore of inflows via FCNR(B) deposits.
PART OF A WAVE OF FCNR(B) OFFERS
The launch was part of a wave of FCNR(B) offers by Indian banks, including Bank of Baroda and Indian Overseas Bank, following the RBI measures.
The scheme offers tenures of three to five years with a one-year lock-in and is available in US dollars, pounds sterling, euros, Canadian dollars and Australian dollars.
Sources: The Hindu Business Line Banking