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Interest rate cap on FCNR NRE deposits temporarily lifted

Published on July 07, 2022
Current Context: The Reserve Bank of India (RBI) has opted to temporarily authorize banks to raise new FCNR(B) and NRE deposits without compiling to the existing guidelines on interest rates, effective July 7, 2022.
Interest rate cap on FCNR NRE deposits temporarily lifted
  • As per present guidelines, Interest rates on NRE deposits must not be higher than those provided by the banks on equivalent domestic rupee term deposits.
  • But now the RBI has opted to temporarily authorize banks to raise new FCNR(B) and NRE deposits without following the existing guidelines.
  • The time frame for this relaxation is from now until October 31, 2022.
  • Foreign Currency NRE Scheme FCNR Accounts are kept in foreign currencies in the form of term deposits or fixed deposits.
  • FCNR deposits may be opened by NRIs, PIOs, and OCIs.
  • Multiple currencies such as the dollar, British pound sterling, Australian dollars, Euros, and Canadian dollars are used in FCNR accounts.
  • Apart from that The RBI took many steps to boost foreign exchange inflows, diversify and broaden the sources of foreign exchange funding, and reduce global impacts in order to reduce volatility.

Question:

Q.1 As per RBI Circular on FCNR accounts, the timeline was given for the bank to raise new FCNR and NRI deposits till which date?
a. October 31st 2022
b. December 31st 2022
c. August 31st 2022
d. September 30th 2022

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