Axis Bank, India’s third-largest private sector lender, has raised the interest rate on FCNR(B) deposits of more than $1 million to 6.40% for three- to five-year maturities, effective August 17, making it the highest rate offered by a large Indian bank. The move follows the Reserve Bank of India’s decision to shorten the concessional swap window for FCNR(B) deposits. Axis Bank had earlier offered 6.25% on deposits above $1 million, while the rate for deposits below $1 million now stands at 6.25%. In comparison, HDFC Bank and ICICI Bank continue to offer 6.25%, while State Bank of India offers 6% on deposits above $1 million for a five-year tenor. Other banks are expected to follow Axis Bank as lenders intensify efforts to mobilise FCNR(B) deposits before the swap window closes. Banks had mobilised more than $52 billion under the scheme as of August 13, with total mobilisation potentially reaching $60-70 billion by the end of August. Axis Bank had mobilised nearly $1.59 billion in net FCNR(B) deposits as of July 31.
