Its a coincidence that RBI has removed interest rate capping on NRE deposits and this week Federal Reserve hiked interest rates by 75 basis points this week. This has triggered a lot of activities in India. Federal Bank has announced increasing the interest rates on its NRE fixed deposits. The bank will now offer 80 basis points higher than previous rates to these NRE deposits. So retail NRE FD which is less than 2 crore will have the best rate of 6.4% for 15 months tenure and bulk NRE FD which is 2 crore and above will have best rate of 6.65% for 15 months tenure.
However, customers to note that Federal Bank is offering this higher interest rate for a specific period which is between 28th-July-2022 to 4th-Aug-2022.
The interest earned on FD by NREs are not taxed in India and in case of emergency many banks will be willing to offer loans. So all these make it more attractive for NRE customers to encash on this short tenure interest rate offered from Federal Bank.