RBI’s plan to attract foreign currency: how much of it could FCNR deposits really expect to lure?
These deposits are not taxed. Hence, for the depositor, the rate of interest is all that matters. RBI caps the rate that can be offered at 350 basis points above the alternative reference rate (ARR), which in this case is the secured overnight financing rate (SOFR). Presently, the SOFR is around 3.60-3.65%. Hence, the maximum rate on offer can go up to 7.15% or so. It may be lower, depending on the judgement and requirement of each bank.
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