NRI's to earn more from Indian Banks

Deregulation of Interest Rates on Non-Resident (External)Rupee (NRE) Deposits and Ordinary Non-Resident (NRO) Accounts

Please refer to paragraph 4 of our circular DBOD.Dir.BC.42/13.03.00/ 2011-12 dated October 25, 2011 on Deregulation of Savings Bank Deposit Interest Rate and paragraph 1 of our circular DBOD.Dir.BC.59/13.03.00/2011-12 dated November 23, 2011 on Interest Rates on Non-Resident (External) Rupee (NRE) Deposits and FCNR (B) Deposits.
2. With a view to providing greater flexibility to banks in mobilising non-resident deposits and also in view of the prevailing market conditions, it has been decided to deregulate interest rates on Non-Resident (External) Rupee (NRE) Deposits and Ordinary Non-Resident (NRO) Accounts (the interest rates on term deposits under Ordinary Non-Resident (NRO) Accounts are already deregulated). Accordingly, banks are free to determine their interest rates on both savings deposits and term deposits of maturity of one year and above under Non-Resident (External) Rupee (NRE) Deposit accounts and savings deposits under Ordinary Non-Resident (NRO) Accounts with immediate effect. However, interest rates offered by banks on NRE and NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
3. Prior approval of the Board/Asset Liability Management Committee (if powers are delegated by the Board) may be obtained by a bank while fixing interest rates on such deposits. At any point of time, individual banks should offer uniform rates at all their branches.
4. The revised deposit rates will apply only to fresh deposits and on renewal of maturing deposits. Further, banks should closely monitor their external liability arising on account of such deregulation and ensure asset-liability compatibility from systemic risk point of view.
5. An amending directive DBOD.Dir.BC. 63 /13.03.00/2011-12 dated December 16, 2011 is enclosed.
Yours faithfully,
(P. R. Ravi Mohan)Chief General Manager

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DBOD.Dir.BC. 63 /13.03.00/2011-12

December 16, 2011

Deregulation of Interest Rates on Non-Resident (External)Rupee (NRE) Deposits and Ordinary Non-Resident (NRO) Accounts

In exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, and in modification of the directive DBOD. Dir. BC. 41/ 13.03.00/ 2011-12 dated October 25, 2011 on Deregulation of Savings Bank Deposit Interest Rate and DBOD.Dir.BC.58/13.03.00/2011-12 dated November 23, 2011 on Interest Rates on Non-Resident (External) (NRE) Deposits and FCNR(B) Deposits, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby directs that banks are free to determine their interest rates on both savings deposits and term deposits of maturity of one year and above under Non-Resident (External) Rupee (NRE) Deposit accounts and savings deposits under Ordinary Non-Resident (NRO) Accounts with immediate effect. However, interest rates offered by banks on NRE and NRO deposits cannot be higher than those offered by them on comparable domestic rupee deposits.
(B. Mahapatra)Executive Director

Interest rate in India to follow Inflation..?

AS the Mid Term R.B.I review of the Monitory policy is due to be declared tomorrow. The Press Statement is set to be released, from 12 hours.
Transmission of the Inflation and its sticking it.


Barely, in this period, State owned Oil Marketing Companies have raised the Petrol Prices by about Rs 3/ across the India, while Diesel Prices remaining untouched and Cooking gas Cylinders are being revised. In another significant move the utility companies are expected to ' Raise ' the tariffs and Railways are expected to raise fares and frights. The weekly  inflation index rose by 9.47 %  and Vegetables/ fruit prices firm and all other stub burn.
The Sudden fall in Asian Currencies and in Rupee has added to the woes of the Importers and made the Oil little more dear.

The Trajectory of Inflation :

As the inflation transmission is in progress and the regular shouts of Inflation to come down in March 2012 are on the rooftop. But, will Inflation which was in 14 % in March 2011 be again allowed to grow by another 7 % till March 2012?
And, will it sustain the economy and Growth.? Will the ' local demand' will Sustain..?

It can be reasonably expected that, diesel prices will be raised, post Divali Festivities, if Oil remains where it is today. The Rise in 7% Dearness Allowance of the Central Government employees will still abet the demand on one hand and put pressure on the strained exchequer. While, the Minimum Support Prices to farm products and ' Food Bill' are still the pressure the inflation curve. More over, any strength to  Hence, apart from the no crunching exercise the inflation still remains the ' Enemy no 1' for R.B.I.

R.B.I. Mid term Monitory policy: 


R.B. I , reasonably expected to add to measured step of 1/4th percentile to the Interest rate and any  ' engagement in Hawkish Talking' and indication of further revival of higher rate bias well be the capturing the throat of Inflation.

Indian Inflation rises to 10%+ again Y-o-Y

Ministry of Commerce & Industry01-September, 2011 11:52 IST

Wholesale Price Indices for Primary Articles and Fuel & Power in India (Base: 2004-05 = 100) Review for the week ended 20th August, 2011 (29 Shravana, 1933 Saka)

The WPI for the week ended 20th August, 2011 in respect of ‘Primary Articles’ and ‘Fuel & Power’ is given below: PRIMARY ARTICLES (Weight 20.12%) The index for this major group rose by 1.2 percent to 200.9 (Provisional) from 198.5 (Provisional) for the previous week. The annual rate of inflation, calculated on point to point basis, stood at 12.93 percent (Provisional) for the week ended 20/08/2011 (over 21/08/2010) as compared to 12.40 percent (Provisional) for the previous week (ended 13/08/2011). The groups and items for which the index showed variations during the week are as follows:- The index for 'Food Articles' group rose by 1.2 percent to 195.0 (Provisional) from 192.7 (Provisional) for the previous week due to higher prices of poultry chicken (5%), fruits & vegetables and fish-inland (3% each), ragi, jowar, egg and gram (2% each) and fish-marine, moong, pork and bajra (1% each). However, the prices of barley (1%) declined. The index for ‘Non-Food Articles’ group remained unchanged at its previous week’s level of 181.3 (Provisional). The items for which the index showed variations are raw cotton (+4%), coir fibre (+3%), groundnut seed, gingelly seed and fodder (+2% each) and raw silk (+1%). Flowers (-11%), sunflower (-4%), raw rubber and gaur seed (-3% each) and castor seed and soyabean (-2% each). maize The index for 'Minerals' group rose by 3.1 percent to 310.8 (Provisional) from 301.6 (Provisional) for the previous week due to higher prices of copper ore (34%), limestone (19%), zinc concentrate (18%), steatite (9%), dolomite and bauxite (7% each) and chromite (2%). However, the prices ofmagnesite (25%), barytes (22%) and sillimanite (10%) declined. FUEL & POWER (Weight 14.91%) The index for this major group declined by 0.2 percent to 166.8 (Provisional) from 167.2 (Provisional) for the previous week due to lower prices of light diesel oil (3%), aviation turbine fuel and naphta (2% each) and furnace oil (1%). However, the price of bitumen (1%) moved up. The annual rate of inflation, calculated on point to point basis, stood at 12.55 percent (Provisional) for the week ended 20/08/2011 (over 21/08/2010) as compared to 13.13 percent (Provisional) for the previous week (ended 13/08/2011). Build up inflation over the week, financial year end and over the year is given in Annexure-I for some important items. Trend of rate of inflation during last six weeks is also given for some important items in Annexure II. Next date of press release: 08/09/2011 for the week ending 27/08/2011 This press release is available at our home page http://eaindustry.nic.in Annexure-I Wholesale Price Index and Rates of Inflation [Base Year: 2004-05 Week Ending 20th August, 2011 (Base: 2004-05) Commodities/Major Groups/Groups/Sub-Groups Weight WPI Aug 20,2011 Latest week over week Build up from end March Year on year 52 week Average 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 Primary Articles 20.12 200.9 0.74 1.21 6.78 6.63 16.27 12.93 15.00 Food Articles 14.34 195.0 0.97 1.19 7.79 8.88 15.14 10.05 11.51 Cereals 3.37 178.1 0.89 0.34 2.65 3.85 9.45 4.64 4.24 Rice 1.79 173.2 1.84 0.29 1.72 3.84 8.79 4.40 3.81 Wheat 1.12 170.0 -0.17 0.12 1.93 -0.35 11.01 -2.52 0.21 Pulses 0.72 193.4 -0.64 0.83 0.80 2.11 6.89 -4.16 -6.50 Vegetables 1.74 206.2 2.71 11.64 37.32 43.79 -1.66 15.78 12.79 Potato 0.20 154.1 5.67 2.87 33.46 43.62 -44.19 13.31 -24.72 Onion 0.18 258.6 3.32 12.34 5.04 53.29 -2.54 57.01 38.84 Fruits 2.11 182.0 0.34 -3.96 3.03 -2.31 8.95 21.58 21.60 Milk 3.24 193.0 0.06 -0.21 3.64 10.92 26.85 9.22 12.59 Egg, Meat & Fish 2.41 213.3 2.49 1.81 8.23 8.05 27.28 12.62 15.25 Non-Food Articles 4.26 181.3 0.52 0.00 2.72 -5.43 16.23 17.19 23.63 Fibres 0.88 219.7 2.84 3.19 5.07 -23.45 17.09 37.66 54.58 Oil Seeds 1.78 160.8 0.29 -0.12 2.50 6.56 2.50 15.43 8.56 Minerals 1.52 310.8 -0.04 3.05 7.86 16.58 24.46 24.42 23.91 Fuel & Power 14.91 166.8 0.27 -0.24 5.78 5.64 12.61 12.55 11.91 Liquefied Petroleum Gas 0.91 147.7 0.00 0.00 14.99 14.58 15.30 14.58 14.14 Petrol 1.09 172.4 0.00 0.00 8.62 8.70 15.33 23.23 22.98 High Speed Diesel Oil 4.67 167.8 0.00 0.00 6.15 9.24 14.64 9.32 10.66 Annexure-II Trend of Rate of Inflation for some important items during last six week Commodities/Major Groups/Groups/Sub-Groups Weight (%) Rate of Inflation for the week ending 20-Aug-11 13-Aug-11 06-Aug-11 30-July-11 23-July-11 16-July-11 Primary Articles 20.12 12.93 12.40 11.64 12.22 10.99 10.49 Food Articles 14.34 10.05 9.80 9.03 9.90 8.04 7.33 Cereals 3.37 4.64 5.22 6.23 6.22 5.13 4.82 Rice 1.79 4.40 6.02 5.58 4.23 2.35 1.80 Wheat 1.12 -2.52 -2.80 0.59 2.57 2.03 1.84 Pulses 0.72 -4.16 -5.56 -5.63 -5.95 -7.01 -8.01 Vegetables 1.74 15.78 6.52 2.59 14.61 10.20 7.59 Potato 0.20 13.31 16.39 7.22 10.85 7.85 10.55 Onion 0.18 57.01 44.42 37.62 36.62 26.36 22.66 Fruits 2.11 21.58 27.01 26.46 16.49 15.97 13.90 Milk 3.24 9.22 9.51 9.76 10.38 10.26 9.96 Egg, Meat & Fish 2.41 12.62 13.37 9.93 13.44 6.66 6.36 Non-Food Articles 4.26 17.19 17.80 16.07 15.05 15.60 16.05 Fibres 0.88 37.66 37.18 34.32 26.28 26.12 28.37 Oil Seeds 1.78 15.43 15.91 16.47 16.45 16.75 13.72 Minerals 1.52 24.42 20.69 21.25 23.12 23.12 23.12 Fuel & Power 14.91 12.55 13.13 13.13 12.19 12.12 12.12 Liquefied Petroleum Gas 0.92 14.58 14.58 14.58 14.58 14.58 14.58 Petrol 1.09 23.23 23.23 23.23 23.23 23.23 23.23 High Speed Diesel Oil 4.67 9.32 9.32 9.32 9.32 9.32 9.32 DS