HDFC Bank starts a two day NRE deposit drive

HDFC Bank, India’s biggest lender by market capitalisation, will open a dedicated two-day window to mobilise NRE deposits offering up to 50 basis points more in interest than existing rates in the category, people familiar with the matter told ET.

The move coincides with the US Federal Reserve’s scheduled decision on policy rates that are expected to rise up to three-fourth of a percentage point.

HDFC Bank NSE 0.50 % expects overseas Indians to utilise the special window and buy NRE deposits for 12 to 15 months. The window will be available on July 27 and 28 for NRE fixed deposits where non-resident Indians can invest in rupees, the people cited above said.

“Relationship managers are reaching out to the Indian diaspora across the world, urging them to invest,” one of the persons cited above told ET.

Currency conversion risks at maturity, however, must be borne by depositors. The deposit plan proposes to pay 6.8% annually. For 12-15 month maturities, HDFC Bank offers 5.75-6.25% to domestic savers for deposit amounts between ₹2 crore and less than ₹5 crore.

The move comes just ahead of the US Federal Reserve’s decision on interest rates. The US central bank is widely expected to raise rates further to restrain inflation. Before that event later this week, HDFC Bank aims to tap the NRI pool of funds, market sources said, potentially prompting other leading banks to follow suit. “With HDFC Bank taking the lead in offering such a bespoke plan, other banks are expected to follow,” said a banker at an overseas lender.