Banks in India are set to offer higher interest rates to the fixed deposits placed by NRIs (Non Resident Indians).   The Reserve Bank of India deregulated interest rates on non-resident external (NRE) rupee deposits and ordinary non-resident accounts recently. It will provide greater flexibility to banks to attract dollars.

Yes Bank has raised the rates to 9.6 % from 3.82 %. The new rate is being offered on term deposits of 15 months-15 days to 16 months. Not only that Yes bank has also increased the interest rate on saving bank account deposits to 6%.

INDUSIND Bank has also raised interest rates on its non-resident external accounts to 9.25 % for deposits of Rs. 10 million and above across tenors from an earlier 3.82 %. Interest rates on deposits of less than Rs. 10 million will earn 8.75 %.

HDFC Bank which commands second position in the private lending in India, has raised its interest rates for non-resident savings deposits to 9 % from 3.82 %.

Banks are likely to see a strong inflow of funds from NRIs in the coming days, especially since dollar has risen to the historical levels of Rs. 53/- against Indian Rupee and banks are offering better interest rates.