Interest on NRI deposits to be calculated on daily basis from April '10

25 April 2009

Non-resident Indians (NRIs) depositing money in rupee-denominated saving accounts with Indian banks would get higher returns from 1 April 2010 as interest on them would be calculated on a daily basis. The new facility would be available for NRE and NRO savings accounts.

At present, these account holders get interest on their minimum balance held during tenth on the last day of a month.

While NRE accounts could be opened from money repatriated from outside, NRO accounts contain money received from within India.

''We advise that on a review, and in view of the present satisfactory level of computerisation in commercial bank branches, it is proposed that payment of interest on savings bank accounts (NRE and NRO) by scheduled commercial banks would be calculated on a daily product basis with effect from 1 April 2010," the Reserve Bank of India (RBI) said in its notification.

In order to ensure a smooth transition, banks may work out the modalities in this regard, the RBI said.

Last week, in its annual credit policy, RBI had also raised cap on loans against foreign currency non-resident (FCNR-B) and non-resident external (NRE) deposits to Rs1 crore from Rs20 lakh.