| Purwar: Crossing borders
Mumbai, Sept. 12: State Bank of India today launched two NRI schemes for a limited period from September 24 in a bid to retain Resurgent India Bond (RIB) holders and attract other non-resident Indians.
The two schemes are Pravasi Vaibhav and Pravasi Samriddhi.
Announcing the launch of these schemes, A. K. Purwar, SBI chairman, said, “Our new deposit schemes not only add value to our array of products for NRIs, but also offer sophisticated financial solutions to maximise earnings on a fully secured basis.”
Pravasi Vaibhav will be denominated in rupees but the payment on maturity will be in dollar. The bank, however, did not divulge the interest rate that will be paid on these deposits. Officials said that it will be announced during the time of the launch. The stipulated minimum amount for this is $10,000 or equivalent while the tenure was one year. The deposit would be offered at 26 branches across the country catering exclusively to NRIs.
Pravasi Samriddhi will be denominated in dollars and euros with a minimum amount of $5,000. It will be offered for a period of one, two, three and five years. This will be booked at the bank’s off-shore banking units at Bahrain, Nassau and Seepz (Mumbai). It will offer an opportunity for investment on floating or fixed interest rates on cumulative and non-cumulative basis, SBI said in a release.
The foreign currency amount received from the customer will be converted by the bank into rupees to issue an NRE Special Term Deposit Receipt. The bank will then book a one-year forward contract to convert the deposit’s proceeds into dollars on maturity.
SBI added that at prevailing rates on NRE deposits, even after the cost of forward cover, NRIs will be able to get an attractive yield on their dollar deposits as compared with other options.
The yield on this scheme will depend on the interest rate of the NRE deposits and the cost of forward cover on the date of issuing the receipt. The interest rate for State Bank’s NRE deposits is presently at around 3.9 per cent for a period between one and two years.
The RIB scheme was launched by SBI on August 1998. The bank had then raised $4.2 billion at 7.44 per cent. Earlier this year, the Reserve Bank of India (RBI) had estimated value of the redemptions at $5.5 billion, including interest. The country’s largest bank is planning to retain 30 to 35 per cent of RIB proceeds with these new schemes.