FCNR Deposit with Forward Cover / Swap – yield 14% – Should NRIs invest ?
Following the sharp depreciation of INR in July – Aug 2013, RBI has taken number of steps to stabilise the currency.
To attract foreign currency, interest rate on FCNR Deposits is increased by 1% for tenure of 3-5 years deposits. Earlier, for FCNR deposits for 3-5 years, Banks could offer LIBOR + 3%, now they can offer LIBOR + 4%
RBI has also allowed banks to increase NRE FD Rates for tenure of 3 years or more. Read my other article - Comparison of NRE FD Rates April 2014
Structured Product for NRIs - FCNR Deposit with Forward Cover / Swap
Many banks are offering a structured product combining FCNR Deposit and Forward Cover and offering a yield of 14%, which is risk free & tax free.
If you have NRE Account with bank, you might have received similar mailer from them.
14% yield… risk ...