Yes Bank hikes NRI deposit rates to 9.6%

Private lender Yes Bank said it will raise interest rates on fixed deposits held by non-resident Indians (NRIs) to 9.6% from 3.82%, continuing its aggressive efforts to broaden its retail base at a time when the weak rupee is spurring capital outflows from India.

The new rate is being offered on term deposits of 15 months 15 days to 16 months. 

This is the second major attempt by Yes Bank in as many days to attract funds from the huge number of Indians living abroad. The bank raised its savings account deposit rate by 200 basis points to 6% on Thursday.

The higher rates, coupled with the dollar's recent rise against the rupee, are sure to encourage foreign exchange inflows, Chief Executive Rana Kapoor said in a statement.

The Reserve Bank of India deregulated interest rates on non-resident external (NRE) rupee deposits and ordinary non-resident accounts last Friday to provide greater flexibility to banks to attract dollars.

So far this year, foreign investors have sold more than half a billion dollars worth of Indian shares against a record inflow of more than USD29 billion in 2010.

The rupee, which hit a record low last week, has fallen about 17% from its July peak as India's economic prospects cool.

No.2 private lender HDFC Bank raised its interest rates for non-resident savings deposits to 9% from 3.82% on Thursday.