Rupee Yield Enhancer

Rupee Yield Enhancer (Forward Foreign Exchange Contract on FCNR (B) Deposit)

Rupee Yield Enhancer is aimed to offer better yield on NRE deposits by converting the balance in NRE deposits into FCNR (B) deposits up to 5 years and booking a forward sale contract for principal and interest of FCNR (B) deposit (i.e. NRI Depositor will sell FCNR (B) deposit maturity proceeds at forward premia). On maturity of the forward contract, NRI Depositor shall receive the proceeds in Indian Rupees at the contracted exchange rate. If the combined return from the FCNR Deposits and forward premia is higher than NRE Deposit, this route will yield higher return to the NRI Depositor.

Thus, based on the relative interest rates on NRE Deposits & Foreign Currency Deposits (FCNR) along with the prevailing forward premia, NRI Depositor may use the forward foreign exchange contract to improve yield on deposits.

Salient features

  • Investment of NRE Funds as FCNR (B) Deposits with a forward cover to convert the maturity amount of FCNR (B) deposit into Indian Rupees at an agreed forward exchange conversion rate

  • Option of nine foreign currencies viz USD/GBP/EUR/AUD/CAD/SGD/HKD/CHF &JPY for placing the FCNR (B) Deposits

  • Exact amount to be received in Indian rupees to be pre-fixed at the time of booking the deposit and forward cover

  • Proceeds received in Indian Rupees on maturity after application of Forward Foreign Exchange contract rate to be fully repatriable and tax free in India

  • Minimum investment of Rs. USD 5000 or its equivalent for a maximum period of 5 years & minimum period of one year

  • Cancellation of forward contract not permitted

  • Exchange Loss arising on account of pre-mature closure of the deposit / forward foreign exchange contract along with the cost /expenses related thereto, if any, to be borne by the client