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PNB offshore unit to offer higher rates on FCNR deposits

The new OBU plans to offer special rates to foreign currency term deposits in dollar, pound and Euro for periods in the ranging from three months to three years.

"While the banks in India offer rates for FCNR deposits at the Central Bank prescribed rates of 25 basis points (bps) below the Libor, the OBU will be offering rates above Libor depending on the currenty, tenor and amount," said P.N Khurana, general manager, Punjab National Bank.

The new rates on FCNR deposits will range from 10 bps to 105 bps for dollar deposits, 15 to 80 bps for Euro and 8 to 65 bps for pound deposits. PNB has plans to open another OBU at the special economic zone at Noida near Delhi.

"The special economic zones are treated as a foreign land by the Government when it comes to banking regulation, and to extent we are flexible in deciding our borrowing and lending rates through the OBUs," said Khurana.

PNB plans to lend the additional resources created through the foreign currency deposits to projects in special economic zones.

The bank management believes that it can deploy its assets in internationally competitive rates to the free zone based exporters while raising money abroad at higher rates compared to the rates offered on foreign currency deposits in the domestic market.

PNB plans to market its high yielding deposit schemes in the UAE through Thomas Cook Al Rostamani. "We will aggressively market our new products in the UAE and the Gulf through our partners in different gulf markets. Next month we will organise a series of roadshows and NRI investor seminars in the Gulf region," he said.

PNB, the second largest public sector commercial bank in India has more than 30 million customers.

With overseas representative offices in London and Almati, the bank has plans to open a representative office each in Dubai and Shanghai this year.