About a week ago I received a call from my Personal Relations Manager in one of the Banks in India. They are about to float a plan for FIXED DEPOSIT SCHEME. It is a Leveraged scheme where in you provide one TENTH of the funds and the Bank will inject into it the other NINE portions, making it into TEN. Each Bank has their own rates and time periods. Please call and verify prior to jumping into this.

IT LOOKS GOOD. Some times too good to be true. No TAX deductions at source. But in Canada, at your going rate.

Based on the inquiries made by my friends, here is some info on the banks that are offering and where :

CITI BANK : Offering in singapore , other asian countries, UK etc. Not in US or Canada

HDFC BANK : Going to offer, but the product is not introduced yet. They will announce when they will introduce this product.

ICICI BANK : Says, this product hasn’t come out yet. They said, just call again after a week to check if the product is introduced.

BANK OF INDIA : The NRI services in its head office, gave very good info. He knows the product well and said that bank has already started offering this. Leverage is kind of 1:10 (our required contribution is 1 and bank’s contribution is 9) and the minimum deposit is very low.

There are NO restrictions on this kind of cross country transactions in Canada. So call the Canadian Branch and see who is offering. Alternately, if you have an account there in India in any branch,any town, contact them via e-mail or over the phone.



FH.
Here is an article from a reliable source :
http://www.reuters.com/article/2013/09/16/us-india-rupee-deposits-exclusive-idUSBRE98F0E120130916
Here is a second one : http://www.indianexpress.com/news/leveraged-nris-on-returns-trip-may-fuel-fcnr-inflows/1167862/
http://www.business-standard.com/article/finance/in-a-crisis%E2%80%A6it-pays-to-be-an-nri-113091700186_1.html

Here is some more information and these offers are still available....

1. The two Banks offering Leveraged products of 3 years FCNR deposits in US $. are,
The HDFC Bank, who are open to people across the world including USA and the Axis Bank is not.
2. The annual Yield of HDFC Bank is app. 11.20% p.a.
And of the Axis Bank comes to 13.87% for amounts in excess of US$ 100,000 to $ 250,000 and
14.08% for US$ 250,000 to $ 500,000, due to leveraging factor.
3. As the deposit is in US$ and the loan is against FCNR deposit, the risk of exchange is nil.
4. As Bank's own foreign subsidiary is offering this loan, the risk of margin call and default are next to nil too.



AXIS BANK STRUCTURED US$ DEPOSITS
Particulars US$ 250000 to US$ 500000 US$ 100000 to US$ 250000
Loan 15 times 19 times
Initial Client Equity 500,000 100,000
Loan extended by overseas branch of Axis Bank 7,500,000 1,900,000
FCNR deposit with Axis Bank - India 8,000,000 2,000,000
Tenure in years 3 3
FCNR Rate THEY PAY YOU 4.77% 4.77%
Loan Interest Rate THEY CHARGE YOU 4.11% 4.26%
Total FCNR Interest received in 3 years 1,144,800 286,200
Total Loan Interest payment in 3 years 924,750 242,820
Bank charges 1% of client's investment 5000 1000
Net Interest Inflow to Client from Deposit 215,050 42,380
Annualised Net Yield 14.34% 14.12%
Less : Fees charged by brokers 0.25% p.a. of client's investment 0.25% 0.25%
Net Yield per Year 14.08% 13.87%

1) Loan amount, the leveraging, above is used for calculations and may vary at the sole discretion of bank Manager.
2) FD Interest received will be first adjusted against Loan interest that gets paid.
3) Bank charges - A one time fee of 1% of client's investment amount.

xxxx


HDFC BANK US$ DEPOSITS (example)
Particulars......................................................................................................
US$

US$ Loan 9 times 11 times
Initial Client contribution 500000 500000
Loan extended by overseas branch of HDFC Bank 4500000 5500000
FCNR deposit with HDFC Bank - India 5000000 .....6000000 Tenure in years 3 and 3
FCNR Rate 4.77% 4.77%
Loan Interest Rate 4.10% 4.10%
Total FCNR Interest received in 3 years 715500 and 858600
Total Loan Interest payment in 3 years 553500 and 676500 respy.
Bank's processing fee 1000 10000
Net Interest Inflow to Client from Deposit 161000 and 172100
Annualised Net Yield 10.73% and 11.47%


Net Yield per Year , if there are any deductions is 10.48% and 11.22%
Notes:
1) Loan amount above is indicative and may vary at sole discretion of bank
2) FD interest payout will be first adjusted against Loan interest.
3) Bank charges $ 1000 / $10,000 for processing.



FH.