Indian interest rates - Possible to deposit?

[mayweather12]

Hi,

Having looked at the state bank of India and other various Indian banks, seeing their exceptionally high interest rates of 9% for 3-5 year deposits, I just wondered if it was possible as a UK citizen to take advantage of these?

Thanks

(NRE) - Non resident external, seems to tick the box for me, on their interest rates charts however not sure if this is true?

http://www.bankofbaroda.com/interest.asp - For example.

[ellroy]

You should be able to deposit funds in the rupee, may be a difficult admin task mind, id, signing forms etc

The bit you're maybe forgetting is the foreign exchange costs and possibility of loss, or gain, on currency fluctuations.

I'd leave it well alone unless you have a lot of dealings in India or are used to fx transactions.

[bobbylondonuk]

Indan govt gaurantee on single deposits are around 25k INR.....around 350GBP. Atleast that was the case a few years ago.

[anonymous-user]

If you're being serious, please contact me!

[jeff m2]

Investing in one country can be unwise if you are undiversified, maybe risky is a better word.
To lock yourself in for 3 to 5 in a single country currency is worse than risky.
Something approaching lunacy springs to mind.

If you are chasing income there are better options.
There is still risk but lower than the Rupee.
Emerging Market Bonds ($) pay about 6%
Emerging Market Local Curr Bonds about the same.
Emerging Market Corp Bonds a little less.
US High Yield 7.5 (That's BBs etc)

Emerging Markets shouldn't put you off, Emerging markets have a lot better balance sheets than most of the developed markets, and of course you have diversication built in to a fund.
The best bit is....you are not locked in. You are free to jump ship anytime.

Alternativly build yourself a little income portfolio with shares like Amerigas, Chevron and Exelon, you will not get a div of 9% obviously but you should easily get 4 points in growth as a top up as these tend to be shareholder friendly cos that do increase their divs each year.
You could spice it up a little by adding something like IAF that pays around 9% (albeit some from capital) but Aberdeen has a decent record. Just be wary of the premium !. Av is around 4, 3 is go.
It seldom goes to a discount.

ETA Should you take any of these options watch the Dollar Sterling rate before you buy 1.62 is a lot better than 1.60.

Edited by jeff m2 on Friday 11th January 22:29

[leef44]

remember risk v return. The higher the return, the higher the risk you are letting yourself in for. And as others have said, there is also exchange rate exposure and foreign country admin hassles.