NRI deposits cross $11 bn in Apr-Nov

Written by fe Bureau | Mumbai | Updated: Jan 12 2013, 06:31am hrs
Dollar inflows from non-resident Indians into bank deposits surged in the April-November period this year to $11.24 billion from $6.39 billion a year ago as higher interest rates and a weak rupee lured NRIs to invest here.

In these eight months, non-resident (external) rupee accounts saw an inflow of $12.79 billion, six times that of last year, data from the Reserve Bank of India showed. Non-resident (ordinary) rupee accounts and foreign currency non-resident accounts saw an outflow this year as against an inflow last year.

Inflows had surged in April and May after rupee depreciated sharply. The currency hit an all-time low of 57.32/$ in June. To earn returns over and above the high interest rates, NRIs can bring in dollars when the rupee is weak and repatriate once the currency appreciates.

Even though the currency has appreciated from its all-time low, inflows into NRI deposits continue as interest rates offered are higher.

Following RBIs deregulation of interest rates on NRI deposits in Deceber 2011, banks hiked rates of such deposits sharply. This deregulation resulted in a surge in inflows in the January-May period. However, inflows have been ever since tapering off and November saw the lowest inflow in nine months.

In November, net inflows into NRE accounts totalled $696 million. While banks have slashed interest rates on deposits since July, NRI deposits still give high returns compared with those of other countries.

Further, rupee recouped losses and stabilised over last few months. On Friday, the currency ended at 54.76/$, 4.67% stronger from its all-time low.Non-resident (ordinary) rupee accounts saw a net outflow of $307 million in November. NRO accounts can be opened by both NRIs and foreign nationals who are visiting the country.

Foreign currency non-resident accounts which allow NRIs to hold deposits in foreign currency rose by $116 million.