Recent fall in Indian rupee and subsequent hike in interest rates offered on non-resident deposits by several banks have led to a considerable pick-up in the flow of non-resident Indian (NRI) deposits, say bankers.
“We have seen a good rise in the NRI deposits over the last two months. This will last till the time NRIs see benefit in a weaker Indian rupee,” a senior executive in State Bank of India (SBI) said. SBI's total NRI deposit base stood at Rs 84,943 crore on June 30, 2013. SBI did not confirm the amount by which NRI deposits had increased in the period. This year Indian rupee has depreciated by almost 26% from Rs 54.68/$ on January 1, 2013, to Rs 68.8/$ on August 28 due to domestic macro-economic concerns and fear of a pullback in the US Federal Reserve's quantitative easing programme later this year. South India-based Federal Bank, which had total NRI deposits of Rs 16,600 crore as on June 30, 2013, has confirmed it has seen a pick up in the flow of NRI deposits in the month of August.
“We have seen deposits worth over Rs 3,000 crore coming in August alone. Usually, it is around Rs 2,000 crore. You may see some more flows in three to five-year deposits since they were recently given some relaxation from RBI. Nearly 67% of total NRI deposits are in the one-year bucket right now ," said A Surendra, head, retail and international business, Federal Bank.
Central Bank of India, a public sector bank, which has a total portfolio of Rs 2,000 crore in NRI deposits also saw the deposits ballooning 30% year-on-year, according to a senior executive at the bank.
“Our NRI deposit portfolio currently stands at Rs 4,000 crore, it has gained about Rs 1,000 crore in last five months on currency weakness,” added RK Bansal, executive director, IDBI Bank.
In August, Reserve Bank of India (RBI) relaxed norms to help banks attract more deposits by exempting NRI fixed deposits with duration of three years or longer from cash