In all the five financial years following fiscal 1992 till end-1997, NRI deposits had grown at an average rate of 10.72 per cent. Growth in the preceding fiscal of 1997 was the highest at 16.9 per cent.

If redemption on account of the discontinuation of FCNR(A) scheme is taken into account, the net outstandings would have reported a modest growth. But the growth rate on other accounts has been lower, compared with the preceding year. Outstandings under individual NRI deposit schemes - FCNR(B), NR(NR)RD and NR(E)RA - have recorded growths of 12.25 per cent, 11.29 per cent and 14.44 per cent respectively, while the preceding fiscal of 1997 had achieved higher growths of 30 per cent, 58.12 per cent and 27.25 per cent.

Apart fromthe pressure caused by redemption of FCNR(A) deposits with the Reserve Bank of India, the main reason for the stagnant growth in NRI deposits has been the volatility in the forex market. In August 1997, the initial period of the Asian metldown and volatality in the Indian forex market, the net outstanding FCNR(B) desposits - the main NRI deposit scheme - dipped to $8.159 billion from $8.237 billion in July 1997, indicating a flight in NRI deposits.

The growth in the succeeding months have been slow and uncertain with negative growth reported in October, November, December and February over the preceding months. If not for the surge in FCNR(B) deposits in the last month of March, 1998, the total NRI deposits would have shown a negative growth.

The previous occassion when NRI deposits recorded a negative growth was in March 1992. The next major NRI deposit sources, the rupee-denominated non-resident non-repartriable rupee deposit scheme (NRNR-RD) and the repartriable non-resident (external) rupee account(NRE), saw dipping outstandings in the months of August, November and December. One of the obvious reason for the dip in overall NRI deposits growth is the redemption of the remaining FCNR(A) deposits with the Reserve Bank this fiscal.

The outstanding balance of FCNR(A) deposits fell to $36 million as on March 31, 1998, compared with $2.3 billion on March 31, 1997. However, outstandings on account of FCNR(A) scheme was progressively declining since the Reserve Bank announced the discontinuation of the scheme in 1995. In 1997 also it had fallen by about $2 billion to $2.3 billion from the preceding year's outstanding of $4.2 billion.