Non-resident Indians pumped in $7.462 billion in India through investment in banks? non-resident (external) rupee (NRE) deposits in 2011-12, data from the Reserve Bank of India showed. The NRI fund inflow into NRE deposits in the month of March hit a year-high of $1.668 billion (over R8,900 crore), the total inflow for stood at $7.462 billion (around R39,800 crore).
The data since the deregulation of NRE deposits in the month of December led to high inflow of money into the NRE account in last financial year, taking the inflow highest-ever in 10 years time. Following the deregulation, all banks raised their interest rate on such deposits from around 3% to 10 %.
Continued high rates will have a sustained upward pressure on the cost of funds for banks, said Rupa Rege Nitsure, chief economist at Bank of Baroda. ?Since NRE rates are at par with the domestic rates, the deposits from these accounts have seen a phenomenal growth. The growth in such deposits are higher than the domestice growth,? said Ashutosh Khajuria, head of treasury at Federal Bank. He added that depreciating rupee will bring more growth to these accounts.