NRI deposits, according to the Reserve Bank of India, with the amount of foreign currency going into FCNR(B) deposits have more than doubled. From April to October 2023, about $2 billion came in, compared to only $841 million during the same time last year.
Overall, NRIs put in about $6 billion from April to October this year, which is double what they put in during the same time last year, as reported by the Economic Times.
An expert from the Bank of Baroda said that the reason more money is coming in is because these deposits offer higher interest rates compared to what banks in the US or Gulf countries offer. Plus, these deposits take away the worry of money-losing value because of changes in currency value.
To encourage more people to put money into these deposits, the Reserve Bank of India made some rules easier for banks such as temporarily waiving cash reserve requirements and statutory liquidity ratio requirements on fresh inflows (under the FCNR schemes). This way, banks can make more money and use it for better investments.
The expert also said that more NRIs are sending money back to India because they’re getting back to work after the Covid situation. However, some bankers think that the rate at which money is coming in might slow down in the second part of the year.
There’s another way for NRIs to put their money in India, called the NRE (RA) account. This account is good for people who are okay with the risk of the currency value changing. When the Indian rupee gets stronger compared to the dollar, this account becomes more attractive.
Money going into the NRE (RA) account increased a bit this year, reaching about $1.95 billion from April to October, up from $1.68 billion during the same time last year. Bankers say more money has been coming into this account since August because some people think the rupee won’t lose much value against the dollar. Some experts think the rupee might even become stronger in the next year.
Donald G. is the Principal Consultant at NRI Money+. He specialises in creating personalised financial plans for NRIs (Non-Resident Indians) and HNI (High Net-worth Individuals).
