In July, the RBI took steps to enhance fresh inflows into NRI deposit accounts
Breaking the streak of continuous fall in outstanding amounts, non-resident Indian (NRI) deposits rose for the first time in the financial year to $134.54 billion in October 2022. The figure was $133.67 billion in September. Reserve Bank of India (RBI) data showed that NRI deposits were in shrinking mode for the first six months of FY23.
They fell to $133.67 billion in September from $139 billion in March. They declined from $141.3 billion a year ago.
Also, the flow of money into NRI deposits rose substantially to $4.93 billion during April-October this year. This is against $3.28 billion in April-October 2021, showing the effect of sops like easing limits on interest rate.
Bankers said while flows into deposits have increased, some funds (from deposits) have been used for purchases during the festival season. This is one of the reasons for the dip in outstanding deposits.
These sops were the easing of cap on interest rate on Foreign Currency Non-Resident (Bank), or FCNR(B), and Non-Resident External (NRE) deposits. And, they were also for exemption from maintaining cash reserve ratio (CRR) and statutory liquidity ratio (SLR) on incremental deposits until November 4, 2022.
The outlook for NRI deposit flows will be conditioned by factors like the magnitude of expected slowdown in advanced economies. The pace and timing of further interest rate actions will also have a bearing on flows.
The outflow of FCNR deposits was $0.8 billion during April-October 2022. This is less than the outflow of $1.66 billion during April-October 2021.
A further analysis indicated that outstanding FCNR(B) deposits were flat at $16.08 billion in October 2022 compared to $16 billion in September 2022. They fell from $18.8 billion a year ago.
FCNR(B) deposits were at $16.91 billion in March 2022. The US dollar continued to be the key currency of FCNR(B) deposits, bankers said.
NRE deposits rose to $96.65 billion in October 2022 from $95.80 billion in September. However, they were down from $102.48 billion a year ago. NRE deposits were at $100.8 billion in March.
Flows into the NRE deposit pool improved to $3.57 billion during April-October 2022 compared to 3.16 billion in April-October 2021.