$ flows into NRI deposits plummeted to $349 million in the June 2022 quarter.
New by NRI Herald, 26 August 2022
Outstanding deposits fell to $135.9 billion at the end of June 2022, down from $141.5 billion the previous year.
Money flowing into non-resident Indian (NRI) deposits fell to $349 million in Q1FY23, down from $2.52 billion in Q1FY22.
Total deposits fell to $135.9 billion at the ending of June 2022, down from $141.5 billion the previous year. As per Reserve Bank of India (RBI) info, NRI deposits decreased successively between $139.02 billion in March 2022 to 137.08 billion in May 2022.
One year earlier, NRI deposits increased by more than $8.4 billion, rising from $132.7 billion in June 2020 to $141.16 billion in June 2021.
Foreign currency deposit (FCNR-B) accounts created to deposit income earned abroad had the greatest decrease. They are expected to fall from $19.69 billion in June 2021 to $15.68 billion in June 2022. Deposits at FCNR-B were $16.91 billion in March 2022 and $15.91 billion in May 2022.
The outstanding deposits in the later group, Non Resident External Account (NRE), wherein NRIs can transfer overseas profits, fell from $102.92 billion in June 2021 to $98.98 billion a year later in June 2022. In March 2022, NRE deposits were $100.8 billion, while in May 2022, they were $99.92 billion.
Non-Resident Ordinary (NRO) Accounts, on the other hand, had their outstanding deposits rise from $18.91 billion in June 2021 to $21.31 billion in June 2022. They were constant consecutively, with $21.3 billion in March and $21.25 billion in May 2022.
In view of the steep decline in foreign exchange reserves, the RBI adopted a number of initiatives on July 7, 2022, to increase forex inflows. The RBI has decided to temporarily allow banks to accept new FCNR(B) and NRE deposits without regard for current interest rate limitations. This reprieve will be accessible until October 31, 2022.
Prior to the easing, the interest rate on FCNR-B deposits was capped at the Overnight Alternative Reference Rate (ARR) for the corresponding currency/swap + 250 basis points for maturities ranging from one year to less than three years. The cap for FCNR-B deposits of three to five years is overnight ARR + 350 basis points.
Interest rates on NRE deposits cannot be greater than those given by banks on equivalent domestic rupee term deposits. As a result, numerous banks, notably the State Bank of India and ICICI Bank, have adjusted interest rates on FCNR-B deposits and NRE, the impacts of which will be felt in the following weeks.
Source- Business Standard