NRI deposit inflows at an 11-year high in FY25 as rates entice
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The Indian diaspora is flocking towards local banks as their deposits surged to a decadal high, promoted by attractive rates amid depreciation in the rupee. Inflows into NRI deposit schemes rose 10% year-on-year to $16.2 billion in FY25 from inflows of $14.7 a year ago, the data released in the Reserve Bank of India's latest monthly bulletin showed. This is the highest inflow in 11 years.
Both dollar (FCBR(B)) and rupee deposits (NRE(RA)) surged reflecting higher returns in the Indian markets. Of the total inflows of NRI deposits, $7.1 billion flowed to FCNR (B) (foreign currency non-resident (banks) deposits which are essentially dollar deposits and the foreign exchange risk is borne by the bank which accepts the deposit. This was 11% higher compared to the previous fiscal year.
Industry executives said that in case of FCNR (B) deposits, NRIs get at least 50-60 basis points more compared to deposits in their home country.
"We had seen many NRI customers locking in deposits on the expectation that rates have peaked and it will start to come down because of the reduction in the RBI repo rate. Banks were also offering attractive rates on NRI deposits because there was intense competition to mobilise deposits in the previous financial year. Depreciation in the Indian rupee has also led to higher inflows in NRI deposits because they tend to make more returns in such cases," said Joy P V, executive vice-president and country head, deposits, wealth and bancassurance, at Federal Bank.
(Join our ETNRI WhatsApp channel for all the latest updates) Inflows into NRE(RA)-non-resident external (rupee accounts) deposits-which are rupee deposits where the currency risk is borne, rose to over $9.1 billion in FY25 from $8.3 billion a year ago.
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