Non-resident Indians showed confidence in Indian economy, deposited 1 billion dollars in April

Non-resident Indians showed confidence in Indian economy, deposited 1 billion dollars in April

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Expressing confidence in the Indian economy, non-resident Indians (NRIs) deposited $1 billion in various NRI deposit schemes in April. This is in sharp contrast to the outflow of $150 million seen in the same period last year. Total outstanding NRI Deposits According to the latest data from the Reserve Bank of India (RBI), India's gross domestic product (GDP) now stands at $153 billion, says an Economic Times report.
This surge reflects confidence Non Resident Indian This has had a positive impact on the resilience of the Indian economy, which is expected to continue with world-leading growth rates this financial year.
There are three main deposit schemes for NRIs: foreign currency Non-Resident (Bank) or FCNR(B), where the foreign exchange risk is borne by the deposit accepting bank; Non-Resident External Rupee Account or NRE (RA), where the currency risk is borne by the depositor; and Non-Resident Ordinary (NRO) Deposit Scheme.
In April, the NRE (RA) scheme attracted the most interest, with total deposits of $583 million, while the FCNR (B) scheme saw inflows of $483 million. The NRO deposit scheme, which is meant for local use by NRIs and allows repatriation up to a certain limit, has outstanding deposits of $27 billion. In comparison, the NRE (RA) has outstanding deposits of $99 billion, and the FCNR (B) scheme has $26 billion.
During the COVID-19 pandemic, NRI deposits grew from $131 billion to $142 billion despite softening of interest rates globally, as bank deposits became a preferred savings option amid volatility in other asset classes. However, with the normalisation of economic activity, NRI deposits witnessed a moderation in FY22 and FY23. Notably, a significant momentum is visible from May 2023 onwards.
“A possible explanation could be that domestic central banks have a more balanced approach compared to global central banks, where the rhetoric on interest rates has been much more volatile,” said Deepanwita Majumdar, economist at Bank of Baroda.
NRI deposits account for nearly a quarter (24%) of India’s external debt, which stands at $648 billion as of December 2023. Although most of these deposits have a tenure of one to three years, they pose a risk from a debt servicing perspective as most of these deposits are carried forward.
The recent increase in NRI deposits signals renewed confidence in the stability and growth prospects of the Indian economy, and strengthens the country's position as an attractive destination for international investors.

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