The inflow of money into Non-Resident Indians (NRIs) deposits witnessed a substantial increase, reaching $2.14 billion in the first quarter of this financial year (FY24), covering the period April to June 2023. This rise is significant compared to a mere $349 million in the same period in FY23.
Accompanying this increase, the outstanding NRI deposits grew by $2.5 billion, standing at $141.28 billion at the end of June 2023, up from $138.77 billion in May 2023, according to data from the Reserve Bank of India (RBI). The RBI released this updated data in a bulletin after almost a three-month gap.
Interestingly, the outstanding NRI deposits remained relatively flat in June 2023, measuring at $138.87 billion compared to March 2023. However, they marked an increase from $135.97 billion a year ago.
A closer analysis reveals that outstanding Foreign Currency Non-Resident (Bank) (FCNR (B)) deposits climbed to $20.48 billion in June 2023. This figure represents a sequential increase from $19.88 billion in May 2023 and $19.36 billion in March 2023, and is substantially higher than the $15.68 billion recorded a year ago.
Non-Resident External (NRE) deposits were positioned at $96.5 billion in June 2023, sequentially up from $95.22 billion in May and $95.81 billion in March 2023. However, this amount was lower than the $98.98 billion observed in June 2022. It’s important to note that eligible NRIs can deposit money into NRE accounts in any foreign denomination and withdraw it in rupees.
On the other hand, Non-Resident Ordinary (NRO) accounts, where money is maintained in rupees and cannot be freely converted into foreign currency, also experienced growth. NRO deposits reached $24.29 billion in June 2023, up from $23.66 billion in May 2023 and $23.69 billion in March 2023. This figure also shows an increase from the $21.31 billion registered a year ago.
In July 2022, the RBI implemented measures aimed at enhancing inflows into NRI accounts. These steps included easing caps on interest rates for both FCNR (B) and NRE deposits, as well as exempting the maintenance of cash reserve ratio and statutory liquidity ratio on incremental deposits until November 4, 2022. These actions likely played a role in the noticeable increase in NRI deposits for the observed period.