- The trend is an expression of strong confidence in domestic economy
- This growing influx of diaspora-driven deposits reinforces the appeal of India’s economic landscape, as the diaspora continues to view India as a reliable hub for both safe investments and financial growth
The Indian diaspora’s confidence in India’s economic prospects is clear as Non-Resident Indian (NRI) deposit inflows have more than doubled from $3.7 billion to $7.8 billion in the April-August period of this year, as reported by the Reserve Bank of India (RBI). This significant rise in NRI deposits underlines a growing belief in the resilience and potential of the Indian economy.
NRI deposit inflows saw substantial growth across both dollar-based Foreign Currency Non-Resident (Banks) accounts (FCNR(B)) and rupee-denominated Non-Resident External (RA) accounts (NRE(RA)), highlighting attractive returns and robust economic fundamentals. Of the $7.8 billion total inflows, FCNR(B) deposits—held in foreign currency and bearing the exchange risk on behalf of banks—accounted for $3.5 billion. In contrast, $2.5 billion entered NRE(RA) accounts, where the depositors bear the currency risk, particularly when they anticipate future rupee appreciation.
By the end of August, total outstanding NRI deposits reached $153 billion, signifying not only the diaspora’s investment trust but also their role in remittance contributions. India remains the top recipient of global remittances, supporting families and fostering economic growth
NRE(RA) inflows tend to rise when investors expect the rupee to strengthen, enabling them to repatriate larger dollar amounts upon maturity of their deposits, typically spanning one to five years. The surge may also be due to India’s comparatively stable economic returns, with interest rates managed more conservatively than in many global economies, as highlighted in a June study by Bank of Baroda. The report indicates that domestic interest rates have been relatively less volatile than those of global central banks.
Moreover, the RBI’s latest monetary policy report shows that India was among the fastest-growing economies worldwide in the April-June quarter, with a real GDP growth rate of 6.7%, reflecting the economy’s resilience despite minor sequential slowdowns.
***********************************************************
Readers
These are extraordinary times. All of us have to rely on high-impact, trustworthy journalism. And this is especially true of the Indian Diaspora. Members of the Indian community overseas cannot be fed with inaccurate news.
Pravasi Samwad is a venture that has no shareholders. It is the result of an impassioned initiative of a handful of Indian journalists spread around the world. We have taken a small step forward with the pledge to provide news with accuracy, free from political and commercial influence. Our aim is to keep you, our readers, informed about developments at ‘home’ and across the world that affect you.
Please help us to keep our journalism independent and free.
In these difficult times, running a news website requires finances. While every contribution, big or small, will make a difference, we request our readers to put us in touch with advertisers worldwide. It will be a great help.
For more information: pravasisamwad00@gmail.com