The Reserve Bank of India's moves to attract funds at a time when foreign exchange reserves were sliding due to selling by overseas investors has turned out to be a success.
Deposits from the Indian diaspora in banks through various NRI deposit schemes more-than-doubled after the central bank exempted the cash reserve ratio (CRR) and statutory liquidity ratio (SLR) on fresh inflows through these routes and relaxed the interest rate cap in July 2022 to boost foreign exchange reserves. This was fuelled by a surge in foreign currency non-resident (bank) or FCNR (B) deposits.
Fresh inflows through various NRI deposit schemes more-than-doubled to $7.9 billion in FY23 from $3.2 billion in FY22, according to the latest RBI data. In the case of FCNR (B) deposits, net inflows were $2.4 billion compared to outflows of $3.5 billion the previous year.
Significantly, the RBI added $46 billion to its forex reserves until March 2023 with reserves surging to $578 billion from a low of $532 billion in September 2022.
"The RBI window on NRI deposits from July to October 2022 provided the much-needed kick start of fresh inflows into FCNR deposits as it was announced towards the end of the Covid period when global economic growth was bouncing back to normalcy with the increase in interest rates across economies," said Soumitra Sen, head of consumer banking and marketing at IndusInd Bank. "At IndusInd Bank, we took a conscious call to incorporate the benefits of this window and provide better and competitive FCNR deposit rates to NRIs along with strong product offering."
Read more at: https://economictimes.indiatimes.com/nri/invest/nris-rupee-forex-deposits-bolstered-reserves-in-fy23/articleshow/100575065.cms
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