Non-resident Indians (NRIs) deposited over $1B into various bank schemes in India in April, marking a significant shift from a $150M outflow during the same period last year. This reversal indicates a change in expatriate remittances back to their homeland.
As of the end of April, the $1.08B influx has increased total NRI deposits in India to $153B, according to data released by India’s central bank.
Expatriate Indians typically remit foreign currency into bank deposits through either Foreign Currency Non-Resident (Banks) or FCNR(B) accounts, as well as Non-Resident External Rupee Account or NRE(RA) accounts.
Under FCNR(B) deposits, the bank accepting the deposit assumes the foreign exchange risk, whereas in NRE(RA) accounts, the depositor bears the currency risk.
FCNR(B) deposits become attractive when the rupee depreciates against the dollar, whereas NRE(RA) accounts are preferred during rupee appreciation.
According to The Economic Times, citing RBI data, NRE(RA) deposits saw the highest inflow of $583M in April, followed by $483M in the FCNR(B) scheme.
Analysts noted a significant momentum in NRI bank deposits in India throughout FY24, particularly since May 2023.
