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Rupee slide seems to have failed to enthuse overseas Indians to send money in back-home in droves. Contrary to belief that rupee slide may entice non-resident Indians to park more funds with banks, the flow into NRI deposits dipped by $1 billion in April-June 2013 over a same period year ago.
The flow of money into NRI deposits in April-June 2013 was $5.5 billion down from $6.5 billion in Q1 of last year. The outstanding NRI deposits stood at $71.07 billion at end of June 2013, , according to Reserve Bank of India data.
The sharp drop in value of rupee began from in second half of May 2013. Indian currencies value against US dollar nosedived by 7.05% to Rs 59.39 level on June 28 from 55.42 on May 21.
Bankers expressed surprise and were unable to pin-point reasons for the trend. The fall has been sudden for many NRIs to take quick call to make more deposits with banks in India. Perhaps, they may have kept decision on hold (to send money) in hope of further slide, said a top executive with Mumbai-based public sector bank.
Deposit flows may not have shown increase but the remittances – money moving for household expenditure and investments other than deposits – has gone up. Some money has gone into real estate investments, said an official with Money Transfer Company with strong base in Middle East.
The Non-Resident (External) Rupee account, mainstay of NRI deposits, saw inflows of $5.6 billion in Q1 of FY14 as against $7.4 billion in April-June 2012. The outstanding NRE deposits stood at $47.06 billion, RBI said.
NRE deposits had seen surge in 2011-12 soon after RBI had hiked the ceiling on interest paid on them. The kitty (NRE deposits) grew to $57.91 billion in March 2012 from $52.49 billion.
