NRI deposits in April-June quarter soar to $4 billion

Deposits of non-resident Indians (NRIs) swelled in the April-to-June quarter of the current fiscal year to $3.95 billion, a 79% jump from $2.2 billion in the year ago quarter, provisional data released in the Reserve Bank of India’s (RBI’s) latest bulletin showed.

The inflows were higher across the three categories: Foreign Currency Non-Resident (Banks), or FCNR(B); Non-Resident External (Rupee Account), or NRE(RA), and Non-Resident Ordinary (NRO).

While FCNR(B) deposits of NRIs hit $1.68 billion during the quarter, a 50% jump from the $1.12 billion reported in the same quarter of last year, NRE(RA) deposits surged to $1.53 billion during the quarter, up by 45% from $1.05 billion in the corresponding quarter of the previous year. NRO deposits jumped 55% to $743 million in the April-to-June quarter from the $489 million reported in the same period last year, data showed.

The FCNR(B) account allows NRIs to deposit their foreign earnings in foreign currencies, which are protected against fluctuations in the exchange rate. The deposits can be made in any major foreign currency, which helps overseas Indians who want to maintain a deposit in foreign currency avoid exchange rate risks.

The funds deposited into NRE accounts are converted from a foreign currency to Indian rupees, and the interest earned on such accounts are tax-free in the country. NRIs use NRE accounts to maintain their overseas earnings in India, with unrestricted repatriation flexibility.

NRO accounts are also rupee-denominated but are primarily used by NRIs to manage their income earned in India, such as rent, dividends, or pension. The funds in an NRO account are subject to Indian tax laws, and there are restrictions on repatriation of the principal amount abroad.