NRI funds top $1bn as banks roll over RIB money
By siliconindia staff writer   |   Thursday, 22 January 2004, 20:30 IST
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MUMBAI: NRI deposits touched a record $1.1bn in October, thanks to banks rolling over a slice of the Resurgent India Bond money. According to RBI figures, both foreign currency non-resident (Banks)-FCNR(B) and non-resident (external) rupee accounts-NR(E)RA recorded a strong growth of $600m and $659m respectively. Interestingly, FCNR(B) deposits which had come to a trickle, has suddenly moved up. The single month inflows of $600m in FCNR(B) is higher than $526m inflow in the entire ’02-03 and $594m in ’01-02. A good part of the money is on account of the $4.5bn RIB redemptions. With the euro and the pound sterling rising against the dollar, FCNR(B) deposits held in these currencies are more attractive. All figures are expressed in dollar terms, inclusive of valuation changes on non-dollar currencies. Bankers say that the Libor-linked returns on these NRI deposits would benefit depositors if the US Federal Reserve and the European Central Bank decide to raise rates. Last year, RBI had lowered the cap that banks can offer on NRE deposits to make it unattractive for NRIs indulging in interest arbitrage. (Courtesy: ET)