NRI Deposits Soar 43% from April to December 2024!

The Reserve Bank of India (RBI) data revealed a significant increase in remittances into non-resident Indian (NRI) bank accounts, showcasing a 42.8 percent rise from April to December 2024, in comparison to the corresponding period in 2023. This surge resulted in a deposit amount of $13.33 billion during 2024, a notable growth from the $9.33 billion recorded in 2023. By the end of December 2024, the cumulative NRI deposits reached an impressive $161.8 billion, up from $146.9 billion at the same time the previous year.

A substantial portion of these inflows was attributed to Foreign Currency Non-Resident (FCNR(B)) deposits, witnessing an inflow of $6.46 billion in the April-December 2024 period. This figure is almost double the $3.45 billion seen in the same timeframe in 2023. FCNR(B) accounts, which allow NRIs to hold fixed deposits in freely convertible foreign currencies for periods up to five years, thus safeguarding their savings against currency fluctuations, saw their total outstanding amount escalate to $32.19 billion by the end of 2024.

Increased Interest Rates on Deposits

To further entice foreign currency inflows and bolster the Indian rupee against the US dollar, the RBI made a strategic move by elevating the interest rate ceiling on FCNR(B) deposits. This policy adjustment permits banks to offer more competitive returns on these deposits. Such financial incentives are designed to attract a higher volume of foreign currency, providing a stronger financial buffer for the rupee.

In addition to FCNR(B) deposits, other NRI deposit categories also experienced growth. Non-Resident External (NRE) accounts saw an increase in inflows, receiving $3.57 billion, up from $2.91 billion in the previous year. By December 2024, the total outstanding amount in NRE deposits reached $99.56 billion. Similarly, Non-Resident Ordinary (NRO) accounts also reported an increase, with inflows of $3.29 billion and an outstanding total of $30.04 billion by the end of December 2024.

This influx of funds not only underscores the confidence of the Indian diaspora in the Indian banking system but also contributes significantly to the financial stability of the country. With the RBI's proactive measures to enhance returns on deposits, the upward trend in NRI deposits is likely to continue, providing a robust support system for the Indian rupee and contributing to the overall economic resilience of India.