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RBI's NRI Deposit Schemes Attract Record $7.9 Billion in FY23

Strategic Insights

— 1 min read

The Reserve Bank of India's (RBI) efforts to boost foreign exchange reserves through its NRI deposit schemes have paid off, with fresh inflows more than doubling to $7.9 billion in FY23 from $3.2 billion in FY22. The schemes, which exempted cash reserve ratio (CRR) and statutory liquidity ratio (SLR) on fresh inflows through these routes and relaxed the interest rate cap, have fueled a surge in foreign currency non-resident (bank) or FCNR (B) deposits. The RBI added $46 billion to its forex reserves until March 2023, with reserves surging to $578 billion from a low of $532 billion in September 2022.

Key Takeaways:

  • Fresh inflows through various NRI deposit schemes more than doubled to $7.9 billion in FY23 from $3.2 billion in FY22.
  • Net inflows in FCNR (B) deposits were $2.4 billion compared to outflows of $3.5 billion the previous year.
  • The RBI's exemptions and relaxations on interest rates contributed to the surge in FCNR (B) deposits, with fres inflows worth $3.5 billion raised after the relaxations ended in October 2022.
  • The RBI added $46 billion to its forex reserves until March 2023, with reserves surging to $578 billion from a low of $532 billion in September 2022.
  • IndusInd Bank's head of consumer banking and marketing, Soumitra Sen, attributed the success of the RBI's schemes to the window provided from July to October 2022, which gave a much-needed kickstart to fresh inflows into FCNR deposits.
  • Despite the end of the relaxations, inflows continued even after the interest rate cap was regulated again, indicating the effectiveness of the RBI's strategy.

Statistics:

  • $7.9 billion: Fresh inflows through various NRI deposit schemes in FY23
  • $3.2 billion: Fresh inflows through various NRI deposit schemes in FY22
  • $2.4 billion: Net inflows in FCNR (B) deposits in FY23
  • $3.5 billion: Outflows in FCNR (B) deposits in FY22
  • $46 billion: Addition to the RBI's forex reserves until March 2023
  • $578 billion: Reserve Bank of India's forex reserves in March 2023
  • $532 billion: Reserve Bank of India's forex reserves in September 2022

Sources:

  • RBI data on NRI deposit schemes
  • RBI announcement on July 6, 2022, exempting incremental FCNR (B) and non-resident external (NRE) deposits from CRR and SLR
  • Interview with Soumitra Sen, head of consumer banking and marketing at IndusInd Bank
  • RBI data on forex reserves

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