Banks raise $10 billion from NRE deposits


11/07/2012 09:43 AST  The Economic Times

Banks have mobilised more than $10 billion from overseas Indians through nonresident rupee deposit schemes since December when the Reserve Bank of India liberalised interest rates banks could offer on such deposits.

Banks raised a record $3.4 billion in May through NRE deposits, according to data released by the RBI. Total NRI deposits however, were lower at $2.8 billion during the month due to outflows from FCNR(B) and NRO deposits.

Banks are offering 9 per cent or more for one year deposits on NRE or non-resident (external ) rupee deposits, almost comparable to that offered on local deposits. These rates come as a bonanza at a time when local markets offer almost negligible returns for NRIs, especially for those in the USA and Europe. If the rupee dips further, the net returns for an NRI depositor may, however, fall as the foreign exchange risk is borne by the depositor in such deposits.

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