NRI Remittances Reach Record $11.9 Billion in April-October, Says RBI

Inflows into non-resident Indian (NRI) deposit accounts surged to $11.9 billion in April-October during the current financial year, which is nearly twice the corresponding figure of $6.1 billion for the same period last year, the latest figures compiled by the Reserve Bank of India (RBI) showed.

The total outstanding NRI deposits as of October 2024 has now increased to $162.7 billion as compared to $143.5 billion during the same period last year.

NRI deposit schemes have been divided into three sections-foreign currency non-resident (FCNR) deposits, non-resident external (NRE) deposits, and non-resident ordinary (NRO) deposits.

The figures also reveal that FCNR (B) deposits attracted the highest flows to the tune of $6.1 billion which is close to thrice the amount of $2.1 billion deposited in the same period last year. The total amount in these accounts stood at $31.87 billion.

These accounts are preferred by Indians working overseas as they can maintain fixed deposits from one to five years which enables them to earn higher interest. Since these accounts are in foreign currency these deposits are safeguarded against fluctuations in the rupee.

The RBI had hiked the interest rate ceilings on FCNR (B) accounts in its monetary policy review earlier this month to attract more flows to increase the country's foreign exchange reserves.
Rising foreign exchange reserves are a reflection of strong fundamentals of the economy and gives the RBI more headroom to stabilize the rupee when it turns volatile.

A robust forex kitty gives the RBI enough elbow room to intervene in the spot and forward currency markets by pumping out more dollars to prevent the rupee from going into a free fall. On the other hand, a declining forex kitty leaves the RBI with less space to intervene in the market to prop up the rupee.

According to RBI figures, NRE deposits increased inflow at $3.09 billion during this period, whereas it was recorded at $1.95 billion during the same period last year. NRE deposits are a high-interest earning rupee deposit option for NRI remittances.
NRO deposits rose to $2.66 billion during April-October compared to $2 billion during the corresponding period of the previous year.

India tops the list of recipient countries for remittances in 2024 with an estimated inflow of $129 billion, according to the latest figures compiled by World Bank economists.
The growth rate of remittances this year is estimated to be 5.8%, compared to 1.2% registered in 2023, according to a World Bank blog post.

“The recovery of the job markets in the high-income countries of the Organisation for Economic Co-operation and Development (OECD), following the onset of the COVID-19 pandemic, has been the key driver of remittances. This is especially true for the United States where the employment of foreign-born workers has recovered steadily and is 11% higher than the pre-pandemic level seen in February 2020,” the report said.