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NRI deposits seen rising

Our Bureau

KOCHI, June 23

THE NRI deposits maintained with banks are poised to surge again as a result of the recent erosion in the value of the rupee and renewed interest in foreign currency deposits.

``The conditions are conducive for a renewed spurt in NRI deposits,'' said Mr. A. Sethumadhavan, Chairman, South Indian Bank.

A spate of interest rate revisions by several banks has lead to a marked preference for FCNR (B) deposits among NRIs, he said.

While the rate revisions have got a strong response from NRIs, the bankers are also finding the spreads and returns to be attractive.

Given that the forward premia on the dollar have surged in the recent past, even the revised rates on FCNR deposits offer attractive margins, said Mr. T. M. Venkataraman, Chairman, Dhanalakshmi Bank.

For the FCNR deposit-holder, the incentive is not only the increased interest rate returns, but the gains on conversion at the time of maturity.

For NRE and NRNR deposit holders, the higher returns on current conversions should induce greater inflow.

The increased inflow into NRI deposits is already evident in Federal Bank, where the total inflow has surged by 40 per cent in the first two months of the current year. As compared to inflows of around Rs. 281 crores between April-May 1999, the inflows w ere at Rs. 388 crores in the corresponding period of 2000.

But bank sources point out that this could also be attributed to the inflows from a tie-up that Federal Bank entered into recently with an exchange company.