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NRI deposits highest ever at $1.7 bn in November

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NRI deposits highest ever at $1.7 bn in November

Last updated: March 14 2012
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  • NRI deposits highest ever at $1.7 bn in November

    Jan 13, 2012, TOI

    Overseas Indians have started flocking India markets with a weak rupee and high interest rates making them so attractive amid rising global uncertainties following the downgrade of US sovereign debt rating as the debt concerns in Europe that they have brought in highest ever amount in a single month .

    Aggregate inflows under various NRI deposits schemes touched $ 1.7 billion in November, the highest ever in a single month. The data reflects the period before the Reserve Bank freed up interest rates in December, following which banks have raised the rates sharply bringing them on par with local rates.

    NRIs have brought in a total of $ 6.4 billion so far this fiscal between April and November, compared to a mere $ 2.2 billion in the year ago period. However, a bulk of the inflows-$5.1 billion- have come in only after August co-inciding with the deepening of the European debt crisis and the US sovereign downgrade.

    NRI deposits in India inflows are under three categories, foreign currency non-resident (banks) or FCNR (B), non-resident-ordinary or NRO and non-resident external, rupee account or NRE (RA). Each one of them have distinct features.

    For instance, in case of NRE (RA), the foreign exchange risk is borne by the depositor and hence tends to gain at the time of conversion, when the rupee is appreciating through the tenor of the deposits. While these two are repatriable, proceeds in the NRO accounts are meant only for the local use.

    Besides, with the prospects of rupee strengthening further, the returns on NRE deposits could be even more attractive. Notably, it is the NRE deposits that has been the favorite among the diaspro with $ 3.4 billion coming in between August and November. ' NRIs often tend to take a long-term view that the rupee would strengthen further whenever the rupee has actually weakened. As a result, inflows tend to be higher when rupee is weak.' said a senior official with a large public sector bank requesting anonymity.

    The Reserve Bank of India sold a record $2.9 billion in the spot currency market to rein in the value of the rupee, according to the figures released by the Reserve Bank of India on Thursday.
    The rupee, it may be recalled was seen slipping against the dollar at a very steep pace during the month, forcing the central bank to intervene in the currency market to prevent a steep slide. The central bank has been criticised from a section of the market for remaining on the sidelines for very long.

    After a prolonged absence in the currency markets for almost a year, the central started selling in small chunks in September and October. Cumulatively in three months, it sold $ 4.7 billion between September and November'11.

    NRI deposits highest ever at $1.7 bn in November - The Times of India
    __________________________________________________ __________
    It is better to be blind than to see things from only one point of view
  • #2

    #2

    Re : NRI deposits highest ever at $1.7 bn in November

    NRE deposit now get 9.5% from all the banks, and NRI's are keen to avail this. NRI's have stopped investing in real estate and many among them are also selling the real estate to book profit, if any. If the property of NRI has appreciated by 20% in last 1.5 year, than the NRI has actually taken a LOSS of 4% because dollar appreciated by 24% against rupee in the mean time.

    Indian investors in property need to understand that the NRI factor is now not in their favor, and may actually go against them - if more and more NRI start selling their property

    Comment

    • #3

      #3

      Re : NRI deposits highest ever at $1.7 bn in November

      Originally posted by amit001
      Jawahar - Please get your technicals right..

      Can give me a logic why will nay NRI sell property at these exchange rates. With Rupee at such low why any body will sell a house and convert the rupees back into dollar?

      is int common sense...

      NRI who want to come back to india wont sell, as they bought to create assets in India

      NRI who want to stay in their foreign countries if they sell now and convert the rupees into dollars, they will get much lower dollars/euros/Pounds...Agar kisi ne $ =45 pain liya hain and he sells at $=52 and convert money back to dollar he will get lower dollar for every rupee as rupee as depreciated..ONLY A FOOL WILL SELL A HOUSE/PLOT AND CONVERT MONEY BACK TO DOLLARS..

      As mentioned before your argument is flawed

      You are just spamming all the threads to create a neegetive sentiments. Sir this forum is not even 1% of the RE market and your negative comments will not make any difference.
      I was not speculating on NRI selling, but saying so on facts. I am sure you agree that greed and fear are two factors which operate in investment. But many do not know that fear is much more potent as compared to greed. The NRI's who had made investment in RE, and have already a house to come back to stay, got worried to see their investment erode.

      Friend, if your neighbor makes 24% and you make 4% loss in the same investment, won't you be hurt. Much more than the hurt was the sentiments prevailing among NRI that the rupee worth will erode further and their notional losses will increase further.

      Interestingly there is another class of NRI who now want to enter RE seeing this as an opportunity on the back of weak rupee. But 9.5% NRE interest rate looks more tempting.

      Besides, I am an IT guy with long experience and fairly well know how to spam in effective manner. By writing at such forums the spam effect will be close to zero. I am relatively new in this forum, and actually found many spammers - perhaps agents of builders or brokers beguiling buyers into buying junk

      You are a veteran member and have boldly said that my arguments are flawed. Firstly I am not arguing, and secondly the judge-as always is time.

      Comment

      • #4

        #4

        Re : NRI deposits highest ever at $1.7 bn in November

        Jawahar my dear friend - you have all the right to put forward your arguments, similarly I have all the rights to counter it..

        I am an NRI and understands the investment mindset of an NRI better than you..

        I will stick to saying that your argument that NRI will sell is hollow - Show me one NRI who sold/will sell on the back of the logic stated by you...

        But Yes I agree that 9.5% is an attractive rate of Interest (though I still feel people can make much more in a CLP investment of a good builder) and some of the NRI money may get invested here instead of RE...

        But selling RE in India and taking money back to dollars/pounds/Dhiram does not make sense to me my dear..See example below

        So if somebody has a $ 100,0000 dollars and he bought a house at $=44 Rs, he would have bought the house at 45,00,000 INR. Now assuming the property price as constant, if he sell at 1$ = 52 (Only a fool will do it) he will get back only 86,538 $. So till the point rupee is at these depreciated levels, no NRI will sell the RE and convert money into dollars, so a weak rupee will prevent a lot of NRI from selling their properties.

        Even who booked for trading purposes and want to book profit in rupee terms, will also be getting lower dollar returns, so they would want to stay invested till rupee comes back to 45/46 levels

        Comment

        • #5

          #5

          Re : NRI deposits highest ever at $1.7 bn in November

          I am not saying that correction can never come.. It very well can..

          But saying that NRI will sell because rupee has depreciated is mathematically, financially and economically wrong..

          I take my "Spam" allegation back. Kindly accept my appologies.

          Comment

          • #6

            #6

            Re : NRI deposits highest ever at $1.7 bn in November

            Originally posted by amit001 View Post
            Jawahar my dear friend - you have all the right to put forward your arguments, similarly I have all the rights to counter it..

            I am an NRI and understands the investment mindset of an NRI better than you..

            I will stick to saying that your argument that NRI will sell is hollow - Show me one NRI who sold/will sell on the back of the logic stated by you...

            But Yes I agree that 9.5% is an attractive rate of Interest (though I still feel people can make much more in a CLP investment of a good builder) and some of the NRI money may get invested here instead of RE...

            But selling RE in India and taking money back to dollars/pounds/Dhiram does not make sense to me my dear..See example below

            So if somebody has a $ 100,0000 dollars and he bought a house at $=44 Rs, he would have bought the house at 45,00,000 INR. Now assuming the property price as constant, if he sell at 1$ = 52 (Only a fool will do it) he will get back only 86,538 $. So till the point rupee is at these depreciated levels, no NRI will sell the RE and convert money into dollars, so a weak rupee will prevent a lot of NRI from selling their properties.

            Even who booked for trading purposes and want to book profit in rupee terms, will also be getting lower dollar returns, so they would want to stay invested till rupee comes back to 45/46 levels

            Amit 001,

            Never knew u r the spokesman of NRI community mindset...anyway how can u speak of NRI'S as a whole...some NRI's are buying some NRI's are selling...as always...nothing more nothing less..

            Comment

            • #7

              #7

              Re : NRI deposits highest ever at $1.7 bn in November

              Thanks Amit. I did not know that you are an NRI. Certainly your spectrum of knowledge about NRI issues is much wider than mine.

              However, whenever or wherever I talked about NRI selling RE, I never ever meant repatriation of proceeds. India is a better investment destination is beyond any doubt. There are other asset classes in India having more potential than RE. The smart guys are finding better avenues because RE is already at a plateau.

              Comment

              • #8

                #8

                Re : NRI deposits highest ever at $1.7 bn in November

                [QUOTE=amit001;313267]

                But saying that NRI will sell because rupee has depreciated is mathematically, financially and economically wrong..

                /QUOTE]

                Good point. I am an NRI and currency issues are least likely to affect my decision to invest or exit in a particular asset class. They may help me to time a particular decision after it has been made to make use of some short-term market conditions, but its not likely to affect the decision itself.

                Comment

                • #9

                  #9

                  Re : NRI deposits highest ever at $1.7 bn in November

                  Originally posted by Jawhar View Post
                  the NRI has actually taken a LOSS of 4% because dollar appreciated by 24% against rupee in the mean time.
                  NRI Investment horizons in real estate are typically at least 10 years. This is because repatriation of the funds (if the NRI takes a bank loan in India) requires the funds remain invested in real estate or some specific investments for a period of at least 10 years. So he's not going to worry too much with a 4% notional loss over the last 1.5 years.

                  Comment

                  • #10

                    #10

                    Re : NRI deposits highest ever at $1.7 bn in November

                    what happens to deposit of someone who is nri and then changes the status to resident indian..also nri from some countries like in australia are not allowed to be in stock trading..

                    what i am getting to is ..are there any disadvantages in taking nri status..?

                    Comment

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