The Indian Diaspora
NRI Deposits and Investment
How NRIs keep money in Indian bank accounts, invest in property and markets, and how India has tapped diaspora funds during crises.
NRIs hold large amounts of money in India.
NRI accounts
- NRE accounts: foreign earnings deposited in rupees, freely repatriable, with tax-free interest in India.
- NRO accounts: income earned in India.
- FCNR deposits: held in foreign currency, avoiding exchange rate risk.
Scale
NRI deposits in Indian banks exceed 150 billion dollars.
Crisis funding
- In 1998, after nuclear tests and sanctions, India raised about 4.2 billion dollars through Resurgent India Bonds from NRIs.
- In 2000, India Millennium Deposits raised about 5.5 billion dollars.
- In 2013, the RBI offered banks a special swap window for FCNR(B) deposits, attracting about 34 billion dollars to support the rupee.
Investment
- NRIs invest in real estate, stocks and mutual funds.
- Property in home towns is popular.
Why NRIs invest at home
- Higher interest rates than in many host countries.
- Family ties and plans to return.
The FCNR deposit
An engineer in Dubai deposits dollars in an FCNR account in Kochi, earning interest in dollars without worrying about the rupee falling.
Thinking NRIs send money only to families
They also hold large deposits and investments in India.
Key takeaways
- NRIs use NRE, NRO and FCNR accounts.
- NRI deposits exceed 150 billion dollars.
- India raised diaspora funds in 1998, 2000 and 2013 crises.
- NRIs invest in property, stocks and funds.
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