Non-Resident Indians (NRIs) are setting much store by the returns on bank deposits in India. NRI deposit inflows in the first two months of the current financial year have nearly doubled compared to the same period last year.

In the April-May 2015 period, NRIs deposited $4.60 billion in Indian banks, against $2.50 billion in the corresponding period last year, according to Reserve Bank of India data.

NS Venkatesh, Executive Director, IDBI Bank, said the copious inflow into NRI deposits is because interest rates in India are attractive compared to the negative returns in the Euro Zone.

Moreover, no tax is applicable on interest earned on Foreign Currency Non Resident (Bank) accounts and Non-Resident (External) Rupee accounts, and this is an added attraction for NRI deposits, he added “India is an oasis of stability in the ocean of turbulence (in the global financial markets). This has imparted a positive momentum to the flows into NRI deposits,” said Venkatesh. As on May 2015, total NRI deposits stood at $118.41 billion against $107.49 billion in May 2014.

Rate of return A senior public sector bank treasury official said the rate of return in India for NRIs is positive, net of inflation.

“In the backdrop of the cost of living in India going up (requiring more money to be sent back home by overseas Indian for maintenance purposes), more Indians going overseas for jobs and the crisis engulfing the Euro Zone, the NRI deposit inflows are expected to go up further,” he said.

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