Reserve Bank of India opens doors to NRI dollars in rupee fight
In its fight to lift the rupee, the RBI on 16 December deregulated non-resident external (NRE) rupee deposits and ordinary non-resident (NRO) accounts. RBI opened the gates to a flood of dollars.
While NRE deposits can be repatriated in dollars, NRO monies can’t, and are held in rupees in India. The RBI said banks are free to determine the interest rates they offer on both savings deposits and term deposits and banks can pay only interest rates comparable to local deposit rates. NRI deposits were coming in when RBI was trying to prevent the appreciation of rupee and the regulation. Mohan Shenoi said that it is a step in the right direction and we want more capital to come into the market.