Mumbai, Nov 16: Following a cap on NRE interest rates by Reserve Bank of India (RBI), banking entities have witnessed a drop in the inflows in these deposits consecutively for July and August, according to RBI data. The inflows to non-resident (external) rupee (NRE) accounts stood at USD 793 million in June. However, they declined to USD 495 million in July and slowed down further at USD 306 million in August, RBI said in its monthly bulletin for November.
The NRE deposits had witnessed inflows of US dollar 626 million in May 2003.
On July 17, 2003, the interest rates on the fresh NRE deposits of one-three year tenor were capped at 2.50 per cent above London-inter bank offered rate (LIBOR) to bring consistency in rates offered to NRIs and curb arbitrage opportunities.
The ceiling was brought down further to one per cent above LIBOR on September 15 and 0.25 per cent on October 18.
Total inflows to NRE accounts for April-August 2003 stood at USD 3.12 billion (USD 2.52 billion in same period of 2002-03), RBI said. Bureau Report