|Good news has been following NRIs for the past one year. Lenient inward frequencies, great NRE (Non resident External) account rates, excellent exchange rates have been a blessing and boon for NRIs who want to send money back home in India.
A new decision was made by the Reserve Bank of India (RBI) tonow allow any individual to send money to India 30 times in one calendar year. Before this decision was made, an individual could only transfer money to India 12 times in a single calendar year. This is definitely going to be a great push to inward flow of capital into India. Inward remittances should touch $70 billion during the duration of 2012. This move by the Reserve Bank of India should better the inward capital amount into India. In 2011, the remittance amount was $64 billion and in 2010 it was $58 billion.
The World Bank’s Migration and Development report which was released in April 2012 stated that the increase in remittance is also due to 2 other reasons: Firstly, theincreasing exchange ratefor currencies around the world such as the Dollar, Pound, Euro, Australian Dollar, Singapore Dollar, the AED or UAED (United Arab Emirates Dhiram etc. Secondly, there has been a great increase in economic activity in the Gulf Cooperation Council countrieswhich has been a major destination for migrants recently.
To make the most of their money transfer to India, NRIs are borrowing money from banks abroad and sending that money back home to India. This is an opportune time for NRIs to make the best of the exchange rate.
The exchange rate for the rupee versus the dollar went from INR 50 per dollar to almost INR 56 per dollar at times. Also, to make this an even bigger form or reason of investment, NRE accounts have started giving a much higher interest rate for fixed deposits. Borrowing money from foreign banks and depositing them in high interest rate NRE accounts would yield a monthly interest which could payoff or offset the loan interest rate to be paid in the foreign country. This coupled with the fact that NRI deposit rates were deregulated and the interest rates for NRE and FCNR (Foreign Currency Non residential) accounts were increased. This is another factor which pushed the inward flow of money to increase over these past 2 years.
Keeping these factors in mind, NRIs should grab this opportunity and make the best while they send money to India.
To summarize the above, NRIs are facing a push towards sending earnings and their money back home to India.
The rising exchange rate of the Dollar versus the rupee is a prime factor. The deregulation of the FCNR and NRE this past year is a good reason for Indians to borrow money from International banks and send money to NRE accounts with the great exchange rate and get a good and pretty good interest rate on the fixed deposits in their NRE and FCNR accounts.