The Indian Panorama asked Mr. Rana Kapoor, MD & CEO of the Yes bank a couple of questions about the scenario with regard to NRI remittances, particularly in view of the depreciating rupee. Mr. Kapoor was kind enough to send reply to the questions asked. We give below excerpts from the interview.

Do you see greater inflows of remittances from NRIs in the USA over the next few months following the sharp plunge of the rupee vis a vis the US dollar?
We are already seeing higher inflows from the USA over the last few months aided by the depreciating Rupee and higher interest rates offered by Indian banks. With a series of steps taken by the RBI over the last fortnight, we expect the Rupee to stabilize around current levels and expect the flows to continue. We therefore see a majority of the Indian Diaspora in the USA, who were initially holding back their investments in India due to currency volatilities, to start remitting as the Rupee stabilizes. The long term growth outlook for India and the current level of interest rates still make it very attractive for NRIs to remit and invest in India on a medium to long term horizon.

In case the Indian government has a new NRI bond scheme – to boost its foreign exchange reserves – do you expect a good response from USA based NRIs?
We currently understand that the government is evaluating all options to shore up foreign capital over the short term. Issuing NRI bonds is one of the many options available. However NRI bonds may not be the first line of action in our view, considering the complexities involved in any such issuances. In the past three instances where such a bond was issued by India, it was very well received by the NRI community with a fairly large subscription coming from the USA. NRIs who had earlier invested in these bonds recorded handsome returns and we anticipate similar interest from NRIs in the USA, if the government plans to go ahead with the issuance.

Given the current sharp depreciation of Rupee, customers are likely to bear huge losses on account of currency movement. In this case are you witnessing a trend where the customers are rolling over their maturing deposits? Are customers likely to move their balances into FCNR account to prevent further currency impact?
With regard to depreciation of the Rupee, we have observed an increase in interest from NRIs to invest in INR deposits. Though, no specific trend has been observed with respect to rolling over of maturing deposits. Also, we have not seen NRI customers wanting to book FCNR (B) deposit from NRI deposits earmarking it to the current depreciation in Rupee.

While most people are concerned about the depreciating rupee, one group of people are happy about it – non resident Indians (NRIs). Will they get more value out of their bank deposits?
Bank deposits are highly liquid and give assured returns. At current interest rates, it is possible to lock into higher levels for longer periods in cases of Non Resident External (NRE) and Non Resident Ordinary (NRO) fixed deposits. Additionally, FCNR deposits can be used to insulate the deposit returns from currency fluctuations by keeping money in foreign currency.

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What is your comment on RBI deregulating the interest rate ceiling as far as the NRE/FCNR deposits are concerned. Do you think that is going to result in significant flows?
The deregulation of NRE deposit rate, increase in FCNR deposit rate, and the CRR/SLR relaxation for banks for incremental NRI deposits is a significant and attractive move by the RBI. This will prompt banks to further mobilize funds under these schemes to take advantage of the current levels of exchange rate and interest rate.

YES BANK, is a state-of-theart high quality, customer centric, service driven, private Indian bank catering to the “Future Businesses of India”, and is an outcome of the professional & entrepreneurial commitment of its Founder, Rana Kapoor, Managing Director & CEO. As the Professionals’ Bank of India, YES BANK has exemplified ‘creating and sharing value’ for all its stakeholders, and has created a differentiated Banking Paradigm.

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