The foreign Indians are now depositing in the dollar deposits like FCNR (B) rather than the NRE (RA) deposits. As the rupee weakens this trend has been noticed among the overseas Indians.

Withdrawals of about $445 million in December and January from the NRE accounts have been a reason for worry for the Indian bankers. The same period saw a rise in the deposits of around $ 240 million in FCNR (B) deposits.

The trends had been the opposite just the few previous months before December. However, as the rupee weakened against dollars, and started trading at a historic low, customers sensed the growing risks in non resident external rupee accounts NRE (RA) deposits. They have played safe as although the interests in the interest earned in foreign deposits are lower, there are chances of making money if the rupee further weakens against the dollars. Rupee has dipped around 7 percent since December.

Moreover, the FCNR (B) is considered a less risky option amongst the NRI population as FCNR (RA) deposits are safe from the exchange losses. Hence, at this hour of rupee being depreciated, NRE (RA) deposits are not a safe place to park funds. The Central Bank expects the rupee to recover around Rs. 48.