..... . VALI disclosures . .....: 24/06/26, RBI’s recent announcements aimed at attracting NRI dollar deposits have yet to demonstrate their effectiveness. The full impact of these measures will only be visible from RBI’s June 2026 data onwards. The timing of the RBI’s program allowing banks to offer higher rates on FCNR(B) deposits is crucial.

Wednesday, June 24, 2026

24/06/26, RBI’s recent announcements aimed at attracting NRI dollar deposits have yet to demonstrate their effectiveness. The full impact of these measures will only be visible from RBI’s June 2026 data onwards. The timing of the RBI’s program allowing banks to offer higher rates on FCNR(B) deposits is crucial.

According to RBI year-end data, FCNR(B) outstanding balances edged up from $32,809 million at end-FY2024-25 to $33,756 million at end-FY2025-26, a rise of $947 million or 2.89 per cent. Although year-end FCNR(B) balances increased slightly from $32.8 billion to $33.7 billion, the April 2026 data is a matter of concern. The April 2026 FCNR(B) inflows decreased by 39% to $166 million from $272 million in April 2025.

Early in the year, it became clear that the Indian rupee was losing ground to the US dollar, and an RBI dollar scheme akin to the one from 2013 was anticipated. That may have led NRIs to restrict their flows into FCNR deposits. The dip in inflows is likely to continue in the May data when it gets released next month. The April data predates all of this, and the impact will reflect from June 2026 onwards.

The RBI’s June 2026 Bulletin indicates that NRI deposit flows remained stable year-on-year, rising only marginally from $164,677 million to $165,654 million by March 2026. However, the April to March 2025–2026 inflow data show a total of $14,413 million (P).

Total NRI deposit

India’s non-resident deposit flows held nearly flat in April 2026, but the headline stability conceals a sharp divergence across the three main NRI deposit schemes. Total NRI deposit flows stood at $764 million in April 2026, up just 1.73 per cent from $751 million in April 2025. Beneath that near-stillness, the three categories moved in opposite directions.

Fresh inflows into Foreign Currency Non-Resident (Bank) deposits fell sharply, declining 38.97 per cent year-on-year to $166 million in April 2026 from $272 million in April 2025.

The weakness reflects a structural problem that persisted through much of FY2025-26: with US dollar rates holding above 4 per cent, Indian banks were unable to offer competitive FCNR(B) rates after absorbing hedging costs estimated at around 3.5 per cent.

Despite weak inflows, outstanding FCNR(B) balances rose from $33,081 million in April 2025 to $33,922 million in April 2026, an increase of $841 million, likely reflecting exchange-rate valuation effects and existing deposit rollovers rather than fresh mobilisation.

The full trajectory is visible in the outstanding data: FCNR(B) balances were as low as $26,216 million in April 2024 before climbing sharply to $32,809 million by March 2025, a build-up driven by the large FCNR(B) mobilisation of FY25. The FY26 inflow deceleration has since moderated further growth.

RBI Measures

The RBI moved aggressively to reverse this in June 2026. On June 8, it opened a special swap facility under which it absorbs the entire hedging cost on fresh three-to-five-year FCNR(B) deposits mobilised until September 30, 2026. On June 17, it lifted the interest rate ceiling on such deposits entirely, allowing banks to price freely.

Banks responded quickly. HDFC Bank, Bank of Baroda, PNB, Yes Bank, ICICI Bank, Axis Bank, and AU Small Finance Bank, amongst many others, raised their USD FCNR(B) rate to as high as 7.10 per cent.

NRE and NRO Deposits

NRE deposit flows were the clear outperformer in April 2026, rising 40.43 per cent year-on-year to $528 million from $376 million in April 2025. However, outstanding NRE balances actually declined from $101,112 million in April 2025 to $98,474 million in April 2026, a fall of $2,638 million, or 2.61 per cent year-on-year.

Non-Resident Ordinary deposit flows fell 31.07 per cent year-on-year to $71 million in April 2026 from $103 million in April 2025. NRO accounts are used to manage income earned within India — rent, dividends, pension, interest — and are not fully repatriable, making them less sensitive to global rate differentials and more dependent on domestic income events.

Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or legal advice. Data and estimates cited are sourced from publicly available reports and expert statements. Interest rates and scheme terms are subject to change as per RBI guidelines. Readers are advised to consult a qualified financial advisor before making any investment decisions.

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Trade Cycles

The four important features of Trade Cycle are (i) Recovery, (ii) Boom, (iii) Recession, and (iv) Depression!

The trades cycle or business cycle are cyclical fluctuations of an economy. A full trade cycle has got four phases: (i) Recovery, (ii) Boom, (iii) Recession, and (iv) depression. The upward phase of a trade cycle or prosperity is divided into two stages—recovery and boom, and the downward phase of a trade cycle is also divided into two stages—recession and depression.

Phases of Trade Cycle:

The phases of trade cycle are explained with a diagram:

(1) Recovery:

In the early period of recovery, entrepreneurs increase the level of investment which in turn increases employment and income. Employment increases purchasing power and this leads to an increase in demand for consumer goods.

As a result, demand for goods will press upon their supply and it shall, thereby, lead to a rise in prices. The demand for consumer’s goods shall encourage the demand for producer’s goods.

The rise in prices shall depend upon the gestation period of investment. The longer the period of investment, the higher shall be the price rise. The rise of prices shall bring about a change in the distribution of income. Rent, wages, interest do not rise in the same proportion as prices.

Consequently, the margin of profit improves. The wholesale prices rise more than retail prices. The prices of raw materials rise more than the prices of semi-finished goods and the prices of semi-finished goods use more than the prices of finished goods.

(2) Boom:

The rate of investment increases still further. Owing to the spread of a wave of optimism in business, the level of production increases and the boom gathers momentum. More investment is possible only through credit creation. During a period of boom, the economy surpasses the level of full employment and enters a stage of over full employment.

(3) Recession:

The orders for raw materials are reduced on the onset of a recession. The rate of investment in producers’ goods industries and housing construction declines. Liquidity preference rises in society and owing to a contraction of money supply, the prices falls. A wave of pessimism spreads in business and those markets which were sometime before sellers markets become buyer’s markets now.

(4) Depression:

The main feature of a depression is a general fall in economic activity. Production, employment and income decline. The prices fall and the main factor responsible for it is, a fall in the purchasing power.

The distribution of national income changes. As the costs are rigid in nature, the margin of profit declines. Machines are not used to their full capacity in factories, because effective demand is much less. The prices of finished goods fall less than the prices of raw materials.

✳Reality Tips to Traders

1)Trading in the stock market is a marathon. 2)Protecting your capital is key. (Learn to protect first) 3)Making 0 on the day is better than losing 50k 4)Losses happen; they are part of this business. 5)It’s not you vs. the market. It’s you VS you. 6)You are your biggest enemy; learn to be mentally disciplined. 7)Don’t follow the majority; follow the correct path. 8)Traders without a stop loss end up not being traders for long. 9)There is always another trade. 10)The big money is made waiting for the right set-ups. 11)Waiting for the right trade is the most powerful strategy. 12)It is better to cut a loss than to wait to be proven right. 13)Position sizing can make or break you. 14)Worry about the downside before you even think about the upside. 15)Don’t listen to headlines

..BANKING TERMINOLOGY

There are various types of Banks: PSU Banks, Private Banks, Co-operative/Regional Banks, Small Finance Banks and Foreign Banks. When you deposit money in a bank, let's say the bank gives you an interest rate of 4%. But when the bank lends out this money, they lend it out at say, 12%. The difference of 8% in the above scenario is effectively the profit of the bank! The loans that do not pay interest for 90 days are known as Non-performing Assets. Banks have to provide for such bad loans. Structure of a Bank Asset for a Bank: The asset portion of a bank's capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of credit, and inter-bank loans). Liabilities for a Bank: The bank's main liabilities are its capital (including cash reserves and, often, subordinated debt) and deposits. The latter may be from domestic or foreign sources (corporations and firms, private individuals, other banks, and even governments). Banks are required to maintain Liquidity with the Reserve Bank of India: SLR (Statutory Liquidity Ratio): It is the money a bank needs to preserve in the form of cash, gold or government Bonds before providing credit customers. This limitation is added by RBI on banks to make funds available to customers on-demand at your earliest convenience. Banks are required to maintain SLR at 18%. CRR (Cash Reserve Ratio): Banks are required to hold a certain proportion of their deposits in the form of cash. Banks don’t hold these as cash with themselves, but deposit such amounts with RBI / currency chests. CRR rate is at 4.5% currently. Repo Rate: The rate at which the RBI lends short-term money to the banks. The RBI through its Monetary Policy committee changes the repo rate to balance growth and Inflation. Reverse Repo rate: The rate at which banks park their short-term excess liquidity with the RBI. Now let us understand various terminologies for Banks Net Interest Income (NII): This is the spread the bank makes on its lending. It is calculated as Interest Income – Interest Expended Net Interest Margin (NIM): This is the spread the bank makes on its lending. It is the earning which is left after deducting the cost paid to depositors from its yields on Loans. This is denoted in % terms. The formula is Yield on Loans – Cost of funds Capital Adequacy Ratio (CAR): The capital adequacy ratio (CAR) is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. Essentially, it is the Capital that is available to lend. Tier I Capital – In simple words this capital is freely available with the bank to lend out. Tier II Capital- This is the capital tied up somewhere and is less freely available to lend. In case of an adverse event, the bank can use this capital to lend. Under Basel III norms, a bank’s tier 1+tier 2 capital must be a minimum of 8% of its risk-weighted holdings. The minimum capital adequacy ratio, also including the capital conservation buffer, is 10.5%. Current Account Saving Account (CASA)- There is no interest paid on the Current Account and a small interest rate is paid on a savings account. The combination of both is called CASA which shows the liabilities of the bank on which it pays relatively less interest. Deposits: Bank deposits are a savings product that customers can use to hold an amount of money at a bank for a specified length of time. In return, the financial institution will pay the customer the relevant amount of interest, based on how much they choose to deposit and for how long. Now let us come to NPA. Gross NPA (GNPA): It is the total loans on which no payment has been paid for 90 days or more. GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances. Slippages: Slippages denote the fresh amount of loans that have turned bad in a year. The slippage ratio of a bank is calculated as Fresh accretion of NPAs during the year /Total standard assets at the beginning of the year multiplied by 100. Provisioning Coverage Ratio (PCR): This is the ratio of provisioning to GNPA and indicates the extent of funds a bank has kept aside to cover loan losses. For Instance, a company has GNPAs of Rs 100 and they have set aside 50 Rs, then the PCR is 50%. Net NPA (NNPA): The total figure left after deducting provisions made for bad loans from GNPA. (GNPA – Provisions+upgrades/writeoffs = NNPA) Special Mention Account (SMA) SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days. SMA-1 is a category in which stress with respect to the principal and interest has remained overdue for a period of 30-60 days. SMA-2 is a category in which stress with respect to the principal and interest has remained overdue for a period of 60-90 days

..... . VALI disclosures . .....

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Wednesday, June 24, 2026

Total NRI deposit

RBI Measures

NRE and NRO Deposits

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