Nonresident Deposits in India: In Search of Return?

Author/Editor: Gordon, James P. F. ; Gupta, Poonam
Publication Date: March 01, 2004
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: This paper analyzes trends in the accumulation of NRI (nonresident Indian) deposits and investigates the determinants of these inflows. It finds that monthly deposit flows have been quite stable since the 1991 crisis; nevertheless, there have been occasions when monthly flows turned negative in the short run, coinciding with adverse domestic or external events. Econometric analysis shows that the NRI deposits are influenced by standard risk and return variables. In particular, NRI deposits respond positively to changes in relative interest rates on NRI deposits and LIBOR; negatively to political and geopolitical uncertainties, such as the government resigning in mid-term, and tensions on India's borders; and negatively to adverse external events, such as the Asian crisis.
Series: Working Paper No. 04/48
Subject(s): Transfers of foreigners income | India | Foreign currency deposit accounts | Capital flows

Author's Keyword(s): Nonreisent Deposits | Foreign Currency Deposits | Capital Flows | India | NRIs
Publication Date: March 01, 2004
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA0482004 Pages: 27
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