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Nonresident Deposits in India; In Search of Return?


  • Poonam Gupta
  • James P. F. Gordon


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.

Suggested Citation

  • Poonam Gupta & James P. F. Gordon, 2004. "Nonresident Deposits in India; In Search of Return?," IMF Working Papers 04/48, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:04/48

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    References listed on IDEAS

    1. Poonam Gupta & James P. F. Gordon, 2003. "Portfolio Flows Into India; Do Domestic Fundamentals Matter?," IMF Working Papers 03/20, International Monetary Fund.
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    Cited by:

    1. Ajay Shah & Ila Patnaik, 2010. "Managing Capital Flows: The Case of India," Chapters,in: Managing Capital Flows, chapter 9 Edward Elgar Publishing.
    2. Basu, Kaushik & Eichengreen, Barry & Gupta, Poonam, 2015. "From Tapering to Tightening:The Impact of the Fed’s Exit on India," India Policy Forum, National Council of Applied Economic Research, vol. 11(1), pages 1-66.
    3. Ajay Shah & Ila Patnaik, 2007. "India's Experience with Capital Flows: The Elusive Quest for a Sustainable Current Account Deficit," NBER Chapters,in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices and Consequences, pages 609-644 National Bureau of Economic Research, Inc.
    4. Jacques Bouhga-Hagbe, 2004. "A Theory of Workers' Remittances with An Application to Morocco," IMF Working Papers 04/194, International Monetary Fund.
    5. Jacques Bouhga-Hagbe, 2006. "Altruism and Workers’ Remittances; Evidence from Selected Countries in the Middle East and Central Asia," IMF Working Papers 06/130, International Monetary Fund.
    6. Jaroslava Durčáková & Ondřej Šíma, 2015. "BRICS: Interconnection of Exchange Rate, Balance of Payments and Foreign Exchange Reserve - the Example of India," Český finanční a účetní časopis, University of Economics, Prague, vol. 2015(1), pages 6-35.
    7. Ibrahim Sirkeci & Jeffrey H. Cohen & Dilip Ratha, 2012. "Migration and Remittances during the Global Financial Crisis and Beyond," World Bank Publications, The World Bank, number 13092, June.
    8. International Monetary Fund, 2006. "Determinants of Emigrant Deposits in Cape Verde," IMF Working Papers 06/132, International Monetary Fund.

    More about this item


    Capital flows; Foreign currency deposits; India; Nonresident Deposits; NRIs; foreign currency; equation; correlation; independent variables; statistics; Open Economy Macroeconomics; Nonreisent Deposits;

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