CHENNAI: A weak rupee was among the reasons that made foreign currency deposits attractive for NRIs. The net inflow under foreign currency non-resident (B) accounts increased by 11% to $7.1 billion in FY25 from $6.4 billion in FY24. It comes after NRIs pulled out their deposits earlier, turning the category negative during 2020-21 and 2021-22.Data available in RBI’s annual reports shows that FCNR (B) recorded a net outflow of $3.8 billion and $3.6 billion during two pandemic years of 2020-21 and 2021-22, respectively. However, its net inflow revived during 2022-23 and stood at $2.4 billion.In FY25, the net inflow under non-resident deposits basket comprising non-resident external (rupee) account (NRE), non-resident ordinary (NRO) account and FCNR (B) was at $16.2 billion, the highest in the past 11 years. Of this, FCNR (B) share was 44%. RBI raising the interest rate caps on FCNR (B), allowing banks more freedom to offer better returns also fuelled its growth.FCNR(B) account is a type of fixed deposit account designed specifically for NRIs and persons of Indian origin (PIOs). The money is held in international currencies such as the dollar, British pound, euro, Australian dollar, Canadian dollar, Swiss franc, and Japanese yen, which protects depositors from exchange rate fluctuations. While the duration of term deposits ranges from 1 year to 5 years, interest earned on FCNR(B) accounts is tax-free in India.Private sector South Indian Bank, which has a sizeable NRI customers base particularly in the Gulf countries, says it has experienced a steady growth in NRE, NRO, and FCNR(B) accounts over the last three financial years at 3%, 5% and 6%, respectively. “The relative strength and stability of foreign currencies such as the US dollar further incentivized NRIs to invest in these accounts. Additionally, the depreciation of the rupee enhanced the appeal of foreign currency deposits as a hedge against exchange rate risk,” said Biji S S, senior general manager and head of branch banking, South Indian Bank.Tanvi Kanchan, head – NRI business & strategy, Anand Rathi Shares and Stock Brokers said, “Looking ahead to FY26, inflows are expected to rise further. This is because interest rates in India are still relatively high.”