Mumbai: Foreign currency non-resident (FCNR) deposits, have taken a beating due to the recent appreciation of the Rupee against major international currencies particularly the US Dollar. NRI's are now looking towards more greener pastures for investment as the interest rates offered by banks have softened. Real-estate and equity markets are attracting most of the investments at the moment.

According to a report on Trend and progress of Banking in India 2006-07, there has been a total outflow of Rs. 5,959 crore from the  non-resident foreign currency repatriable fixed deposits during the period April to September 2007. This effectively means that the NRI's have repatriated money from their accounts in India.

FCNR deposits are issued by most banks in major International currencies like the US dollar, British Pound, Japanese Yen, Euro, Canadian Dollar, Australian Dollar etc. The boom in Indian economy has led the Rupee to appreciate by as much as 12% against the US dollar during the last year alone.

The interest rates on FCNR deposits are regulated by RBI and are currently pegged at 75 basis points below the LIBOR. Banks cannot offer a higher interest rate on such deposits and this is worsening the situation. NRI's have been favoring FCNR deposits because of no tax deductions and loans can be availed against these deposits. But as most bankers agree, NRIs have been putting money in investment avenues like real estate and equity, mostly because of the performance of these sectors.