Barclays has released a new report showing that Foreign Currency Non-Resident (FCNR) inflows are missing high market targets. Many market analysts expected a massive wave of foreign money to enter India, but the actual speed of these deposits is much slower. This news is important for bank officers who handle NRI (Non-Resident Indian) accounts and foreign exchange desks.

The report states that actual FCNR inflows have only reached about $5 billion to $6 billion so far. This is a huge gap compared to market rumors that predicted inflows between $40 billion and $70 billion. Even Barclays had a more realistic target of $25 billion to $30 billion, which the market is still struggling to meet. FCNR(B) deposits are accounts where NRIs can keep money in foreign currency like Dollars or Pounds to avoid exchange rate risks.

Why is the response so quiet? In 2013, a similar RBI scheme was very successful, but things have changed. Today, interest rates in the United States are very high. When US rates are high, NRIs prefer to keep their Dollars in American banks or other global investments instead of sending them to India. The profit margin for moving money to India has become smaller for these investors.

There are also technical hurdles mentioned in the report. Problems with 'leveraged structures' (using borrowed money to invest) and specific setups in GIFT City (India's new international financial hub) have made it harder for some investors to join. These implementation issues have caused a delay in the expected flow of funds into the Indian banking system.

For Indian bank officers, this means there is more work to do to attract NRI customers. While the RBI took steps to make these deposits attractive, the global competition for cash is very tough right now. Banks cannot rely only on these special schemes to boost their foreign currency reserves quickly. Customers might also ask why Indian rates aren't high enough to beat US options.

Barclays warns that the Indian Rupee will stay under pressure for some time. This is because of several factors outside of banking, such as rising crude oil prices and wars in the Middle East. When oil prices go up, India needs more Dollars to pay for imports. This high demand for Dollars makes the Rupee weaker against the greenback.

Despite the slow start, Barclays still thinks the RBI’s measures will eventually help the Balance of Payments (the record of all transactions between India and the rest of the world). However, they expect the Rupee to continue a 'gradual depreciation' (losing value slowly). Bankers should prepare for a volatile period in the foreign exchange market.

In the coming months, the industry will watch if the RBI introduces more tweaks to the rules to make FCNR deposits easier to handle. For now, the 'hype' of a massive $70 billion windfall seems to be over. Bank staff should focus on steady growth and explaining the current global interest rate environment to their NRI clients.