Reserve assets rose by USD 34.8 bn, net claims of NRI decreased by USD 12.2 bn: RBI

According to the RBI, there was a USD 34.8 billion increase in reserve assets, while net claims of non-residents on India decreased by USD 12.2 billion.

The Reserve Bank of India disclosed the latest data on India’s International Investment Position (IIP) as of December 2023, revealing a decline in non-residents’ claims on India by USD 12.2 billion during October to December 2023, reaching USD 370.4 billion by December 2023.

This decrease is partly due to the rise in reserve assets, which surged by USD 34.8 billion in the third quarter of 2023-24.

The RBI attributes this decline in net claims primarily to a significant increase in Indian residents’ overseas financial assets, amounting to USD 40.7 billion, surpassing the rise in foreign-owned assets in India, which was USD 28.5 billion.

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Reserve assets constitute over 85 percent of the increase in foreign assets held by Indian residents, emphasizing their crucial role in enhancing India’s global financial standing. Conversely, India experienced a growth in foreign liabilities due to increased inward direct investments, portfolio investments, and loans obtained by resident entities.

Despite a slight decrease in trade credits, the influx of investments and loans from abroad contributed to the rise in India’s foreign liabilities. Reserve assets make up a significant portion of India’s international financial assets, comprising 63.9 percent of the total.

Meanwhile, the share of debt liabilities in the country’s external liabilities remained steady at 50.4 percent.

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One notable trend indicated in the report is the improvement in the ratio of India’s international financial assets to liabilities, which increased to 72.4 percent by December 2023 from 70.9 percent in the previous quarter, indicating a more favorable balance between assets and liabilities in India’s international financial transactions.

The latest data on India’s International Investment Position illustrates dynamic changes in the country’s financial landscape, with reserves playing a crucial role in strengthening its position amidst evolving global economic dynamics.