The recent slowdown in inward remittances from non-resident Indians (NRIs) into Indian bank accounts has sparked concerns about NRI deposits being withdrawn from the country. However, according to Archit Gupta, the chief executive of ClearTax, the data presents a different picture, and India is not losing NRI deposits.
NRI Deposit Trends: A Closer Look
While fresh inflows into total NRI deposits (FCNR, NRE, and NRO combined) slowed down in April-March 2025-2026 compared to the same period in 2024-25, the total outstanding NRI deposit balances still remained higher on a year-on-year basis. In fact, NRE inflows have increased sharply during this period, while NRO deposits have also reported growth.
The moderation in overall inflows was largely driven by a slowdown in FCNR (foreign currency non-resident) deposits. Archit Gupta commented that the Reserve Bank of India (RBI) reports NRI deposit figures in US dollar terms, meaning rupee depreciation can make balances appear lower compared to previous periods even without actual withdrawals.
Rupee Depreciation and NRI Deposits
Archit Gupta explained that NRE accounts hold rupees, but the RBI reports them in US dollars. When the rupee weakens, the same balance shows up as a smaller dollar figure on paper. He stated that there’s no major outflow by NRIs, and it’s just how the number is reported. The rupee is currently trading at 95.66 per dollar.
Market Impact and Details
Total NRI deposits went up from $164.67 billion in March 2025 to $165.65 billion in March 2026. According to Archit Gupta, this rise was mainly driven by three factors. FCNR deposits slowed mainly because FY25 saw an unusually strong inflow driven by a temporary RBI policy.
The higher rates made FCNR very attractive for a few months, which is why FY25 saw $7.1 billion of inflows. That relaxation ended on March 31, 2025. Archit Gupta stated that once it ended, banks could no longer offer those elevated rates, and FCNR rates settled back down.
- FCNR deposits are held in foreign currency, mostly US dollars, and the interest rate is tied to global rates.
- With US deposit rates now in the 4 to 5% range, NRIs can earn similar returns on a dollar deposit in the US itself, without sending the money to India, narrowing the advantage of FCNR.
- NRE and NRO accounts are different, as they hold rupees and earn Indian deposit rates, which are higher than dollar rates.
Key Takeaways
- The total outstanding NRI deposit balances still remained higher on a year-on-year basis, despite a slowdown in fresh inflows.
- NRE inflows have increased sharply, while NRO deposits have also reported growth.
- The moderation in overall inflows was largely driven by a slowdown in FCNR deposits, which was affected by rupee depreciation and changes in global interest rates.
FAQs
What is the current trend in NRI deposits?
The current trend in NRI deposits shows a slowdown in fresh inflows, but the total outstanding NRI deposit balances still remain higher on a year-on-year basis.
Why did FCNR deposits slow down?
FCNR deposits slowed down mainly because FY25 saw an unusually strong inflow driven by a temporary RBI policy, which ended on March 31, 2025.
What is the impact of rupee depreciation on NRI deposits?
Rupee depreciation can make NRI deposit balances appear lower compared to previous periods, even without actual withdrawals, as the RBI reports NRI deposit figures in US dollar terms.
Conclusion
In conclusion, the recent slowdown in inward remittances from NRIs into Indian bank accounts does not necessarily mean that India is losing NRI deposits. According to Archit Gupta, the data presents a different picture, and NRI deposits remain a vital source of foreign exchange for India. As the Indian economy continues to grow, it is essential to understand the trends and factors affecting NRI deposits and to take necessary steps to attract and retain these deposits. For more information on NRI deposits and other financial topics, stay tuned to our website and follow our experts, such as Archit Gupta and Eshita Gain, who provide valuable insights and analysis on personal finance, markets, and business trends.
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