- Going forward, banks may need to introduce more competitive rates or offer innovative NRI financial products to attract global investors
- The trend also indicates a larger global recalibration as overseas Indians diversify their portfolios into equities, mutual funds, and international markets instead of long-term deposits
India witnessed a sharp decline in Non-Resident Indian (NRI) deposit inflows during the first half of FY26, according to newly-released data from the Reserve Bank of India (RBI). Between April and September 2025, total fresh NRI deposits stood at $6.1 billion, falling nearly 40% from the $10.2 billion recorded during the same period in FY25.
The steepest decline occurred in Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits, which dropped a dramatic 87% year-on-year. In July and August 2025, withdrawals from FCNR(B) accounts exceeded fresh contributions, signalling a major shift in preference among overseas Indians.
Analysts attribute this trend to the narrowing interest-rate differential between India and major global economies. With Indian rates sliding due to easing inflation and the US Federal Reserve maintaining comparatively higher rates amid inflationary pressure, NRIs find fewer incentives to park funds in Indian bank deposits
While FCNR(B) inflows collapsed, Non-Resident External (NRE) and Non-Resident Ordinary (NRO) deposits remained largely stable. A key factor supporting rupee-denominated accounts was the 4.5% decline in the Indian rupee in 2025, which offered favourable conversion benefits to NRIs.
Experts also point to a behavioural shift: an increasing number of NRIs are choosing Indian equities over fixed deposits. Rising stock-market participation, supported by stable economic growth and strong corporate earnings, has diverted capital away from traditional deposit instruments.
Despite the sharp fall in fresh inflows, the overall stock of NRI deposits increased modestly. As of September 2025, total NRI deposits stood at $165.9 billion, a slight rise from $161.6 billion a year earlier. This suggests that while growth has slowed, the base remains stable.
Economists say two major factors are influencing incremental NRI flows:
Reduced interest-rate advantage with the US and Europe.
Slower income growth among expatriates in Western countries, particularly amid economic uncertainty.
