Concerns about non-resident Indians (NRIs) withdrawing money from India have been gaining traction recently, especially after the Reserve Bank of India released data earlier this week showing a slowdown in inward remittances from NRIs into Indian bank accounts. However, a closer look at the numbers presents a very different picture.
While fresh inflows into total (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.
Commenting on the trend, Archit Gupta, the chief executive of ClearTax, told Mint that 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. The rupee is currently trading at 95.66 per dollar.
“NRE accounts hold rupees, but the Reserve Bank of India () reports them in dollars. When the rupee weakens, the same balance shows up as a smaller dollar figure on paper. There’s no major outflow by NRIs. It’s just how the number is reported,” he said.
Why outstanding NRI deposits rose despite lower inflows
Total NRI deposits went up from $164.67 billion in March 2025 to $165.65 billion in March 2026. According to Gupta, this rise was mainly driven by three factors.
- NRO balances grew from $31.1 billion to $33.3 billion. This wasn’t only interest; fresh inflows into NRO accounts in FY26 were $5.53 billion, higher than $4.37 billion the year before. NRO accounts hold money that NRIs earn inside India, like rent, dividends, and pensions. So this growth shows more income being earned and parked here.
- FCNR balances rose a little, from $32.8 billion to $33.76 billion. Even though new money coming in slowed down, the existing deposits are still earning interest and staying in the system.
- NRE balances declined from $100.7 billion to $98.56 billion, but this was largely due to valuation effects. Since NRE accounts hold rupees while RBI reports them in dollars, rupee depreciation can make balances appear lower even without actual outflows. In fact, fresh inflows into NRE accounts rose to $7.94 billion in FY26 from $4.7 billion in the previous year.
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Why are FCNR deposits slowing while NRE and NRO inflows rose?
FCNR deposits slowed mainly because FY25 saw an unusually strong inflow driven by a temporary RBI policy. In December 2024, when the rupee was under pressure and had hit a then all-time low of around 85 to the dollar, the Central bank raised the interest rate ceiling on FCNR deposits to attract dollar inflows.
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.
“Once it ended, banks could no longer offer those elevated rates, and FCNR rates settled back down. So part of the FY26 slowdown is simply the base effect of comparing against an unusually strong, policy-driven year,” Gupta said.
Another reason stated by the expert is that 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, he added.
Meanwhile, both NRE and NRO accounts are different. They hold rupees and earn Indian deposit rates, which are higher than dollar rates. NRE is used for foreign income that NRIs send home. NRO is for income earned inside India, like rent and pensions. The reasons NRIs use these accounts, like supporting family, buying property, or investing in Indian markets, are not driven by global interest rates. Hence, these inflows have remained strong, according to Gupta.