The ongoing geopolitical tensions involving Iran have significantly impacted the flow of funds from overseas Indians, with non-resident Indians (NRIs) withdrawing nearly $2 billion more than they deposited in Indian bank accounts during March. This development is based on data released by the Reserve Bank of India (RBI).
Decline in NRI Deposits
The total value of NRI deposits with Indian banks fell to $165.65 billion at the end of March, down from $167.58 billion a month earlier. Overall inflows into these deposits also slowed, dropping to $14.41 billion in the financial year 2025-26 from $16.16 billion in the previous fiscal year.
Account-Wise Breakdown
The decline was primarily observed in non-resident external rupee accounts (NRERA) and non-resident ordinary (NRO) accounts, where withdrawals surpassed fresh deposits during the month. In contrast, foreign currency non-resident or FCNR(B) account balances remained almost unchanged.
According to bankers, NRERA and NRO accounts are predominantly used by Indians working abroad, especially in Middle Eastern countries. FCNR(B) accounts, on the other hand, are generally utilized by Indians settled overseas, particularly in Western nations.
RBI Data Highlights
RBI data revealed that NRERA deposits stood at $98.56 billion at the end of March, down from $99.77 billion a year earlier. NRO deposits also declined to $33.33 billion from $34.09 billion. However, FCNR(B) deposits remained steady at $33.76 billion compared with $33.72 billion previously.
Impact of Geopolitical Uncertainty
Bankers and economists have warned that a prolonged period of geopolitical uncertainty could further affect NRI deposits. South Indian Bank managing director PR Seshadri had earlier stated that flows could be impacted more if the West Asia conflict continues over a longer period and people's livelihoods in those countries are affected.
This trend underscores the sensitivity of NRI deposit flows to geopolitical developments, particularly in the Middle East, where a large number of Indian expatriates work and send remittances back home.
