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NRI Deposits Plummet 16% Amid Global Uncertainty
26 Feb
Summary
- NRI deposit inflows fell 16% to $11.20 billion in FY26.
- FCNR(B) deposits saw a sharp 68.4% decline to $2.04 billion.
- Expectations of a weaker rupee tacticaly shifted NRI deposit strategies.
Non-Resident Indian (NRI) deposit inflows experienced a significant moderation, declining 16% to $11.20 billion in the first nine months of FY26. This marks a reversal from the robust growth seen in prior years, including a 42.8% surge in FY25. Experts attribute this slowdown primarily to currency expectations, suggesting that NRI investors anticipated a weaker rupee amid global uncertainties, leading to a tactical shift in their deposit strategies.
Analysis of deposit categories reveals a sharp decline of 68.4% in FCNR(B) deposits, falling to $2.04 billion in FY26. These foreign currency-denominated accounts typically protect against exchange rate risks. In contrast, rupee-denominated NRE deposits grew by 41.7%, and NRO accounts increased by 24.3%. Repatriable accounts, comprising FCNR(B) and NRE deposits, are highly sensitive to interest rate differentials and currency expectations.
Looking forward, analysts predict that NRI deposit flows are likely to stabilize rather than see a significant surge. This stabilization is contingent on the Indian Rupee (INR) remaining stable and the Reserve Bank of India refraining from cutting policy rates. Any expectation of depreciation or policy rate cuts could potentially deter future deposits.
