RBI data reveals highest NRI deposit inflows in over a decade, with strong gains in FCNR(B) accounts following a hike in interest rate caps.
NRIs drive record $16.2 billion deposit inflows in FY25, lured by high interest rates and weaker rupee. (Image: DC)
Mumbai: Non-Resident Indians (NRIs) took advantage of higher interest rates on deposits offered by domestic banks and a weak rupee sending a record amount of money back home in 2024-2025.
According to the RBI May edition of the Monthly Bulletin, inflows into NRI deposit schemes rose 10.20 per cent year-on-year to $16.2 billion in FY25, the highest inflow in 11 years. The inflows in NRI deposits was $14.7 billion in the year ago period.
Total outstanding NRI deposits reached $164.7 billion at the end of March 2025, up from $151.9 billion the same time last year. Sequentially, outstanding deposits were at $160.33 billion in February 2025.
NRI deposits comprise foreign currency non-resident banks deposits also referred to as FCNR(B) deposits, non-resident external (NRE) and non-resident ordinary (NRO) accounts. While FCNR (B) deposits can be maintained in foreign currency, essentially dollar deposits, they cannot be converted to the rupee and the foreign exchange risk is borne by the bank which accepts the deposit. On the other hand, an NRE account allows NRIs to deposit or save foreign earnings in Indian currency with full repatriability and tax exemptions on both interest and principal.
NRO accounts typically serve NRIs with income generated within India, such as rent, dividends, or pension payments.
The RBI data showed that in FY25, the maximum inflows came to FCNR (B) deposits. Of the total inflows of NRI deposits, $7.1 billion flowed to FCNR (B) deposits in FY25, around 13 per cent higher compared to $6.3 billion the year before. Outstanding amount in FCNR (B) accounts stood at $ 32.8 billion at the end of March 2025, showed the RBI data.
On the other hand, NRE deposits saw an inflow of $4.7 billion during 2024-2025 compared to $4.2 billion in the corresponding period a year ago. Outstanding NRE deposits stood at $100.7 billion in March 2025. However, NRO deposits saw a marginal growth with inflows of $4.4 billion in FY25, compared to $4.2 billion a year ago. The total outstanding amount in NRO deposits was $31.1 billion in March 2025.
The RBI in December 2024 increased the interest rate cap on Foreign Currency Non-Resident (Bank) [FCNR(B)] deposits allowing banks to offer rates up to 400 basis points above the Overnight Alternative Reference Rate (ARR) for deposits with maturities between one year and less than 3 years. This was a significant increase from the earlier limit of 200 basis points over the ARR.
( Source : Deccan Chronicle )
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