Kerala: A Hub for Indians Living Abroad
By Vineeta Rao
Auckland, June 29, 2025
The Malayali community, known for its strong cultural ties and global presence, has been making significant economic waves recently.
In the year 2024-25, members of this community stood out not only for their rich culture but also for their impressive financial contributions. With a strong presence in Gulf countries, North America, and beyond, they have created a source of wealth that is fueling India’s economy, highlighted by a surge in money transfers and deposits from abroad.
According to the latest information from India’s Reserve Bank and Ministry of External Affairs, Malayalis are leading the way in wealth support for the country. Kerala now ranks second in receiving remittances, benefitting significantly from this inflow of funds. The overall remittance amount was reported at $263.7 billion, with Keralites playing a major role.
As of October 2024, total deposits from Indians living abroad in banks back home hit $263.7 billion, marking a 13% increase from the previous year. The main contributors? Malayalis, especially those based in Gulf Cooperation Council (GCC) countries.
Here’s how the deposits break down: Foreign Currency Non-Resident (FCNR) deposits were $52.5 billion, allowing NRIs to hold their funds in foreign currencies. Non-Resident External (NRE) rupee accounts, totaling $162.3 billion, let NRIs deposit foreign earnings in Indian Rupees while enabling full repatriation of funds. Non-Resident Ordinary (NRO) accounts accounted for $48.9 billion for managing income earned in India.
Local banks in Kerala, such as Federal Bank and South Indian Bank, along with national banks like SBI and ICICI, hold a significant portion of these deposits. Industry estimates suggest that over 35% of all NRI deposits come from Keralites, even though Kerala comprises less than 3% of India’s population.
Kerala Among Leaders in Remittance Inflows
When it comes to remittances, Maharashtra is at the top with 20.5%, followed closely by Kerala at 19.7% and Tamil Nadu at 10.4%. In 2023, Kerala alone received about $44 billion in personal remittances, dramatically increasing from $17.2 billion in 2018. This financial flow now constitutes nearly 20% of Kerala’s economy, making the state heavily reliant on foreign earnings.
Journey from the Gulf to the Global Stage
Kerala’s migration journey began in the labor wave toward the Gulf in the 1970s and ‘80s. Today, over 3 million Malayalis are working across the UAE, Saudi Arabia, Qatar, Oman, and Kuwait. Unlike earlier migration trends that mainly involved manual labor, current migrants are increasingly skilled professionals, including IT experts, nurses, and engineers.
Countries like the United States (23%), United Kingdom (11%), and Canada (7%) are now becoming key contributors to India’s remittances. Kerala has effectively utilized its skilled workforce and education to tap into this opportunity.
The Success Factors of the Malayali Diaspora
Several factors have contributed to Kerala’s strong economic presence abroad. The state’s early access to Gulf labor markets since the 1970s, high literacy rates, and professional skills, particularly in healthcare, have all supported this migration trend. Strong connections with Indian banks offering favorable deposit options have also played a significant role, resulting in a Diaspora that is both large and actively involved in India’s financial systems.
Looking Ahead: From Remittances to Investments
As many younger Malayalis now hold foreign passports, the next phase of Kerala’s economy will hinge on investments beyond just remittances. This includes areas like real estate, startups, and government-backed infrastructure initiatives aimed at NRIs.
“Kerala has created an outstanding model for economic resilience,” remarks Dr. S. Irudaya Rajan from the International Institute of Migration and Development. “The challenge now is to maintain engagement across generations and encourage investment back into the state.”
A Small State with Global Impact
While Maharashtra leads in overall remittances, the Malayali community makes a considerable impact relative to its size. Whether evaluated by per capita wealth, NRI deposit levels, or market presence, Kerala continues to showcase one of India’s most dynamic expatriate communities.
In a year when India saw $210 billion in remittances, the contributions of Malayalis highlighted how a small state can foster a globally connected and financially strong community, influencing the national economy positively.
Vineeta Rao is a reporter based in Auckland.
