Indian Diaspora Turns to Local Banks Amid Rising Deposits
The Indian diaspora is increasingly choosing local banks for their savings, leading to a significant rise in deposits that have reached their highest level in a decade. According to the latest data from the Reserve Bank of India, deposits from Non-Resident Indians (NRIs) grew by 10% year-on-year, totaling $16.2 billion in the fiscal year 2025, up from $14.7 billion the previous year. This marks the largest inflow in 11 years.
Both foreign currency non-resident (FCNR(B)) and non-resident external (NRE(RA)) accounts have seen impressive growth, indicating attractive returns in Indian markets. Out of the total NRI deposits, $7.1 billion was funneled into FCNR(B) accounts—dollar-denominated deposits that minimize currency risk for account holders. This represents an 11% increase compared to the prior fiscal year.
Industry experts noted that NRIs are enjoying better rates for their deposits in India—about 50 to 60 basis points higher than in their home countries. Joy P V, an executive at Federal Bank, explained that many NRI clients are locking in these deposits, believing interest rates have peaked and may begin to decline due to a decrease in the RBI repo rate. The competitive market among banks, which offered appealing rates to attract deposits, has also played a role. Additionally, the depreciation of the Indian rupee has made investing in India even more appealing for NRIs, enhancing their potential returns.
The inflow into NRE(RA) accounts, which are rupee-denominated and carry more currency risk, also increased, rising to over $9.1 billion in FY25 from $8.3 billion the year before.
Overall, the trend highlights a growing confidence among NRIs in the Indian banking system, fueled by attractive interest rates and the potential for better returns despite currency fluctuations.
