NRI deposit inflows slow to $ 2.8 billion in Q1 FY27

Non-resident deposits with Indian banks recorded a net inflow of US$ 2.8 billion in the first quarter of 2026-27, down from US$ 3.6 billion in the same quarter a year earlier, according to the Reserve Bank of India’s latest balance of payments data.

The latest figures show that while NRI deposits continued to bring foreign currency into the Indian banking system, inflows moderated by around 22 percent year-on-year during April-June 2026.

For overseas Indians, NRI deposits include accounts such as FCNR(B) deposits, which allow NRIs to hold their deposits in designated foreign currencies rather than in rupees. This also means that the principal and interest on FCNR(B) deposits are not directly exposed to rupee depreciation during the deposit period.

The moderation in NRI deposit inflows comes after the RBI introduced a special swap facility for FCNR(B) deposits on June 8, 2026, aimed at encouraging banks to mobilise foreign-currency deposits. It was closed on August 31, 2026.

Under the facility, banks can swap the foreign currency raised through eligible FCNR(B) deposits with the RBI for rupees for a specified period. This helps banks manage the currency risk associated with raising foreign-currency deposits and can improve the attractiveness of mobilising such funds.

For NRIs, the move is relevant because banks may have greater room to offer competitive interest rates on FCNR(B) deposits, although the actual rate offered depends on the bank, currency and deposit tenure.

NRI deposits remain an important source of foreign currency

The RBI’s data show that NRI deposits remain a source of foreign-currency inflows for India even as the country’s external deficit widened. India’s current account deficit increased to US$4.2 billion, or 0.5 percent of GDP, in Q1:2026-27 from US$3.4 billion, or 0.4 percent of GDP, a year earlier.

The merchandise trade deficit also widened to US$ 86.1 billion from US$ 68.9 billion during the same period. Against this backdrop, measures that help banks attract foreign-currency funds, including from NRIs, become particularly relevant.

For NRIs, the latest numbers bring attention to the interest rates offered on FCNR(B) deposits, currency of the deposit and tenure before deciding where to park overseas savings. While FCNR(B) deposits avoid direct rupee exchange-rate risk, returns can differ significantly depending on the currency and prevailing deposit rates.

The RBI’s June swap facility is therefore relevant not just for banks looking to raise foreign currency, but also for NRIs as it could influence the rates banks are willing to offer on FCNR(B) deposits.

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