NRI deposits fell 11% in FY2026 to $14.41 billion, down from $16.16 billion the previous year, with FCNR deposits seeing the sharpest drop, crashing from $7.08 billion to just $946 million.
Indians are investing abroad at a record pace — outward investment in global equity and debt surged 43.7% year-on-year to $440 million in March 2026, more than doubling within just three months.
India is witnessing a sudden and notable shift in its dollar flows. Outward remittances for investment in global equity and debt instruments are rising sharply. At the same time, non-resident Indians (NRIs) are sending fewer dollars back home. Effectively, more dollars are now leaving India than what the country is receiving from NRIs as deposits. While this is currently a short-term trend, whether it becomes a long-term pattern remains to be seen.
NRI Deposits Are Falling
NRI deposits have fallen by 11% in FY2026. Total inflows into India’s non-resident deposit schemes dropped to $14,413 million ($14.41 billion), down from $16,163 million ($16.16 billion) the previous year. Outstanding NRI deposits also dipped slightly — from $1,67,579 million at the end of February to $1,65,654 million at the end of March.
The sharpest fall was in the FCNR category. FCNR(B) deposits saw inflows crash to just $946 million in FY26, down from $7.08 billion in FY25 — a dramatic decline by any measure. Outstanding FCNR deposits currently stand at $33.76 billion, according to the RBI May bulletin.
What Is an FCNR Account?
FCNR, or Foreign Currency Non-Resident account, allows NRIs to save their foreign currency earnings in Indian bank accounts and earn higher interest rates than what is available in their country of residence.
The interest earned is tax-free, and both capital and interest can be repatriated in the original currency — eliminating currency exchange risk.
NRE and NRO Deposits — A Mixed Picture
NRIs can also open NRE and NRO accounts with Indian banks — both maintained in Indian Rupees, unlike the FCNR account, which can be held in any permitted foreign currency.
NRE deposits saw a healthy increase in inflows, reaching $7.9 billion in FY26, up from $4.7 billion the previous year. However, outstanding NRE deposits slipped to $98.5 billion in March, down from $99.7 billion at the end of February.
The NRO category also saw higher inflows — rising to $5.5 billion in FY26 from $4.3 billion the previous year. Total outstanding NRO deposits rose to $33.3 billion in March, up from $31.1 billion a year earlier. However, outstanding NRO deposits on a year-on-year basis dipped to $98,564 million in March 2026, from $1,00,733 million a year earlier.
There is an important difference between these accounts. The NRE account only permits inward remittance of income earned abroad, while the NRO account allows deposits from income earned in India — such as rent, pension, and dividends.
Indians Are Investing More Dollars Abroad
While NRI inflows are slowing, outward investment is accelerating — and fast. Investing abroad has now become the fastest-growing category for Indian remittances.
Investment outflows rose from $306.30 million in March 2025 to $440.22 million in March 2026 — a year-on-year rise of 43.7%, according to the RBI May bulletin.
The monthly numbers tell an even sharper story. Dollar outflows for overseas investment more than doubled in just three months — rising from $178.86 million in January 2026 to $440.22 million in March 2026. For the full year FY2025, total investment abroad in equity and debt stood at $1,698.94 million, with an average monthly outflow of $140 million. The current pace suggests FY2026 will significantly exceed that number.
The Bigger Picture
India remains one of the world’s top recipients of remittances. Total inflows have grown from $55.6 billion in 2010-11 to $118.7 billion in 2023-24, as reported by the Reserve Bank of India’s Remittances Survey 2025. In FY24, more than half of India’s remittances came from advanced economies such as the USA, UK, Singapore, Canada, and Australia — reflecting a shift in the global remittance landscape. Remittances from GCC countries, which were once dominant, have declined significantly.
What Needs to Change
The numbers put the situation in perspective. NRI deposits are still a substantial $165 billion annually, while outward investment abroad stands at around $1.7 billion — so the gap remains wide for now.
To attract more dollars and boost India’s forex reserves, the government will need to introduce new, attractively priced NRI deposit schemes — ones that can compete with the returns available in global markets and give NRIs a compelling reason to bring their dollars home. Currently, some Indian banks are offering rates of around 5% on FCNR deposits, while the Annualized Percentage Yield on deposits in US banks is also around 4%.
Disclaimer: This article is intended for general awareness only and should not be construed as investment, financial, or tax advice. Readers are advised to consult a qualified chartered accountant or financial advisor familiar with NRI banking and investment regulations before making any financial decisions.
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