In a positive trend for the Indian banking sector, non-resident Indian (NRI) deposits witnessed an impressive 23% growth during the first 11 months of FY25. According to the Reserve Bank of India (RBI), inflows surged by Rs. 1,24,388 crore (US$ 14.55 billion) between April 2024 and February 2025, compared to Rs. 1,00,878 crore (US$ 11.8 billion) during the same period last year. The total value of outstanding NRI deposits at the end of February 2025 was recorded at Rs. 13,70,661 crore (US$ 160.33 billion).

Key Insights from NRI Deposit Trends
The growth in NRI deposits can be attributed to a variety of factors, including global economic conditions and India's attractive deposit schemes. The growth in foreign currency non-resident (FCNR) deposits played a major role, contributing a substantial Rs. 57,706 crore (US$ 6.75 billion) in inflows, up from Rs. 47,276 crore (US$ 5.53 billion) in the same period a year ago. This demonstrates the trust that NRIs place in India’s stable banking system and the benefits offered by these fixed deposit schemes.

The FCNR (B) accounts, which allow NRIs to maintain fixed deposits in freely convertible foreign currencies, have been gaining traction. These accounts offer protection against currency fluctuations, a significant concern for those living abroad. As of February 2025, the outstanding amount in FCNR (B) accounts stood at Rs. 2,77,757 crore (US$ 32.49 billion). These accounts offer competitive interest rates and hedge against currency risk, which continues to attract NRIs looking for secure and profitable avenues for their funds.

Another noteworthy contributor to the rise in NRI deposits is the NRE (Non-Resident External) deposits, which saw an inflow of Rs. 34,281 crore (US$ 4.01 billion) between April 2024 and February 2025, compared to Rs. 22,484 crore (US$ 2.63 billion) during the same period last year. This increase points to a growing preference for NRE accounts, which offer tax-free interest income and the flexibility of repatriation of funds.

Meanwhile, the NRO (Non-Resident Ordinary) deposits segment also saw consistent growth, with outstanding amounts reaching Rs. 2,55,615 crore (US$ 29.9 billion) by December 2024. These deposits are typically used by NRIs to manage their income earned in India, such as rental income or dividends.

Factors Driving the Growth in NRI Deposits
The strong inflows into NRI deposit accounts reflect the broader economic stability and the growing attractiveness of India as a destination for investment. While the monthly performance showed a minor dip, the overall trend remains positive, suggesting that NRIs are increasingly viewing India as a secure and profitable place to park their savings. Moreover, as interest rates in other global markets remain volatile, India offers a more stable and attractive return on investment, which likely contributed to the growing demand for Indian deposit products.

Another key factor is the RBI’s continued support for these deposit schemes. The central bank’s policies have been instrumental in ensuring that NRI deposits remain attractive by providing favorable terms, which includes the freedom to hold deposits in foreign currencies, thereby protecting against exchange rate risks. Additionally, as India's economy continues to show resilience in the face of global challenges, NRIs have gained confidence in the long-term growth prospects of the country.

Outlook for NRI Deposits
The outlook for NRI deposits remains positive, as the RBI's robust policies and India’s improving economic fundamentals are expected to continue driving the growth of these deposits. While the growth rate may not maintain the same pace as seen in FY25, the consistency and attractiveness of Indian deposit schemes are likely to keep them a preferred option for NRIs.

In conclusion, the substantial rise in NRI deposits during FY25 is indicative of the growing confidence that non-resident Indians have in India’s financial systems. With competitive interest rates and a strong regulatory framework, NRI deposits are expected to continue contributing significantly to the Indian economy in the coming years.

The Upcoming IPOs in this week and coming weeks are Ather Energy.

The Current active IPO are Tankup Engineers.

Start your Stock Market Journey and Apply in IPO by Opening Free Demat Account in Choice Broking FinX.

Join our Trading with CA Abhay Telegram Channel for regular Stock Market Trading and Investment Calls by CA Abhay Varn - SEBI Registered Research Analyst.