NRI deposits show a dent despite softening rupee

Indian diaspora withdrew more money than it invested in local bank deposits since October last year despite the sharp depreciation of the rupee, possibly indicating a tighter job market overseas, especially in the Gulf countries, as well as a fear of uncertainty in the global economy amid a looming tariff war, said people familiar with the matter.

Reserve Bank of India (RBI) data showed that there was a net outflow of $1.5 billion between October 2024 and January this year in non-resident deposits while the rupee depreciated 3.3% during this period. The outstanding NRI (non-resident Indian) deposits stood at $161.2 billion at the end of January, down from $162.7 billion at the end of October last year.

Fresh inflows during this period fell to $2.4 billion against $11.9 billion in the first seven months of the financial year. «It appears the amount that can be saved has come down. This could hence reflect tight job markets. Low oil prices have affected income in the Gulf,» said Bank of Baroda chief economist Madan Sabnavis. «At the same time, fear of the future in the USA due to immigration rules would make such deposits sparser.»


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The fall in outstanding deposit amount was largely led by $2.4 billion outflows from non-resident external rupee accounts (NRE-RA), which normally increases when rupee depreciates. Outstanding NRE-RA stockpile of $98.5 billion at the end of January accounted for about 60% of NRI deposits.

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