Indian diaspora withdraws $2 bn from banks amid West Asia turmoil

Kolkata: The Indian diaspora withdrew nearly $2 billion deposits maintained with local banks in March on net basis, amid the West Asia geopolitical conflicts, Reserve Bank of India data showed.

The outstanding non-resident Indian (NRI) deposits stood at $165.654 billion at the end of March as compared with $167.579 billion a month prior.

This monthly dent led to an annual contraction in NRI deposits inflows to $14.413 billion in FY26 from $16163 billion in the preceding fiscal.

Senior bank executives and economists expect the geopolitical uncertainties to have a more pronounced impact on NRI in the long run.

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South Indian Bank managing director PR Seshadri told ET in an interview earlier in the month that the NRI deposit flow is likely to be impacted more "if the issue continues over a longer period and people's livelihoods in those countries are impacted".

The monthly net outflow in March suggests that non resident Indians withdrew more deposits maintained in local banks than what they invested in the same month. The outflows were recorded in the non resident external rupee accounts (NRERA) and non-resident ordinary accounts while the foreign currency non-resident bank (FCNR(B)) account remained steady.

The NRERA and NRO accounts were used by Indians working on foreign soil, mostly in the Middle East and Gulf nations. The FCNR(B) account was used by Indians settled abroad, especially in the West, senior bankers said.

The outstanding NRERA deposit stood at $98.564 billion at the end of March as compared with $99766 billion while outstanding NRO deposit was at $33.334 billion against $34092 billion. In contrast, outstanding FCNR(B) deposits stood at $33.756 billion against $33720 billion, RBI data showed.