NRI Deposit Inflows Jump to $36.24 Billion on FCNR Surge

Deposits from non-resident Indians have surged to a record pace this financial year, giving the Reserve Bank of India a valuable source of dollar inflows as it battles a weak rupee and steady foreign selling in equities. Net inflows into NRI deposit schemes reached $36.24 billion in April-July 2026-27, compared with $4.66 billion in the same period a year earlier, according to RBI data reported by Business Standard and IANS on Sunday.

That is an increase of about 678 per cent, or nearly eight times the year-ago level. Almost all of the growth came from one category: Foreign Currency Non-Resident (Bank) deposits, commonly known as FCNR(B) accounts.

FCNR deposits do the heavy lifting

Inflows into FCNR(B) deposits jumped to $34.53 billion in April-July, from just $772 million a year ago. These deposits are held in foreign currencies such as the US dollar, which means the depositor does not bear the risk of a fall in the rupee. The bank taking the deposit, rather than the saver, carries the currency exposure.

The picture was very different for rupee-denominated accounts. Inflows into Non-Resident External (NRE) deposits, which are held in rupees and are freely repatriable, collapsed to $207 million from $2.42 billion a year earlier. Non-Resident Ordinary (NRO) accounts, typically used to manage income earned in India, saw inflows of $1.51 billion, broadly in line with $1.47 billion a year ago.

As a result, total outstanding NRI deposits stood at $200.89 billion at the end of July 2026. Of this, FCNR(B) accounts made up $68.28 billion, NRE deposits $98.02 billion and NRO deposits $34.59 billion.

The RBI’s swap window

The driving force behind the surge is a concessional swap facility that the RBI introduced in June for banks raising fresh foreign currency deposits. Under such arrangements, banks can swap the dollars they raise with the central bank at a favourable rate, reducing their cost of hedging and allowing them to offer attractive interest rates to non-resident depositors. The RBI, in turn, adds to its foreign exchange reserves.

India has used this playbook before. In 2013, during the “taper tantrum” when the rupee came under intense pressure, a similar RBI swap window for FCNR(B) deposits helped the country attract more than $30 billion in a few months and stabilise the currency. The current scheme appears to be having a comparable effect, arriving at a time when the rupee is trading near 96 to the dollar, crude oil is above $100 a barrel and foreign portfolio investors have pulled more than ₹2.4 lakh crore out of Indian equities so far this calendar year.

Outward flows have continued too. Remittances sent abroad by resident Indians under the Liberalised Remittance Scheme rose 4.7 per cent to $9.37 billion in April-July, according to the same data.

Why it matters

For the economy, the inflows are a timely cushion. India’s forex reserves have fallen sharply in recent weeks as the RBI sold dollars to defend the rupee, and every additional dollar that comes in through deposits reduces the strain on the central bank. Unlike portfolio flows into stocks and bonds, deposits tend to be stickier, as they are locked in for fixed tenures, typically one to five years for FCNR(B) accounts.

For banks, the scheme offers a relatively low-cost way to raise long-term funds at a time when domestic deposit growth has been a constant challenge and liquidity in the banking system has tightened. Lenders with large overseas customer bases and strong franchises in Gulf markets, the US and the UK are likely to have been among the biggest beneficiaries.

The sharp drop in NRE inflows, however, carries a signal of its own. It suggests that non-resident Indians are wary of taking on rupee exposure while the currency is weak and the outlook for oil and global interest rates is uncertain. Given the choice between a rupee deposit and a dollar deposit offering a competitive rate, savers are clearly choosing the latter.

There is also a cost dimension. When banks swap the dollars with the RBI at concessional rates, the central bank effectively absorbs part of the hedging cost. It also takes on a future obligation to return dollars when the swaps mature, which will need careful management in three to five years’ time.

What happens next

The next data point to watch is the August figure for NRI deposits, which will show whether the momentum has continued. Market participants will also watch for any announcement from the RBI on extending, modifying or closing the swap window, particularly around its monetary policy meeting from 5 to 7 October.

The impact on forex reserves and the rupee will be closely tracked, since the scheme’s success is ultimately measured by how well it steadies the currency. With crude prices elevated and US Treasury yields near 20-year highs, the RBI may need every source of stable dollar funding it can find in the months ahead.