Overall Fresh Inflows Slow to $2.78 Billion in April–June; Special RBI Window Drives Strong Interest in Foreign Currency Deposits
Fresh inflows into Non-Resident Indian (NRI) deposit accounts declined 23 per cent year-on-year in the first quarter of FY27, even as Foreign Currency Non-Resident (Bank) or FCNR(B) deposits more than doubled. The contrasting trends highlight how a targeted Reserve Bank of India facility reshaped the mix of NRI savings coming into the country.
The Headline Numbers
According to official data, NRI deposit inflows stood at $2.775 billion during April–June 2026-27, down from $3.614 billion in the corresponding period of the previous year. Within this total, FCNR(B) inflows jumped about 124 per cent to $1.732 billion from $774 million a year earlier.
Outstanding FCNR(B) deposits rose to $35.487 billion at the end of June 2026, compared with $33.583 billion a year earlier and $34.038 billion at the end of May. Overall outstanding NRI deposits were little changed at $168.506 billion at end-June 2026 versus $168.327 billion a year earlier.
NRE rupee accounts and NRO deposits continued to form the bulk of the stock, with NR(E)RA balances at $98.757 billion and NRO deposits at $34.262 billion at the end of June.
Why FCNR(B) Outperformed
The sharp rise in FCNR(B) inflows is linked to a special swap window introduced by the RBI around the June monetary policy meeting. Under the facility, the central bank bore the cost of currency hedging to attract foreign currency deposits and strengthen India’s external position. The scheme drew substantial interest from NRIs and banks before the RBI advanced its closure for fresh deposits to August 31 from the originally indicated September 30 deadline.
FCNR(B) deposits are denominated in foreign currencies such as the US dollar, pound or euro and are not subject to exchange-rate risk for the depositor in the same way as rupee accounts. When the central bank subsidises the hedge cost, the effective return becomes more attractive, explaining the surge in this category even as overall fresh inflows moderated.
Broader Context
NRI deposits have long been an important source of stable foreign exchange for India. They typically rise when interest-rate differentials favour India, when the rupee is relatively stable, or when special incentives are offered. The latest quarter shows that while the aggregate flow of new money slowed, the composition shifted heavily toward foreign-currency deposits because of the temporary policy support.
The modest increase in the overall outstanding stock despite weaker fresh inflows suggests that existing deposits were largely rolled over, even as new money arrived at a slower pace outside the FCNR(B) window.
Implications for Banks and Policy
For banks, FCNR(B) deposits provide foreign-currency liabilities that can be used for trade finance or swapped into rupees. The special window temporarily improved the economics of such deposits. With the facility now winding down, banks will have to rely on regular pricing and customer relationships to retain these balances.
For policymakers, the episode demonstrates that well-designed, time-bound incentives can quickly mobilise NRI savings when external conditions warrant. At the same time, the 23 per cent drop in total fresh inflows indicates that without such support, the pace of new NRI money can ease, especially if global interest rates or rupee volatility reduce the relative attractiveness of Indian deposits.
Outlook
Market participants will watch whether FCNR(B) balances continue to grow after the special window closes or whether some of the recent inflows prove temporary. NRE rupee deposits, which remain the largest component of the NRI deposit stock, will depend on interest-rate differentials and rupee stability.
Overall NRI deposit outstanding remaining broadly stable year-on-year provides a degree of comfort for India’s external accounts. However, the slower pace of fresh inflows in the first quarter suggests that sustaining growth in this pool will require either competitive pricing or continued confidence in the Indian economy and currency.
The latest data therefore present a mixed picture: a clear policy-driven success in attracting foreign-currency deposits, set against a broader moderation in new NRI savings entering the banking system.
