Iran war squeezes NRI deposits, overseas Indians pull out nearly $2 billion in March

The Iran war is affecting money flows from overseas Indians, with NRIs withdrawing nearly $2 billion more than they deposited in Indian bank accounts in March, according to Reserve Bank of India (RBI) data. The total value of NRI deposits with Indian banks fell to $165.65 billion at the end of March from $167.58 billion a month earlier. Overall inflows into these deposits also slowed, dropping to $14.41 billion in 2025-26 from $16.16 billion in the previous financial year.The fall was mainly seen in non-resident external rupee accounts (NRERA) and non-resident ordinary (NRO) accounts, where withdrawals were higher than fresh deposits during the month. At the same time, foreign currency non-resident or FCNR(B) account balances remained almost unchanged. Bankers said NRERA and NRO accounts are mostly used by Indians working abroad, especially in Middle Eastern countries. FCNR(B) accounts, meanwhile, are generally used by Indians settled overseas, particularly in Western countries, ET reported. RBI data showed NRERA deposits stood at $98.56 billion at the end of March, down from $99.77 billion a year earlier. NRO deposits also declined to $33.33 billion from $34.09 billion. FCNR(B) deposits, however, remained steady at $33.76 billion compared with $33.72 billion earlier.Bankers and economists said a longer period of geopolitical uncertainty could affect NRI deposits further. South Indian Bank managing director PR Seshadri had earlier told ET that flows could be impacted more “if the (West Asia conflict) issue continues over a longer period and people's livelihoods in those countries are impacted”.