The global Indian diaspora has poured an unprecedented amount of money into India's banks this year, providing a crucial cushion for the rupee and the country's finances as oil prices surge and foreign portfolio investors pull back.
Inflows into deposit schemes for non-resident Indians (NRIs) reached $121.94 billion in April to August 2026, according to Reserve Bank of India data reported by Business Standard on Friday, October 23. That compares with about $5.6 billion in the same period a year earlier, an increase of more than 21 times.
The outstanding balance of NRI deposits stood at $286.48 billion at the end of August, up from $200.89 billion just a month earlier and $166.80 billion a year before.
The FCNR(B) surge
Almost the entire increase came from Foreign Currency Non-Resident (Bank) deposits, known as FCNR(B) accounts, which allow NRIs to hold deposits in foreign currencies such as the US dollar, pound or euro, without exposure to rupee fluctuations. Inflows into FCNR(B) deposits totalled $120.94 billion in April-August, taking the outstanding balance to $154.69 billion.
By contrast, Non-Resident External (NRE) rupee deposits saw an outflow of $1.29 billion, with outstanding balances slipping to $96.43 billion. Non-Resident Ordinary (NRO) accounts, which hold income earned in India, recorded inflows of $2.29 billion, with balances of $35.35 billion.
The RBI's swap window
The surge followed a policy move by the RBI. In June 2026, the central bank introduced a concessional foreign exchange swap facility to encourage banks to mobilise foreign currency deposits. Under such arrangements, banks that raise dollar deposits can swap them with the RBI for rupees at favourable rates, reducing their cost of hedging and allowing them to offer attractive interest rates to depositors.
Banks mobilised $133 billion under the facility up to August 31, according to the RBI data. The window allowed banks to raise fresh FCNR deposits until September 30.
The measure echoes a similar scheme in 2013, when the RBI offered a concessional swap window for FCNR(B) deposits during a period of severe pressure on the rupee, the so-called "taper tantrum." That scheme attracted about $34 billion. This year's inflows are far larger, reflecting both the scale of the diaspora's wealth and the attractiveness of the terms.
Why India needed the money
The timing is significant. India has faced pressure on its currency and reserves this year as oil prices surged amid conflict in West Asia, foreign portfolio investors sold Indian equities, and US interest rates climbed. The rupee has weakened to around 95 per dollar.
The RBI made record net dollar purchases of $43.26 billion in August, helped by the deposit inflows, building its reserves to a record $785.7 billion in early September. Since then, reserves have fallen by about $65 billion as the central bank has sold dollars to support the rupee, but the diaspora inflows have provided a crucial buffer.
Why NRIs responded
For NRIs, FCNR(B) deposits offered an attractive combination: interest rates that were competitive with or higher than those available in their countries of residence, no currency risk because deposits are held in foreign currency, and the safety of Indian banks. Interest earned on FCNR(B) and NRE deposits is also exempt from Indian income tax for NRIs, though it may be taxable in their country of residence.
