A recent data by the Reserve Bank of India has revealed the impact of the Middle East conflict on the NRI deposit flow, raising concerns by banking experts over an adverse consequence of the situation on NRIs.

In the middle of the Iran war in March this year, overseas Indians had made net withdrawals of nearly $2 billion from their domestic bank accounts, causing a contraction in NRI deposit inflows to $14.41 billion in 2025-26 from $16.16 billion in the preceding fiscal.

The outstanding NRI deposits stood at $165.65 billion at the end of March against $167.58 billion a month ago.

Banking experts say that the NRERA (non-resident external rupee accounts) and NRO (non-resident ordinary) accounts were largely used by Indians working in the Middle East, while the FCNR(B) (foreign currency non-resident bank) account was used by Indians settled abroad, mostly in the West.

The monthly net outflow in March suggested that NRIs had withdrawn more deposits maintained in local banks than what they had invested during the month.

The outflows were recorded in NRERA and NRO accounts. The FCNR(B) accounts were noticeably steady.

The outstanding NRERA deposits stood at $98.56 billion at the end of March, as against $99.77 billion a year ago. The outstanding NRO deposits amounted to $33.33 billion against $34.09 billion. – Image credit: freepik – editor@nrifocus.com