Foreign Currency Non-Resident (FCNR) deposits dropped 39% to $166 million in April 2026. However, overall NRI deposits remained stable as inflows into NRE rupee accounts surged 40% to $528 million. This shift reflects changing preferences among non-resident Indians regarding currency and interest rates.
What Happened
New data from the Reserve Bank of India (RBI) for April 2026 shows a sharp decline in Foreign Currency Non-Resident (FCNR) deposits. Inflows into these accounts fell 39% year-on-year to $166 million, down from $272 million in April 2025. Despite this, total inflows across all non-resident deposit schemes saw a slight rise, reaching $764 million compared to $751 million a year ago.
The overall stability was driven by a strong performance in Non-Resident External (NRE) rupee accounts. Inflows into NRE accounts jumped 40% to $528 million in April 2026, up from $376 million in the same month last year. Meanwhile, Non-Resident Ordinary (NRO) accounts saw a decline of 31%, receiving $71 million.
Why The Shift Between FCNR And NRE Matters
To understand this, it is helpful to distinguish between these account types. FCNR accounts allow NRIs to deposit money in foreign currencies like the US Dollar. Because the money is held in foreign currency, the bank bears the risk of exchange rate fluctuations. NRE accounts, however, are maintained in Indian Rupees. When NRIs choose NRE accounts, they are essentially taking the currency risk, or betting on the strength of the Rupee.
For Indian banks, this shift is often positive. When NRIs deposit money in NRE accounts, banks receive Rupee liquidity, which they can use for domestic lending without worrying about hedging against foreign currency volatility. A rise in NRE inflows suggests that non-resident investors are comfortable holding Rupee-denominated assets, which can be influenced by domestic interest rates and expectations of currency stability.
Full Fiscal Year Context
The trends observed in April are part of a broader pattern seen throughout the 2025-26 fiscal year. Total NRI deposit inflows for the entire FY26 were $14.41 billion, lower than the $16.16 billion recorded in FY25.
A significant part of this annual slowdown came from FCNR(B) accounts, which dropped to $946 million in FY26 from a much higher $7.08 billion in FY25. Conversely, NRE accounts showed resilience, attracting $7.94 billion in FY26 compared to $4.71 billion the year before. NRO deposits also grew, recording $5.53 billion in FY26 against $4.37 billion in FY25.
What Investors Should Track Next
The key factor to watch is the interest rate environment. NRI deposits are sensitive to the gap between interest rates in foreign countries (like the US) and rates in India. If global interest rates stay high or change, it can impact the attractiveness of Indian deposit schemes. Additionally, market participants will monitor the RBI's commentary on liquidity and the Rupee to understand if the preference for NRE accounts continues to provide consistent funding to the domestic banking system.