Overseas Indians withdrew nearly $2 billion from Indian bank accounts in March amid the Iran war, according to Reserve Bank of India data. The outstanding non-resident Indian deposits stood at $165.65 billion at the end of March, down from $167.58 billion a month ago. This contraction led to a significant decline in NRI deposit inflows to $14.41 billion in 2025-26, compared to $16.16 billion in the preceding fiscal year. The monthly net outflow in March suggests that non-resident Indians withdrew more deposits maintained in local banks than what they invested during the month.
The outflows were recorded across different account categories, with the non-resident external rupee accounts (NRERA) and non-resident ordinary (NRO) accounts experiencing withdrawals. According to RBI data, outstanding NRERA deposits stood at $98.56 billion at the end of March, down from $99.77 billion a year ago, while outstanding NRO deposits amounted to $33.33 billion against $34.09 billion. In contrast, outstanding foreign currency non-resident bank (FCNR(B)) accounts remained steady at $33.76 billion against $33.72 billion. The NRERA and NRO accounts were used by Indians working overseas, mostly in West Asian nations, while FCNR(B) accounts were used by Indians settled abroad, especially in the West.
Senior bank executives and economists expect the geopolitical uncertainties to have a more pronounced impact on NRIs in the long run. South Indian Bank managing director PR Seshadri told The Economic Times that the NRI deposit flow is likely to be impacted more "if the (West Asia conflict) issue continues over a longer period and people's livelihoods in those countries are impacted." The ongoing Iran war has created a challenging environment for Indian banks that rely on NRI deposits, particularly those with significant exposure to West Asian markets. Withdrawals were seen in Non-Resident External Rupee Accounts and Non-Resident Ordinary accounts during the conflict period.
