Despite fears of a slowdown, the Middle East turmoil was expected to result in a dip in inward remittances to Kerala, but quarterly figures from two major banks reveal no such decline. The clearest sign comes from Federal Bank. The latest quarterly results show that non-resident deposits grew 7% quarter-on-quarter to Rs 1,02,620 crore, crossing the Rs 1 lakh crore mark for the first time.
The total NR deposits rose from Q4 FY25 Rs 90,631 to Rs 1,02,620 in Q4 FY26, a YoY growth of 13%. Within that, NRE deposits rose from Q4 FY25 Rs 83,297 to Rs 93,660 in Q4 FY26, a YoY growth of 12.5%. Quarter on quarter, the NRE Deposits showed a growth of 7%, rising from Rs 87,402 crore to Rs 93,660 crore.
The significance of NRI deposits for Federal Bank can be seen from the quarterly data, which shows a 10% QoQ growth in NRE SB accounts. By comparison, resident deposits show a lower growth rate — a 6% increase in Avg CASA, a 4% rise in Resident SB, and a 5% overall growth in Total SB and Deposits on a QoQ basis.
South Indian Bank tells a similar story. For the QoQ ending March 2026, NRO Term Deposits led the pace at +9%, followed by FCNR/RFC at +11.1%. NRE Term Deposits were the slowest mover at just +1.7%.
On a YoY basis, NRO Term Deposits posted the strongest growth at +23.3%, while the Low-Cost NRI Deposit bucket grew a solid +20.7%. NRE Term Deposits, despite being the largest category, had the most modest YoY growth at +6.6%. Overall, South Indian Bank’s NRI deposits rose from Rs 31,602 crore to Rs 35,371 crore, a growth of 12% YoY, and from Rs 33,965 crore to Rs 35,371 crore, a QoQ growth of 4%.
NRI accounts
To understand these numbers better, it helps to know the three types of NRI accounts: Non-Resident (External) Rupee Account (NRE Account), Non-Resident Ordinary Rupee Account Scheme (NRO Account), and Foreign Currency (Non-Resident) Account (FCNR (B) Account).
One key distinction between NRI accounts is that NRE and NRO accounts are held in Indian Rupees, whereas the FCNR (B) Account can be maintained in any convertible foreign currency.
The broader national picture, however, is more mixed. According to the last released bulletin by RBI, the non-resident deposits recorded net inflows of US$ 11.0 billion in April-February 2025-26, lower than US$ 14.6 billion during April- February 2024-25. However, these figures are before the Iran war broke out.
One important factor shaping these trends is currency movement. The Indian rupee has depreciated significantly against the US dollar over the past year. The INR-USD exchange rate is also playing a role in the non-resident deposits, especially the FCNR deposits. The RBI data shows a big decline in net inflows under FCNR(B) deposits. Specifically, the FCNR deposits have fallen from $6,759 million for Apr.-Feb. 2024-25 to $911 in Apr.-Feb in 2025-26.
The next RBI bulletin will likely paint a better picture of the remittance by NRIs, especially from the Middle East nations.
Disclaimer: This article is based on publicly available data from Federal Bank, South Indian Bank, and the Reserve Bank of India. Some figures predate the outbreak of the Iran war and may not reflect the most current remittance trends. Readers are advised to refer to forthcoming RBI bulletins for updated data.