Overseas Indians pulled out nearly two billion dollars from Indian bank deposits in March 2026. The sudden withdrawal came as the Iran war and rising geopolitical tensions created uncertainty for many non‑resident Indians working in West Asia.
According to Reserve Bank of India data, total outstanding deposits fell to 165.65 billion dollars in March from 167.58 billion dollars in February. Annual inflows also dropped to 14.41 billion dollars in FY26 compared with 16.16 billion dollars in FY25.
The biggest fall was seen in Non‑Resident External Rupee Accounts, which slipped to 98.56 billion dollars from 99.77 billion dollars. Non‑Resident Ordinary accounts also declined to 33.33 billion dollars from 34.09 billion dollars. Foreign Currency Non‑Resident accounts remained steady at 33.76 billion dollars.
Bankers say the conflict in West Asia has raised concerns about the livelihood of NRIs in the region. Many are choosing to reduce exposure to Indian deposits until the situation stabilises.
PR Seshadri, Managing Director of South Indian Bank, warned that deposit flows could weaken further if the war continues. Economists believe the long‑term impact may be felt most among NRIs in Gulf countries, while deposits from Western nations remain stable.
The fall in inflows may affect banking liquidity and foreign exchange reserves. Experts suggest that banks and the RBI may need to offer better incentives to attract deposits back.