Overseas Indians deposited approximately $4 billion into non-resident Indian (NRI) deposit schemes between April and June FY25, representing a significant 79% increase compared to the same period last year, as per data from the Reserve Bank of India (RBI) released on Monday. This surge contrasts sharply with a 24.39% drop in outward remittances under the RBI’s Liberalised Remittance Scheme (LRS), which totaled $6.9 billion for the quarter.
NRI deposits saw a substantial rise across various schemes. Foreign currency non-resident (FCNR) deposits attracted $1.68 billion, up from $1.12 billion a year ago, bringing the total outstanding balance to $27.41 billion. Non-resident external (NRE) deposits experienced a notable inflow of $1.53 billion, compared to $489 million in the same quarter last year, with total outstanding NRE deposits now approaching $100 billion. Non-resident ordinary (NRO) deposits also grew, with inflows of $743 million, up from $598 million, and total outstanding NRO deposits reaching $28.24 billion.
Outward remittances
Conversely, outward remittances showed a marked decline across most categories. International travel remittances decreased by 6% to $3.8 billion from $4.07 billion. Remittances for maintaining close relatives fell 46% to $983.2 million, and ‘gift’ remittances dropped nearly 41% to $811.9 million. Investments in equity and debt schemes saw a reduction to $318.02 million, down from $503.73 million, while remittances for deposits plummeted 61% to $164.7 million. Spending on overseas education decreased by 14% to $596.08 million from $694.41 million.
Notably, remittances for medical treatment rose by 43.5% year-on-year to $24.46 million, and donations increased by 3.6% to $4.29 million, reflecting a shift in priorities amid changing financial conditions.
The decline in outward remittances is partly attributed to recent changes in tax collection norms and a shift in spending behavior among Indians abroad. The introduction of tax collection at source (TCS) on remittances, which was implemented in July 2023, has impacted transaction volumes. The LRS scheme, allowing residents to remit up to $250,000 annually, continues to be utilized for various purposes, but with varying impacts on different sectors.
