$165 Billion In NRI Deposits And Banks Want To Convert It Into Investments - Top 5 Banks Offering Benefits

Indian banks are sitting on $164.7 billion in NRI deposits and they are expecting more. But this time, not just deposits. With NRI inflows growing 23% in FY 25 and remittances hitting the record around $135 billion (as per IBEF) , banks have realized the diaspora is an underleveraged wealth pool.

The strategy now is to convert one time deposit customers to long term investments clients, pushing mutual funds, insurance, home loans and portfolio managements services alongside the traditional fixed deposit. In short, the FD gets you in the door. Here's what everything you need to know.
Why Deposits Alone Don't Excite Banks Anymore.

A fixed deposit is simple but a low margin for the banks. The banks pays you interest, lends that money out at a higher rate, and keep the difference. That spread is thin.

Compare to a mutual fund, where the bank earns a distribution commission every year the NRI invested or a ULIP (unit linked insurance plan),which carries higher margin, or a home loan on Indian property which generates income for years.

Banks now are bundling NRI offering to include insurenace products, tax advisory support and real estate financing, positioning themselves as a one stop shop rather than a deposit window.
What Products Are Being Pushed.

The main being offered to NRI deposits are

- Mutual Funds via SIP - these are monthly investments starting as low as Rs. 500, linked to the NRE or NRO account. Equity mutual funds gains are texed at 15% for short term and 12.5% for long term holding beyond Rs. 1lakh.

- ULIP's and Insurance - life cover bundled with market- linked investments

- Home Loans - banks offer NRI a specific home loan products often using NRE/FCNR deposits as collateral

- Portfolio Managements Service (PMS) - for NRIs with larger investable amounts, typically above Rs. 50 lakh.

What NRIs Should Watch Out For

The bundling of product is not always in the customer's interest. A few things to look in:
First, not all mutual Funds houses accept onvestmensts from NRI's based in the US and Canada due to compliance rules, regulation for US and Canadian NRI's can be stricter than the NRI's in other countries. Always confirm the eligibility before signing up.(stated by policy bazaar)
Second, repatriation rules differ. NRE accounts allow full repatriation of both principal and returns, while NRO accounts allow repatriation of only up to $1 million per year. Which account your investment is linked to matters.

Third, tax deduction at source (TDS) applies at redemption on mutual funds for NRIs, the rate differs from what resident Indians pay.

Here Are The Top 5 Banks Offering Benefits To NRI's

Bank	NRE/NRO FD	Mutual Funds	Insurance / ULIP	Home Loan	PMS
SBI	✓	✓	✓	✓	✓
HDFC Bank	✓	✓	✓	✓	Limited
ICICI Bank	✓	✓	✓	✓	✓
Axis Bank	✓	✓	✓	✓	Limited
Kotak	✓	✓	✓	✓	Limited
Source: Bank websites (SBI, HDFC, ICICI, Axis, Kotak) - verified June 2025