KOCHI: Kerala is on the verge of crossing a major financial milestone: deposits from non-resident Indians (NRIs) in its banks are likely to cross Rs 3 trillion in the January-March 2025 quarter, if the last year’s trend continued.
As of December 31, 2024, non-resident (NR) deposits stood at Rs 2,86,063 crore -- up nearly Rs 24,000 crore from the year before. This marks a 9.4% increase year-on-year. The data for this year’s January-March quarter is yet to be released.
NR deposits are foreign currency accounts maintained by NRIs, different from personal remittances sent to families. Even so, a large part of remittances ends up in these accounts, driven by interest rates and currency exchange benefits.
It has been a steady climb. Kerala crossed the Rs 1-trillion mark in NR deposits back in December 2014. It doubled that figure by March 2020. And in the last five years alone, deposits have grown by another Rs 1 trillion.
One key driver has been the weakening of rupee. Over the past five years, the Indian currency has depreciated from Rs 75.71 per US dollar to Rs 85.45 -- a 13% drop. This adds more value to every dollar sent home, boosting deposits.
Remittances have also made a strong post-pandemic recovery, with a 19-20% increase. Kerala accounted for 19.7% of all remittances to India in 2023-24, second only to Maharashtra at 20.5%. In 2020-21, Kerala’s share dipped to 10.2% while Maharashtra surged ahead to 35.2%. But Kerala has since closed much of the gap.
According to Reserve Bank of India’s March 2025 bulletin, India received $118.7 billion in remittances in 2023-24 -- more than double the $55.6 billion recorded in 2010-11. Kerala alone accounted for $23.39 billion. The United States is now the top source (27.7%), followed by the UAE (19.2%). Back in 2016-17, the UAE led with 26.9%. Grouping the UAE with other Gulf countries -- Saudi Arabia, Qatar, Kuwait, Oman and Bahrain -- takes their combined share to 37.9%.
According to K V Joseph of the International Institute of Migration and Development, remittances from the Gulf may fall in the coming years, while inflows from the US, the UK, and Canada could rise. Gulf countries, he noted, have limited space for skilled workers. Larger countries like the US offer more opportunities, though policy changes -- especially in the US -- remain a concern.
Dr Divya Balan, assistant professor of international studies at FLAME University, Pune, sees a more complex picture. While students and skilled workers are increasingly heading West, she believes the Gulf will remain important for many Malayalis.
She points to a shift in migrant profiles: more students, more professionals, and more loans taken to finance migration. This, Divya says, could help maintain strong inflows -- especially if migrants secure long-term employment and residency.