Malayalis lead India’s NRI wealth inflows

Kerala remains the vault of the Indian Diaspora

Vineeta Rao
Auckland, June 29, 2025

The Malayali Diaspora has long been celebrated for its social cohesion and global spread.

In 2024–25, Malayalis stood out not just for their cultural influence but also for their economic contributions. Across Gulf nations, North America, and everywhere else, the community has built an offshore wealth engine that is now powering India’s financial ecosystem through record-breaking inflows of non-resident deposits and personal remittances.

New figures from the Reserve Bank of India (RBI) and India’s Ministry of External Affairs confirm that Malayalis lead the country in NRI wealth contributions, with Kerala receiving the second-highest share of India’s remittance inflows and dominating NRI deposit markets by sheer volume. The total remittance was placed at $263.7 billion, out of which Keralites accounted for

As of October 2024, total NRI deposits in Indian banks reached $263.7 billion, up 13% from the year before. A major driver of this surge? The Kerala-origin Diaspora, particularly those based in the Gulf Cooperation Council (GCC) countries.

Breakdown of deposit types: Foreign Currency Non-Resident (FCNR) deposits: $52.5 billion. A Foreign Currency Non-Resident (FCNR) account is a fixed deposit account that allows NRIs to hold their deposits in foreign currency (not in Indian Rupees) in Indian banks.

Non-Resident External (NRE) rupee accounts: $162.3 billion. An NRE account allows NRIs to deposit foreign income in Indian Rupees, with full repatriation of both principal and interest.

Non-Resident Ordinary (NRO) accounts: $48.9 billion. An NRO account is used to manage income earned in India, such as rent, dividends, or pensions, by NRIs. Interest earned is taxable in India, and repatriation is limited and subject to RBI rules.

Kerala-based banks, such as Federal Bank, South Indian Bank, and the Kerala branches of national lenders like SBI and ICICI, hold a disproportionately large share of these deposits. Industry estimates suggest over 35% of all NRI deposits originate from Malayali individuals, despite Kerala making up less than 3% of India’s population.

Kerala Among Top Two in Remittance Receipts

In terms of total personal remittances, Maharashtra led India in FY 2023–24 with 20.5%, followed by Kerala at 19.7%, and Tamil Nadu at 10.4%.

In absolute terms, Kerala received an estimated $44 billion in personal remittances in 2023 alone, more than 150% higher than the $17.2 billion it received in 2018. These remittances now account for nearly 20% of Kerala’s Gross State Domestic Product (GSDP), making it more dependent on foreign earnings than any other Indian state. The depreciation of the rupee (from ₹74.3/US$ in 2021 to ₹86.5/US$ in early 2025), has also helped, making each dollar remitted worth more in rupee terms.

From the Gulf to the Globe

Kerala’s migration story started with the labour movement to the Gulf in the 1970s and ‘80s. Today, over 3 million Malayalis live and work across the UAE, Saudi Arabia, Qatar, Oman, and Kuwait. While that earlier wave was predominantly blue-collar, the 21st-century Malayali migrant is increasingly white-collar: IT professionals, nurses, engineers, and business owners.

This demographic shift is mirrored in geography. According to MEA data, the United States (23%), United Kingdom (11%), and Canada (7%) now contribute a growing portion of India’s remittances—an opportunity Kerala has effectively capitalised on thanks to its skilled labour force and educational attainments.

Why the Malayali Diaspora Outperforms

Kerala’s overseas wealth creation rests on several structural advantages. These include the early mover access to Gulf labour markets since the 1970s. The state’s high literacy rates and professional skills, especially in healthcare, support global migration.

They also have established relationships with Indian banks that offer favourable NRI deposit schemes. The result is a Diaspora that is not only large and global but consistently engaged with India’s formal financial channels.

What Comes Next: From Remittances to Investment

With many second and third generation Malayalis now holding foreign passports, the future of Kerala’s overseas economy lies not just in remittances, but in investments. This includes real estate, start-ups and small businesses, Diaspora bonds and mutual fund inflows, and government-backed NRI-targeted infrastructure investment vehicles.

“Kerala has built a unique model of transnational economic resilience,” notes Dr. S. Irudaya Rajan, Chair of the International Institute of Migration and Development. “The key question now is how to ensure intergenerational engagement and reinvestment into the state.”

Small State, Global Leverage

While Maharashtra’s broader Diaspora continues to top national remittance rankings, the Malayali Diaspora punches well above its weight. Whether you measure by per capita wealth transfers, NRI deposit density, or Gulf market penetration, Kerala remains India’s most economically potent expatriate community.

In a fiscal year when India recorded $210 billion (US$129 billion) in remittance inflows, Malayalis once again demonstrated that a relatively small state can build a globally distributed, financially robust community, one capable of shaping national economic outcomes.

Vineeta Rao is an Indian Newslink Reporter based in Auckland.

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