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28 March 2024

Joy of remittance: Kerala banks hold Dh37 billion in NRI deposits

Published
By Parag Deulgaonkar

Banks in Kerala hold nearly Dh37.1 billion (Rs556.63 billion) in deposits from non-resident Indians, according to the state’s finance minister.

Deposits jumped by nearly 44 per cent to Dh37.1 billion in the first six months of 2012 compared to Dh25.6 billion (Rs385 billion) in 2011.

“In 2011 the total NRI deposits in Kerala banks was Rs385 billion and in June this year, it has touched Rs556.63 billion. One in 10 Keralites are abroad and the much-talked about Kerala model of growth was made possible by the Kerala diaspora,” Kerala Finance Minister KM Mani said at a recent event in the UAE.

Bank deposits more than doubled during April-October 2012 to Dh37.2 billion from Dh17.9 billion during the same period last year, the Reserve Bank of India (RBI) data reveals.

Inflow in the non-resident external rupee accounts reached Dh42.61 billion, which is five times more than last year.

After RBI deregulated interest rates on NRI deposits in December 2011, banks offered up to 10 per cent interest on fixed deposits for less than 12 months tenure. The rates have currently dropped to seven to eight.

Although depreciating Rupee benefits NRIs in terms of getting good exchange rates, the Indian economy actually suffers, making imports costlier and stoking inflation.

India Forex Advisors has reported that the pace of Rupee depreciation is much wilder than the pace of appreciation with the rupee weakening over the last 15 years. The Rupee has dipped by 27 per cent since December 2010.

"The decline in exchange rate value of the rupee makes imports expensive. In situations where the higher cost is passed on to the consumers, it would contribute to inflationary pressures and general price rise," Finance minister P Chidambaram had said when addressing the Indian Parliament.

As per the Kerala Migration Survey, the number of Kerala emigrants living abroad in 2011 was estimated at 2.28 million, up from 2.19 million in 2008.

Remittances from emigrants abroad to Kerala last year were estimated to be Dh35.5 billion compared with Dh30.92 billion in 2008.

Remittances were Dh4,523 per household in 2011 compared with Dh4,088 in 2008.

A World Bank report, released in November, said India was set to once again be the top recipient of remittances from its expatriate workforce, with the country estimated to gain $70 billion by way of inward remittances this year, a fifth more compared with $58 billion it received in 2011.

It cited “strong economic activity in the Gulf Cooperation Council countries” to be the primary driver of an increase in global remittances, with South Asia and the Mena region witnessing the strongest growth among developing countries.

 

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