The weakening of Indian currency since second quarter of current fiscal seems to have given a boost to foreign remittances to India as non-resident Indians (NRIs) have poured-in huge sum of money in the form of deposits to take advantage of higher valuation of US Dollar.
A latest report from Gujarat State Level Bankers' Committee (SLBC) revealed that non-resident Indian (NRI) deposits in Gujarat have grown by Rs 1201 crore at Rs 23,990 crore during the quarter ended September 2011, compared to Rs 22,789 crore in June quarter. Sources in the banking circle anticipate this figure to swell up further in the third quarter ending December 2011.
"The NRI deposits in Gujarat banks have grown by Rs 1201 crore during September quarter against a fall of Rs 188 crore recorded in the June quarter this year. The growth has come mainly due to higher value of US dollar against Indian currency, while in some incidences, it is clubbed with NRIs' preferences for investments in real estate in Gujarat," informed a senior officer from SLBC - Gujarat.
The Indian currency has witnessed a sustained value erosion against the US greenback since August 2011. Since August 1, 2011 rupee has depreciated by about 18 per cent. The rupee stood in the range of Rs 44-45 to a dollar during the first quarter of the current fiscal.
However, it started depreciating since second quarter, especially from the month of August onwards. Rupee hit its lowest levels against Dollar at Rs 52.72, during November, 2011. Meanwhile, against Euro, the rupee has depreciated by 10.41 per cent at around Rs 70.07 a Euro.
"With dollar becoming costlier against rupee, the inflow of NRI funds has increased sharply. Additionally, NRIs poured-in money prior to their visit to home country during festivals in November-December. We can see more inflows of NRI funds in the current quarter (October-December)," said a general manager of a public sector bank in Ahmedabad.
The growth in NRI deposits is also seen as a fallout of high interest rates being offered for such deposits. "Recently, the interest rates too have become attractive for NRIs. Most banks have increased NRI deposit rates and they hover in the range of about 3.8 per cent to 4 per cent in different banks," said the SLBC official.
Recently, private sector lender IDBI Bank has increased interest rates offered on Non Resident External (NRE) term deposits and Foreign Currency Non-Resident (FCNR) deposits to 3.82 per cent and 2.32 per cent respectively for a basic one year time period.
According to SLBC report, the public sector banks in Gujarat witnessed highest growth in NRI deposits. State Bank of India reported a growth of Rs 300 crore in NRI deposits, followed by Bank of Baroda and Bank of India with the growth of Rs 100 crore each for the NRI deposits. Private banks' NRI deposits grew by Rs 210 crore during the quarter under consideration.
None of the major cities of the state found place in the top recipients of NRI deposits. Conversely, some of the smaller districts including Anand, Navsari, Kutchh and Porbandar in Saurashtra showed maximum growth in NRI deposit receipts constituting nearly 50 per cent of the total NRI deposits received, the SLBC officer informed.
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