A whopping Rs 58,000 crore is lying with banks in the state by way of deposits from non-resident Indians. This is a record high, and as bankers say, the figure could be still higher when the accounts are finalised.
From a dollar fetching Rs 44 during August last year, rupee’s value saw a 25 per cent fall over the year. The large chunk of NRKs saw this as a golden opportunity, whereby their remittances in dollars went up by 25 per cent when it reached the banks home.
This explains why NRI deposits went up from Rs 48,000 crore in March to Rs 55,000 crore in June, says Abraham Thariyan, executive director of South Indian Bank, adding that the trend was continuing.
To support this, came the relaxation of norms by the Reserve Bank which earlier allowed Libor-linked rates for NRI deposits which was around four per cent. This now is at par with domestic deposit rates and ranges up to 9 per cent. And, unlike in the past, they do not attract income-tax, he notes.
According to Catholic Syrian Bank managing director V.P. Iswardas, NRI deposits account for around 22-28 per cent of the total deposits in Kerala-based banks.
Coupled with the higher interest rates and a weak rupee, the dismal performance of the equity markets too had contributed to channeling NRI funds into banks, he says. Broking firms admit that the low equity market reflected the lack of interest of NRIs.
A good part of the money does not remain in the bank and goes to household expenses, supporting the tag of a remittance state, says Thariyan.
However, leading NRKs say sufficient funds are going into banks, and that the government should look at utilising these funds.