The Hindu Business Line : ‘Strong rupee slows down NRI deposits’

There has been a slight slowdown in NRI deposits due to the rising rupee, although there was no slowdown in inward remittances, said Mr M. Venugopalan, Chairman and CEO, Federal Bank.

Low deposit rates combined with the appreciation of the rupee has led to money going to other investment avenues such as stock market and real estate. So, although there are inflows, not much remains in bank accounts, Mr Venugopalan said. He was speaking on the sidelines of a banking seminar in Mumbai, today.

NRI deposits account for 26 per cent of total deposits of Federal Bank. The bank is also planning to open a representative office in UAE within the next two months, which will help strengthen its NRI client base.

The bank is expecting about 25 per cent growth in credit in the third quarter.

As on September 30, 2007, total advances went up by 27.45 per cent to Rs 16,204 crore, and total deposits increased by 31.81 per cent to Rs 24,111 crore.

The bank is also planning to add 66 branches this year which would take the total network to 600.

Follow-on issue

The bank is planning a follow-on public issue Rs 2,000 crore in December-January, Mr Venugopalan added.

In October, the bank had come out with a rights issue and had priced the shares at Rs 250.

On Tuesday, shares of Federal Bank closed at Rs 324.5 against the previous close of Rs 334.05 on the BSE.

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