C. J. Punnathara
Kochi, April 21
NRI deposits are no longer the flavour of the season for Indian banks.
"Due to the fickle nature of NRI deposits in the recent past and rapidly thinning margins, they are no longer the key source for raising resources to several banks. Now it is just one among several such sources," Mr A. Sethumadhavan, Chairman of South Indian Bank, told Business Line.
Belying expectations that the pace of remittances has slowed down, he said that there was just a slight and temporary dip in remittances, most of which seems to be drifting away from banks to real estate, mutual funds and capital markets.
Even the announcement by the Union Finance Minister, Mr P. Chidambaram, taking NRI deposits away from the purview of income-tax has not revived their growth momentum significantly, Mr T. R. Madhavan, Managing Director of Dhanalakshmi Bank, said. Dhanalakshmi Bank plansto increase its share of NRI deposits and make it on par with other Kerala-based banks.
The dip in NRI deposits recorded by banks during the last quarter of last year might have at best been bridged, but growth trends have remained flat even after the Budget announcement, Mr N. R. Achan, Chairman of Catholic Syrian Bank, said.
The corpus of NRI deposits of South Indian Bank had slipped by Rs 96 crore from Rs 2,845 crore in 2003-04 to Rs 2,749 crore in 2004-05. With the bank having got into agreements with six new exchange companies in the Gulf, the pace of remittances has picked up, which is not being reflected to any significant level in NRI deposits.
World Bank statistics have shown that remittances to India from its citizens working abroad has soared significantly from $17.4 billion to $23 billion in 2004. This has placed the country much ahead of other developing countries such as China, Mexico and Brazil. But bankers lament the fact that the spurt in remittances is not reflected in growth in NRI deposits.