Reverse remittances surge as migrant workers in cities call home for money

Instances of migrant workers asking for money from home to buy a bicycle or plane ticketto travel back from the city are not one-off episodes witnessed during the two-month-long lockdown.

Payment companies and banks have reported a sharp surge in reverse remittances from rural to urban centres as workers try to return home or stick it out in urban centres during the national lockdown.

Takefor instance Ramesh Kumar, a milkman in Mumbai, who wanted to send back his family to his village in Uttar Pradeshin May. Hiring a private van meant shelling out ₹30,000 for the over 1,500-km-long road trip for which he did not have enough savings. While he borrowed some money from friends in the city, he also asked his family back home to send him whatever they could find.

“Reverse remittance, that ismoney being sent from rural to urban areas is there, but it is a small per cent, at about 10 per cent of our current monthly remittance throughput. It is largely sent by people to their families stuck in other placesto tide over the situation,” said Ashish Ahuja, Chief Operating Officer, Fino Payments Bank.

Anand Kumar Bajaj, Managing Director and CEO, PayNearby, also said there has been a 10 to 12 per cent increase in remittances from rural to urban areas.

Bajaj said the company found that migrants to Surat from West Bengal, who work in the gem and jewellery industry, received money from their homes during the lockdown.

“We have identified three places from where these remittances are coming – Bihar, Andhra Pradesh, and West Bengal. Reverse remittances have been seen in areas where the lockdown was announced earlier and many migrants could not go back home,” he said.

Ketan Doshi, Managing Director, Pay Point India, said that company data for May revealed that reverse remittances amounted to 25 per cent to 30 per cent of the total monthly remittances.

“Migrants staying in urban areas with no jobs or limited livelihood are getting funds for survival from their native places (their family). This trend started in March,” he said.

Revival in remittances

Meanwhile, with the easing of the lockdown, players have also started reporting a revival in domestic remittances as many workers are being paid by employers or are getting back to their jobs. However, returning to the pre-Covid situation is still at least three months away.

According to Ashish Ahuja, Fino Payments Bank had a monthly remittance business of ₹4,500 crore before the lockdown. “In the initial days of the lockdown, it was down to 20 per cent, and in April, it began to recover. We expect to reach around 50 per cent of pre-Covid level in June,” he said.

“With the advent of Unlock1.0 from the beginning of this month, remittances have climbed back to 40 per cent of the pre-lockdown levels. This is expected to cross the 50 per cent mark by the end of June,”said Eko India on Tuesday.

Remittances from across urban nodes have been impacted – it is down 95 per cent in Mumbai and Surat, 80 per cent in Delhi, 88 per cent in Chandigarh, and 83 per cent in Bengaluru.

PayNearby is also seeing normalisation in remittances with volumes back to 90 to 92 per cent of its original transaction levels on June 8.

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