Gujarat to have a dedicated cell for Film shooting

For the first time in six years, pockets of banks in Gujarat bulged with non-resident Indians’ (NRI) deposits in 2012.

Reason may be either removal of interest rate cap by RBI or the depreciating currency, or both, but with Rs5,734 crore more, deposits increased by 22% with the banks during this period. The total NRI deposits with banks in Gujarat increased to Rs31,179 crore by end of December 2012. NRI deposits contribute about Rs3.48 lakh crore, i.e., 9% of total deposits in Gujarat, reveals a State-level Bankers’ Committee (SLBC), December 2012 report.

Till 2011, NRIs used to get interest on deposits of around 4%. “Last year, Reserve Bank of India (RBI) removed the cap. With that, NRIs too could get rate of interest equivalent to citizens of the country. This is the basic reason of huge hike in NRI deposits in 2012,” said SLBC Convener and general manager of Dena Bank, Suresh Patel.

Since 2007, NRI deposits never grew beyond 20%. NRI deposits were Rs18,288 crore by end of 2006, which grew by a mere 4.53% in 2007. During global meltdown, in 2008 and 2009, NRIs had pumped more money in Indian banking systems and so NRI deposits grew by 9.02% and 7.29%, respectively. In 2010, experts believe stock market and real estate attracted NRIs’ money because of which growth was less than 1%. In 2011, it witnessed significant growth of 13.46% and net addition in NRI deposits was Rs3,018 crore.

Other financial experts believe that two more factors — weak currency and slowdown in western countries — along with RBI removing cap, have left the NRIs or NRGs with no choice but to invest in bank deposit schemes in India. In western countries, the interest rates on deposits is less than 3%, whereas here the NRIs are getting about 9%, said Forex expert, and executive director of Vadilal Forex & Consultancy Services, Aspy Bharuch.

“Last year, a cap on interest rate was removed. As a result, instead of getting 4% to 5%, now NRIs are getting around 9% of returns on deposits. Secondly, currency is depreciating which is also giving them returns of another 5%. Overall, NRIs are getting huge benefits in depositing money with banks in India,” Bharucha said, adding that if currency depreciates from present level, NRGs will gain further from it.

Bharucha further said that overseas markets are still shaky. “In Europe and the US, the interest rates on fixed deposits are less than 3%. Moreover, the economies of those countries are on shaky grounds,” said Bharucha.

Maximum flow of NRI deposits comes from the US and the UK, said chairman, GCCI NRG Committee, Kulin Patel. “This trend is likely to continue this year as NRGs will be getting highest returns in India compared to whole world. Interest rates in the US and EU countries are negligible against what they are getting in India. I also believe that NRGs have full faith on Indian banking system, particularly on nationalize and public sector banks,” he said.