Gujarat banks see record increase in NRI deposits

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 depraiciating 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.