Ahmedabad this year, has witnessed Rs3,720 crore in deposits, a 14.25% growth over Rs3,256 crore in the year ended September 2010.
The slump in the real estate sector has come as a boon to banks in Gujarat. Finding realty unprofitable, non-resident Gujaratis have again started depositing money in banks which has swelled their coffers.
In the year ended September 2011, deposits by non-resident Gujaratis (NRG) in banks located in the state increased substantially over the corresponding period last year. This has been revealed in a recent report of the State Level Banker's Committee (SLBC) of Gujarat. The only exception to this upward trend is Kutch district. Every other district of the state has seen a significant rise in NRG deposits this year.
Total NRG deposits in Gujarat (as on September 2011) stood at Rs23,989 crore, which is Rs1,738 crore more than the Rs22,251 crore recorded in September 2010.
nterestingly, the figure for September 2010 is Rs7 crore less than the Rs22,358 crore deposited in the same period in the year ended September 2009. The fall in deposits between 2008-09 and 2009-10 can be attributed to the real estate boom in that period. Gujaratis living abroad chose realty over deposits in banks (public, private and co-operative) as a more profitable investment.
However, the slowdown in realty this year has shifted the focus of NRGs back to the banks. This is reflected in the steep Rs1,738-crore rise in deposits recorded between October 2010 and September 2011. However, experts believe that a depreciating rupee against the US greenback is a bigger contributor towards this rise in bank deposits. NRGs' dollars have started giving them better returns. "Compared to real estate, investing money in Indian banks is a better option for NRIs. A depreciating rupee has yielded more than 20% return, which includes hike in interest rates," said Aspy Bharucha, an independent forex advisor from the city.
Kutch district, which sees largest NRG deposits every year, has seen a Rs136-crore fall in deposits this year. It recorded Rs5,183 crore in NRG deposits by the end of September 2011.
Ahmedabad this year, has witnessed Rs3,720 crore in deposits, a 14.25% growth over Rs3,256 crore in the year ended September 2010. Almost Rs2.90 lakh crore are deposited in Gujarat banks every year, of which 10% are contributed by NRGs.
Bankers, however, believe that deposits could have been much higher. "(Interest) rates offered to NRIs in India are very low as compared to their much higher home loan rates. Some countries insure their (foreign) deposits which is not the scenario in India. Due to these reasons, NRI deposits have not grown much in India," said Pratip Chaudhuri, chairman, State Bank of India, during his recent visit to Ahmedabad.
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