Non-Resident Indian (NRI) deposits in some leading public sector banks in Gujarat are seen to have increased immensely at this time of financial crisis.
Chief General Manager, State Bank of India (SBI), Gujarat, H C Pattnaik said, "In the current fiscal till October, total NRI deposits in our branches across Gujarat have grown by Rs 651 crore, from Rs 5,980 crore in March to Rs 6,631 crore."
"The currency inflow is largely from NRIs settled in the US and UK. The net growth in NRI deposits in last eight months has been at Rs 651 crore, with 80 percent of deposits in Foreign Currency Non Resident (FCNR) accounts and 20 per cent in Non Resident External (NRE) fixed deposits," he added.
It is felt that this surge in the inflow of funds from abroad in the last few months is noticed because of the bankruptcy of some major financial institutions in US. The overseas conditions have shaken the NRIs confidence and therefore they are diverting their funds back to India.
General Manager, Bank of Baroda (BoB) Gujarat, GJ Joshi said, "Between August and October, NRI deposits in our branches across Gujarat increased by Rs 334 crore. Of this Rs 256 crore has been in FCNR account, a growth of 10 percent in foreign currency."
"The overall NRI deposits in our branches continue to grow at 8 percent ever since the financial crisis rocked the West," he added.
"Total NRI deposits in various branches of BoB across Gujarat were Rs 5,041 crore in August, which jumped to Rs 5,375 crore in September. Of these Rs 2,402 crore were in FCNR accounts," Joshi said, adding "Deposits in FCNR rose to Rs 2,658 crore between September and October."
In the period between March and August, 2008 BoB has recorded a fall in its NRI deposits by Rs 171 crore but after this period the bank clocked a robust growth in its foreign currency inflow.
"RBI's recent decision to allow margin over benchmark interest rates London Interbank Offered Rate (LIBOR) continues to have a positive impact on FCNR and NRE deposits," Joshi added.
According to the recent order by RBI "Interest rates on fresh Rupee NRE term deposits for one to three years maturity should not exceed the LIBOR/SWAPS (a swap is a derivative in which two counterparties agree to exchange one stream of cash flows against another stream) rates plus 175 basis points, for US dollar of corresponding maturities."