Scared NRIs find Indian banks safer

Ahmedabad: Anand Patel, a hotelier in New Jersey who hails from Nadiad, has just called up his brother Dilip to find out more about NRI deposits in Indian banks. Anand told him he wanted to send him $1,00,000 for safe keeping, because he was worried about the turmoil in the US financial markets.

Many others have already made the move, much to the delight of public sector banks. Far from getting hit by the turmoil in the US financial markets, the collapse of American banking has turned out to be a blessing in disguise for Indian banks, now being seen by NRIs as a safe place to park their funds.

In recent weeks, many US-based NRIs have switch their funds from US based entities to Indian banks by way of NRI deposits. For instance, SBI in Gujarat, which had mopped up NRI deposits worth Rs 290 crore in the last five months, has collected over Rs 150 crore in September alone.

“The spurt can be mainly attributed to the financial crisis in the US markets,” said HC Pattnaik, chief general manager, SBI- Gujarat. The depreciation of rupee and rising rate of interest for fixed deposits in foreign currency have made NRI deposits attractive, Pattnaik added.

With the crisis mounting in US, many NRIs are looking for opportunity to invest in real estate market in India also. According to a report of Jones Lang LaSaale, 25% of apartments and plotted properties in India are bought by NRIs. In September, rupee has depreciated over 11 per cent against the dollar, from Rs 42.85 to Rs 47.68. Besides, in order to lure NRIs, RBI had recently increased rate for deposits in foreign currency from Libor (London Inter Bank Offer Rate) minus 75 basis point to Libor minus 25 basis point.

“We are seeing a surge in NRI deposits and it is expected that momentum will increase,” GG Joshi, general manager, Bank of Baroda, said.

MV Nair, chairman and managing director, Union Bank of India, said that good amount of money will flow back into the country looking at the current scenario.