Remittances to Bharat hit by return of the native

MUMBAI: Domestic remittances, usually from big cities and more affluent areas to India’s rural hinterland, plunged about 80% in the past two weeks, triggered likely by a sudden loss of jobs and the return of the migrant workers to their homes. The Centre’s decision to transfer funds directly to their bank accounts might cushion the impact, but business for the affected payments companies might take longer to recover.

Fino Payments Bank, Eko India Financial Services, Spice Digital, Oxigen Services India and members of the business correspondent network have seen remittances nosedive since the nationwide lockdown took effect. Remittances within India are pegged at about Rs 2 lakh crore a year, and monthly volumes accurately capture the financial health of the informal sector.

“We used to remit Rs 5,000 crore in a month, but that volume is now down to just 20%, and we don’t see this improving in the next six months due to labour dislocation and job losses,” said Rishi Gupta, CEO, Fino Payments Bank.


“The only silver lining is (the hope that) transactions pick up on the Aadhaar-enabled payments platform when the stimulus from the PM Garib Kalyan Yojana starts flowing in,” Gupta said.

The total number of internal migrants in the country is estimated at 139 million, according to the Economic Survey, 2017. Bihar and UP together receive 60% of the money sent by them, while Odisha, Jharkhand, Tamil Nadu, and Andhra Pradesh are some of the other receiving states.

The business correspondent network in the country caters to this low-income segment that gets its wages every week or two.

“I process Rs 700 crore of remittances in a week and my business has fallen 90% since March 22; this is even (more) brutal than demonetisation,” said Abhishek Sinha, CEO, Eko Financial Services.

“If you compare the business fall versus demonetisation, it is down 50%. We could never anticipate this even when we saw business steadily slowing down since Holi.”

Any extension of the lockdown, scheduled to end nationally mid-April, might delay the recovery.

In March, a total of 181 million transactions worth Rs 10,700 crore was recorded on the Aadhaar-Enabled Payment System (AePS) – 11% lower in value and 18% by way of volumes since February, the latest data sourced from National Payments Corporation of India (NPCI) showed.

This marks the second steepest monthly decline in the value of transactions since the channel became operational in 2016. In September 2019, when the number of daily transactions was capped by banks, the decline was marginally steeper.

AePS is central to the domestic remittance flow for millions of migrants sending money from urban zones to rural villages and is used by over a million business correspondent agents at micro ATM points across the country to enable Jan Dhan account holders to withdraw cash.

“In the week following the lockdown, the remittances… have fallen by nearly 80% and we’re only seeing 20% of the routine flow,” said Anand Kumar Bajaj, CEO of Pay Nearby, a leading AePS facilitator. “Migrants from Bihar, Uttar Pradesh, Odisha and Bengal, who formed the gig economy in urban centers, were sending money to their villages… We anticipate, however, the flow to normalise once commerce reopens after the lockdown.”