NRIs deposits in leading nationalised banks in Gujarat surge

AHMEDABAD: In backdrop of the global financial crisis, Non-Resident Indian (NRI) deposits in leading nationalised banks in Gujarat have surged.

"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," Chief General Manager, State Bank of India (SBI), Gujarat, H C Pattnaik said.

"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 per cent of deposits in Foreign Currency Non Resident (FCNR) accounts and 20 per cent in Non Resident External (NRE) fixed deposits," he said.

Bankers attribute this robust inflow of funds from overseas in last few months to paradigm shift in NRIs' confidence from banks of the US and Europe to their Indian counterparts.



"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 accounts, a growth of 10 per cent in foreign currency," General Manager, Bank of Baroda (BoB) Gujarat, GJ Joshi said.

"The overall NRI deposits in our branches continue to grow at 8 per cent 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."

NRI deposits of BoB had fallen by Rs 171 crore between March and August 2008, but post-August the flow of foreign currency in the bank has been robust, Joshi said.

"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.

As per a recent RBI order "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."