NRIs park 46% of earnings in bank deposits, realty, stocks

MUMBAI: Only a slice of the money sent by the Indian diaspora goes towards maintenance of the family back home. A chunk flows into the stock market and other investment avenues.

A study on remittances conducted by the Reserve Bank of India (RBI) reveals 46% of the money is parked in instruments such as stocks, bank deposits and real estate. Of this, 20% is in bank deposits, 13% in real estate and shares and the balance 13% in other instruments.

In FY06, India received $24.6 billion as remittance. An extrapolation of the figures arrived at by RBI shows that families of the diaspora have invested $11.04 billion in various instruments. Of this, $4.92 billion or Rs 22,140 crore landed up as bank deposits, $2.46 billion (Rs 11,070 crore) went into buying property and $738 million (Rs 3,321 crore) chased equities.

The study — conducted in cities like Mumbai, Ahmedabad, Bangalore, Chennai, Chandigarh, Delhi, Hyderabad, Jaipur, Kochi and Kolkata — reveals an interesting trend. Families in Jaipur, Bangalore and Mumbai prefer to invest a higher share of what they receive from abroad.

Delhi (35%), Chandigarh (29%), Kochi (29%) and Mumbai (25%) account for a higher share of their total remittances going into bank deposits. However, families in Jaipur (25%), Bangalore (20%) and Hyderabad (11%) have a preference for land and property. As far as equity is concerned, Mumbai (12%), Bangalore (5%) and Kochi (3%) top the list.

Global remittance is concentrated in the sub-continent. India is the largest recipient of remittance after Mexico and China. Both Pakistan and Bangladesh figure among the top 10 recipients of remittance.

North America and the Gulf countries are major sources of remittance, together accounting for 68%, with a share of 44% and 24%, respectively. This is because over the years there has been a strong migration to North America with demand for highly-skilled technical professionals strong in the region.