NRI deposits in Kutch village decline.
The global meltdown has made its tremors evident in the land of Kutch, Gujarat. Madhapar village, considered as a barometer of NRI deposits and remittances in the country, is now facing the brunt of the recession with banks in the region witnessing a decline in NRI deposits.
There were times when the village, with a population of 15,000, boasted of NRI deposits of Rs 5,000 crore coming in from the the UK, the US and other western markets. The recent depreciation in the pound has also led to a reduction in numbers in several banks’ balance sheets.
For instance, Bank of Baroda has registered a decline in NRI deposits. The bank’s Madhapar branch registered only Rs 159 crore worth of NRI deposits compared with Rs 164 crore in September 2008.
According to G G Joshi, general manager (Gujarat), Bank of Baroda, the reduction in interest rates and the pound’s depreciation against the rupee has led to the current situation. “There has hardly been much growth in NRI deposits in Madhapar. Since many family members of the villagers are based out of the UK, the deposits have reduced as the pound has depreciated. Moreover, the global economic meltdown has also been discouraging several depositors.”
Similarly, Dena Bank, which had set a target of Rs 10 crore of deposits in September-January, is disappointed to have registered a mere Rs 2 crore business so far. “As compared to a considerable growth last year, the NRI deposits for Madhapar branch has hardly managed to grow. In September 2007, the bank had NRI deposits of Rs 51.97 crore. It has increased to Rs 53.39 crore a year ago,” said a Madhapar branch employee of Dena Bank. Along with Punjab and Kerala, Gujarat forms one of the largest chunks of NRI deposits and remittances in the country.
Even the state-level bankers’ committee (SLBC), where Dena Bank acts as a convenor, expresses its worries over the issue. “Since Gujaratis are known for their enterprising skills, the rupee’s appreciation against the pound or the dollar may force them to avoid direct deposits and remittances and instead go for other alternatives,” said B S Rathod, chief manager, SLBC.