The Federal Bank has stated that it is the perfect time for non resident
Indians to invest in India. "I will ask NRIs (non-resident Indians)
to take advantage of the current situation of high exchange rates and
interest rates," Venugopalan, CEO and managing director of India's
Federal Bank said in Qatar. Venugopalan, who is on a tour of the Gulf,
said that banks in India were safer in the face of the global credit
crunch as these had "insignificant" exposure to the US markets
and did not have a large presence of structured products, which had
compounded the crisis in the West. It was advisable to invest in non-resident
ordinary (NRO) deposits or relatives' domestic deposits as rates were
higher now. The rupee has fallen to over 48 levels against the dollar
as foreign institutional investors took out money from the Indian stock
markets in the face of the crisis.
Federal Bank has an NRI customer base of 400,000 with deposits of over
Rs 56 billion or 20 percent of its total. In a separate interview to
the Kuwait Times, Venugopalan said that there was a serious liquidity
crunch in India. "This is mainly because of the non-availability
of dollar. Foreign funds are exiting India following the global credit
crisis and there is no perceptible cash inflow," he was quoted
as saying. He, however, added that Federal Bank was not affected by
the global financial turmoil as its shares were widely held. "An
individual shareholder cannot hold more than five percent of the bank's
shares," Venugopalan said. According to him, overleveraging by
central banks across the world fuelled the sub-prime crisis, which started
in the US, spread to Europe and then engulfed the rest of the world.
But the efforts by these banks now have helped contain the crisis by
a large extent from spreading further. In India, he said, the Reserve
Bank of India's (RBI) decision to curb the liquidity of banks by raising
cash reserve ratio (CRR) has helped it in regulating lending by Indian
banks. Venugopalan's comments came even as remittances from the large
expatriate Indian community in the Gulf saw a significant rise over
the last one month.
