The collapse of American banking has turned out to be a blessing in
disguise for Indian banks, now being seen by NRIs as a safe place to
park their funds. In recent weeks, many US-based NRIs have switched
their funds from US based entities to Indian banks by way of NRI deposits.
SBI in Gujarat, which had mopped up NRI deposits worth Rs 290 crore
in the last five months, has collected over Rs 150 crore in September
alone. "The spurt can be mainly attributed to the financial crisis
in the US markets," said HC Pattnaik, chief general manager, SBI-
Gujarat. The depreciation of rupee and rising rate of interest for fixed
deposits in foreign currency have made NRI deposits attractive, Pattnaik
added.
With the crisis mounting in US, many NRIs are looking for opportunity
to invest in real estate market in India also. According to a report
of Jones Lang LaSaale, 25% of apartments and plotted properties in India
are bought by NRIs. In September, rupee has depreciated over 11 per
cent against the dollar, from Rs 42.85 to Rs 47.68. Besides, in order
to lure NRIs, RBI had recently increased rate for deposits in foreign
currency from Libor (London Inter Bank Offer Rate) minus 75 basis point
to Libor minus 25 basis point. "We are seeing a surge in NRI deposits
and it is expected that momentum will increase," GG Joshi, general
manager, Bank of Baroda, said. MV Nair, chairman and managing director,
Union Bank of India, said that good amount of money will flow back into
the country looking at the current scenario.
