Kochi: With many families in Gulf countries deciding to return to Kerala amid the COVID-19 pandemic, there has been a surge in the deposits in NRI bank accounts.
NRIs are transferring most of their savings from foreign banks to accounts in Kerala and the amount is not being withdrawn locally for any major expenses. This has resulted in the increase in deposits, say banks.
Many Gulf Malayalis have either returned or have decided to return with their families for good given the fear over COVID's spread.
Before the COVID-19 lockdown, there had been a fall in the amounts getting credited in the accounts of foreign Malayalis. Moreover, the withdrawal from such accounts were also substantial.
In the February-March period, Rs 1,200 crore had been withdrawn from the NRI accounts of Canara Bank in Kerala.
But, now, the trend has changed. The bank has seen over Rs 1,000 crore deposited in its NRI accounts in the previous two months.
Even SBI reported deposits of over Rs1,000 crore in such accounts during the period. All the other major banks have also seen an increase in such savings bank accounts.
The rupee’s fall against the dollar from 72 to 76 also increased the value of NRI savings as the currencies of the Gulf countries also strengthened simultaneously.
Historically, this has been a period when transfers from Gulf Malayalis fall to a trickle since their expenses go up on account of children’s school admission at the beginning of a new academic season and also due to job changes. This year, they have been able to save on those expenses.
Most deposits have happened in the non-resident external (NRE) and non-resident foreign currency non-repatriable (NRFCNR) accounts, said bank officials.
Money can be sent back abroad from NRE accounts, but that is not possible with NRFCNR accounts. This is the reason why non-repatriable accounts offer higher interest rates.
The deposits have remained in bank accounts because the usual avenues for spending the money were shut due to the lockdown that was in place. There was no housing work or real estate dealings. Malls and restaurants were closed and there was no possibility of travel.
Many are now wondering what to do with the NRE deposits, given the low savings rate. They feel they could have opted for a fixed deposit, say experts.
