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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (6646)	9/9/1999 11:37:00 PM
From: Mohan Marette	Respond to of 12475

NRIs shift preference from NRNR to NRE deposits C.J. Punnathara KOCHI, Sept. 9 WHILE the surge in NRI deposits continues, top bankers said that there has been a perceptible shift from Non-Resident Non-Repatriable (NRNR) account to Non-Resident External (NRE) account. As on August 20, a growth of 24.5 per cent was perceived in NRI deposits held with Federal Bank on an year-to-year basis. Acknowledging the sharp growth, Mr. K.P. Padmakumar, Chairman of Federal Bank, said that the changes effected in the interest rates resulted in a perceptible shift from NRNR deposits to NRE deposits. While NRE deposits grew by 38.8 per cent to Rs. 608 crores (from Rs. 438 crores), the growth in NRNR deposits was relatively modest at 11.6 per cent to Rs. 1,389 crores (from Rs. 1,244 crore). Starting from a very low base, the growth in FCNR deposits was quite significant at 76.8 per cent to touch Rs. 329 crore (Rs. 186 crores). Mr. Padmakumar said several of his NRI customers were now posting the interest which has accrued from NRNR deposits to NRE accounts. This is partly because the interest rates for NRNR and NRE accounts have become more competitive. The interest accruing from NRNR accounts is disbursed in foreign exchange and used to be repatriated. But now it is being ploughed back into Indian accounts. The trends in South Indian Bank were no different. NRI deposits held with the bank grew by 33 per cent on an year-to-year basis to Rs. 1,182 crores as on July 30. The growth in NRI deposits continues to be quite significant and they constitute almost 35 per cent of the bank's deposit portfolio now, Mr. A. Sethumadhavan, Chairman of the bank, said. Here again the preference has shifted to NRE deposits at the cost of NRNR deposits. NRE deposits grew by 53.9 per cent to touch Rs. 331 crores (Rs. 215 crores) as on July 30. Meanwhile, the growth in NRNR deposits was relatively sluggish at 26.6 per cent to Rs. 747 crores (Rs. 590 crores). The corpus of FCNR deposits grew by 26.8 per cent to Rs. 104 crores (Rs. 82 crores). NRI deposits held with Dhanalakshmi Bank have also grown significantly by 34.3 per cent. The NRI deposits grew from Rs. 96.12 crores to Rs. 129 crores as on August 27. It is to be expected that the customer will try to maximise his returns and post his savings into the most remunerative deposits, sources in the bank said. Unlike in the recent past, bankers are happy about the incremental growth in NRI deposits because foreign exchange is available at modest rates. The reasonable cost of foreign exchange and the continuing premium for the dollar have made NRI deposits quite attractive, sources said. (BusinessLine)