Cut in interest on NRI deposits won't affect Kerala

Wednesday, 17 September 2003, 19:30 IST
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THIRUVANANTHAPURAM: The Reserve Bank of India (RBI) has cut interest rates on non-resident Indian (NRI) deposits for the second time in two months but it would have minimal impact in Kerala, say experts. According to S. Irudayarajan of the Centre for Development Studies here, for instance, it was most unlikely that falling interest rates on NRI deposits would affect Kerala because 90 percent of non-resident Keralites (NRK) sent money for daily expenses. Irudayarajan, who has conducted several studies on NRKs, said: "Our ongoing survey has found that there are six dependants for each NRK working abroad. Bank officials have told us that in the lower middle class and even middle class NRK families, most of the money that arrives disappears in a matter of days or weeks." He said bankers now felt they were merely "collecting agents". But the picture might be a little different in the higher segment of NRK society, however minuscule it might be, he said. There has been a free fall in NRI interest rates since mid 1990. At the time, NRI accounts fetched an interest of 18 to 20 percent. This has come down to 3.7 percent. Similarly, on dollar denominated accounts, interests have fallen from 5 percent to 2.2 percent. NRI deposits are considered by many to be the backbone of Kerala's economy. Latest figures said deposits crossed 250 billion.
Source: IANS
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