Contrary to the major anticipation, the remittance flow to India from West Asia countries hasn’t dried up despite the entire region being embroiled in the Iran-US war.
According to a report of the Economic Times citing data from leading banks operating in Kerala, the remittance flow to India from West Asia has remained intact, suggesting resilience despite geopolitical situations.
In fact, there’s a rise of 5.4 per cent in flow due to the rupee depreciation between January and March. When the rupee weakens against global currencies, the amount sent by migrants translates into higher remittances on the same base.
It was anticipated that the disruption caused by the Iran-US war might lead to a thinning of the remittance flow to India in the coming
months.
A large population of the southern states of India, especially Kerala, migrate in Gulf nations for jobs and remittances sent back by these migrants have been playing a crucial role for the past few decades in Kerala economy.
The ET report stated Kerala-based Federal Bank and South Indian Bank have seen quarter-on-quarter growth in non-resident deposits inflow.
Indians who go to the Gulf nations sent money back to their family members living in India and their money is usually deposited in non-resident external (NRE) accounts using online platforms or bank wire transfers.
Federal Bank’s non-resident deposits grew 7 per cent Q-o-Q to Rs 1.03 lakh crore by the end of March, according to ET report, adding that the growth rate was more than rupee depreciation. The bank also enjoys a substantial market share in inward remittances.
“Remittances, as of now, remain elevated. My sense is that unless you see significant job losses and returning Indians from UAE for good into India, I don’t think this story is likely to change immediately,” Federal Bank managing director KVS Manian told analysts in a post-earning interaction as cited by ET.
A third of India’s remittances, approximately Rs 3.74 lakh crore, came from Gulf countries, such as the UAE, Saudi Arabia, Qatar, Kuwait and Oman.
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