The NRI deposits in Kerala, accounting for 30 per cent of the total deposits, are set to cross the Rs 1-trillion mark as rupee plunged to a 13-month low earlier this week, resulting in increased remittances. With nearly two million Malayalees working abroad, Kerala is one of the top beneficiaries of remittances along with Gujarat and Punjab. NRI deposits into banks in Kerala have been steadily rising in the last few quarters. The NRI deposits for the July-September quarter stood at Rs 97,466.04 crore, a 3.7 per cent rise from Rs 94,097.89 crore in April-June.
The consumption-led Kerala economy is mostly powered by the NRI money, which, apart from getting parked in banks and other financial institutions, goes into buying or building houses, fancy cars and bikes besides a slew of white goods or of course the yellow gold in the form of ornaments. The NRKs, as they are popularly known, would surely appreciate any opportunity to go beyond a sedate RoI of around eight per cent from banks by the traditonalists and upwards of 10 per cent from “finance companies” by the more daring ones. There is a window of opportunity up for grabs if the state government were to get proactive and route these funds to more productive ventures that give the NRKs more lucrative returns.
Because, the credit deposit ratio of Kerala that increased from 68.66 per cent to 69.83 per cent is way below the national average of 75 per cent. A minimum of 70 per cent CD ratio would contribute to the growth of Kerala, it is reckoned. It’s not as if the government has no history of thinking out of the box. When it decided to build the Cochin International Airport Ltd, it was innovative enough to push a unique private-public shareholder participation, with some big ticket NRKs taking equity participation. The Kerala government has no reason to continue being cash-strapped as around two million Malayalees working abroad are waiting to be tapped.