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'NRIs shying away from Indian banks'

By Our Special Correspondent

JAIPUR, DEC. 28. Commercial banks are getting fewer deposits from Non-Resident Indians (NRIs) indicating a shift in their investment preferences. The low interest regime, coupled with fears of an official move to impose a tax on the interests from NRI deposits, is seemingly forcing NRIs to look elsewhere for more profitable options with their money.

"This is happening all over the South, be it Kerala, Tamil Nadu, Karnataka and Andhra Pradesh. The NRIs are depositing less with the banks and are shifting their investments to real estate," said A. Sethumadhavan, Chairman of the Thrissur-based South Indian Bank Ltd. here.

Mr. Sethumadhavan, who was here in connection with the inauguration of the bank's first branch in Rajasthan, said even when the overall remittance from NRIs went up marginally last year there had been a steep decline in the deposits.

"There had been a decline of Rs.100 crores in NRI deposits this year in the case of South Indian Bank alone which has 38 per cent of its total deposits from this category," Mr.Sethumadhavan pointed out. This had happened in the case of other Kerala-based banks as well, he noted.

The South Indian Bank, which opened its 421st branch here, has 2 lakh NRIs among its total of 30 lakh customers.

"The bank is on an attempt to assume a national character. By the end of the current financial year we will have presence in 20 States," said Mr. Sethumadhavan, who is a well known Malayalam writer, in his presidential address on the occasion of the inauguration of the new branch on Tonk Road here. The new States to be connected are Madhya Pradesh, Chhattisgarh and Orissa while new branches are in the offing in Noida, Amritsar, Nagpur and Delhi (Mayur Vihar).

"The opening of new branches are part of a well designed plan to make an all India presence. This is also needed to facilitate the plans for "anywhere" banking," Mr. Sethumadhavan explained. Expansion outside was essential as at present the 76-year-old South Indian Bank, rated third among India's most customer-friendly banks by an "Outlook Money" survey last September, has more than half its branches in Kerala alone and as many as 95 in Tamil Nadu.

The bank, which had an oversubscribed rights issue in the past, is likely to come out with a public issue next year. "We are aiming at Rs.1000-crore capital plus net assets and a business of Rs.25,000 crores in future," Mr. Sethumadhavan said.

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