Region Accounts For 27% Of Total Remittances, N America's Share Dips To 38%

THE Indian Diaspora from the Gulf region is remitting more money home than their counterparts in the rest of the world. The region has increased its share of inward remittances even as the region is slowly witnessing a slow reverse migration. With global oil prices set to harden further, inflows from the region is expected to go up further. A study on invisibles by RBI in the balance of payments comprising income from transaction in services and overseas investments, besides permanent transfers such as remittances by the Diaspora, has said the Gulf has accounted for 27% of the total remittances.

The central bank has quoted a survey on remittances by overseas Indians which it conducted in November 2009 (The other findings of the survey are, however, not in public domain). The last time, when RBI had done a similar survey published in November 2006, the Gulf region had accounted for 24% of the remittances inflows, while North America and Europe accounted for 44% and 13%, respectively. While the share of North America has now dipped to 38%, that of Europe has risen to 18%.

India is the largest recipient of remittances by its Diaspora. The World Bank has estimated that it has received close to $47 billion as remittances in 2009. These include money sent by relatives abroad for the maintenance of their families back home as well as money parked in various NRI deposits that is used locally and not repatriated or used for local investments. The sharp increase in remittances started with the oil boom in the Gulf, resulting in the surge in migrant labour to the region and later in the 90s the technology boom resulted in an immigration surge of skilled IT professionals in North America and Europe.

Bankers attribute the current rise in remittances from the Gulf to a slew of initiatives to tap the low-end market in the Gulf region. Many state-owned and new private banks have either set up branches or representative offices eyeing the potential in this segment and have devised many customer-friendly products an also tied up with exchange houses in the region. Besides, money transfer companies such as Times of Money and Western Union also have successively reached the Diaspora in the region. These initiatives have helped the flow of funds through official channels from the unofficial 'hawala' route earlier.

The State Bank of India, which is estimated to have a share of 24% in the market is working towards increasing this share to 50% globally over the next few years. Among other things, it has envisaged geography-specific and clientele-specific products. For the Gulf region, it is targeting the low-end remittances market, which among other things includes tie-ups with exchange houses and also offering door-todoor services, said a senior SBI official requesting anonymity.

According to the RBI study, the recent increase in global oil prices is likely to support remittances from Indian workers in the Gulf region. The declining share of North America is largely attributed to the slowdown in the region, resulting in job losses and hence, lower funds at their disposal to send back home, pointed an economist with a public sector bank.

Source : http://epaper.timesofindia.com/