Slowdown in NRI deposits evident in post-Covid yrs
The Kerala Economic Review released in February noted that while NRI deposits were once a significant driver of bank growth, domestic deposits have now overtaken them in both volume and growth rate.
The slowdown is particularly evident in the post-Covid years. Between 2022 and 2023, NRI deposits grew by a mere 1.1%, increasing from Rs 2.38 lakh crore to 2.41 lakh crore. In contrast, domestic deposits rose by 11.8%, from Rs 4.27 lakh crore to Rs 4.78 lakh crore during the same period.
Godwin S K, professor at the Government College for Women, Thiruvananthapuram, said the pandemic had a severe impact on Kerala’s NRI economy.
“Covid was catastrophic for the global economy. Many Keralites lost their jobs or saw stagnant wages. This directly affected NRI deposits in Kerala. However, with economic recovery globally and model development initiatives in Kerala, there is hope that NRI deposits will bounce back,” he said.
According to a source with a nationalised bank in Kerala, a growing number of Non-Resident Keralites have started shifting their deposits from traditional NRI fixed deposits to mutual funds and other financial investments.
“Earlier, fixed deposits were considered the safest and most preferred option. But as awareness about market-linked investments grew, more NRKs became willing to take calculated risks. This shift in preference is one of the key reasons we are witnessing a slowdown in the growth of NRI deposits,” the source told TNIE.