Remittances into Kerala have surged as expats from the Indian state working in the UAE send money home to their families for the Onam harvest festival.
A Surendran, the head of retail and international banking at Federal Bank, headquartered in Kochi in Kerala, said that the lender’s remittances have risen three-fold on normal daily volumes, because of the Hindu festival, which is celebrated in the state today.
“Onam is an auspicious occasion for people to invest in household goods, vehicles, jewellery,” said Mr Surendran. “They spend a lot on clothing.”
Most of the remittances the bank receives from abroad come from the UAE and Saudi Arabia, he added.
Keralites make up 55 per cent of Indian expats in the UAE, according to the UAE Embassy in New Delhi.
The spike in remittances for the festival comes as figures from the Reserve Bank of India show that funds flowing into non-resident Indian (NRI) deposit accounts declined to US$2.4 billion in the quarter between April and June compared to $5.5bn in the same period last year. The Indian rupee has stabilised at about 60 rupees to the US dollar after it plummeted to record lows last year.
"Last year, people in the Gulf borrowed locally and parked money in Indian banks to make the most of a depreciating currency," Abraham Thariyan, the executive director at South Indian Bank told the Economic Times, an Indian newspaper. "As the rupee is more stable now, there is no abnormal rush for keeping money in NRI deposit schemes."
The Gulf is home to the majority of Keralites who live overseas and the state’s economy is heavily dependent on flows of money sent home by expats working in the region.
“The Keralite community forms over 30 per cent of the customer base of UAE Exchange,” said Promoth Manghat, the vice president of global operations at UAE Exchange. Expats last year remitted Dh300 million from the UAE to Kerala during its promotional period for Onam, he added.
“The remittances from the Gulf to India have remained uniform, as compared to 2013, primarily because of the stability of Indian rupee. With the upcoming season of Indian festivals, we are expecting the remittances to grow gradually.”
Sudhesh Giriyan, the vice president and business head of the remittances company Xpress Money, said that said that upcoming festivals including Diwali would help to boost remittances over the coming weeks.
“The rupee is still at a very decent level,” Mr Giriyan said.
KR Bijimon, the chief general manager at Muthoot Finance, an Indian financial services company, said the firm always noticed a spike in inflows during Onam.
“Onam is the major festival of Kerala and the families require more money for the purchase of new clothes, vacation travel, electronics, and family maintenance.”
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