The depreciation of the rupee has ballooned federal bank‘s NRI is funding the kitty with 21% of India’s remittances now going through the bank. Last financial year saw remittances reach ₹1,40,000 crore, said Shyam Srinivasan, managing director and CEO of the bank.
“But its use has changed. Previously, these remittances remained in the bank as deposits. But now it is being used by customers to invest in properties and finance businesses and construction activities, he said.
Srinivasan was addressing a press encounter program titled “Take off Kerala”, organized by Ernakulam Press Club.
He said the upward trend in NRI remittances is also expected to continue in the coming quarters.
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Credit growth, for the first time in the past 8-9 years, has grown by 15-17%, which is encouraging. Moreover, growth has been well diversified across all segments, and even companies are resorting to more loans, Srinivasan said.
Impact of Covid-19
Asked about the impact of Covid-19 on the NPA, he said the ratio had improved by 100 basis points compared to 2020. To a large extent, social protection programs and moratoriums government have helped keep the NPAs under control. But the next six months will be crucial as the moratoriums will be lifted.
Asked about the effect of Covid on the economy, Srinivasan said: “Covid has taught us that we are in a fragile world. But we largely exited after restoring normalcy to all walks of life, proving our ability to deal with any unfortunate circumstance. The pandemic has not worsened as expected due to the resilience of the population. At the same time, Covid has taught us to turn all challenges into opportunities.”
Asked about rising inflationary trends, he said that globally, inflation is a big challenge in all developed markets, which could lead to a recession. But India is largely insulated from global trends, thanks to the timely intervention of the Reserve Bank, which has paved the way for an economic recovery.
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There could be a further increase in inflation rates, which could keep interest rates high, and it is expected to start to subside after two quarters.
However, the economy could see some positive signs as the start of the festival season in the second half of the year could boost growth.
September 04, 2022