UP, Bihar set to pip Kerala in cash remittances in 2 yrs
Nov 29 2012 , Chennai
The monthly transactions by money transfer agencies to Uttar Pradesh has gone up by over 200 per cent and Bihar by 100 per cent in the past five years. During the same time, Kerala and Punjab, the traditionally strong markets for remittances, have grown by over 30 per cent.
Of the 12 lakh cash-to-cash monthly transactions taking place five years back, Kerala accounted for over three lakh, Punjab around three lakh, Tamil Nadu about two lakh and Andhra Pradesh over 1.5 lakh. Uttar Pradesh’s share was less than one lakh and Bihar received around 50,000 transactions. At present, the total transactions have grown by around 22 lakh, of which, Kerala’s share is a little above four lakh and Punjab four lakh. The remittance to Uttar Pradesh has gone up to three lakh and that to Bihar is at one lakh, according to Suresh Kumar, general manager, Muthoot Finance.
“Uttar Pradesh and Bihar are growing at a very fast pace and will overtake Kerala and Punjab in remittance numbers in next two years,” he said. Muthoot has been focusing on states like UP and Bihar for its money transfer business.
Cash-to-cash transaction is more commonly used by people who do not have bank accounts or when they are transferring money to places that have lower bank penetration. The penetration of banks has been growing in states like Kerala and most of the emigrants are now transferring money online or through bank accounts.
According to Kiran Shetty, managing director of Western Union Services India, money transfer agencies have a deeper penetration even in the remotest areas of the country. “We currently operate in 100,000 locations in India. When we started operations, we used to get remittances from 41 countries and now it has gone up to 191 countries,” he said.
“The number of emigrants from states like UP and Bihar have been growing over the past few years,” said Kumar.
As per the data from the ministry of overseas indian affairs, Uttar Pradesh and Bihar sent the largest number of workers abroad with emigration check required (ECR) endorsement in 2011. ECR endorsement is needed for emigrants without educational qualification.
Kerala sent only 86,783 persons last year, against 1,20,083 in 2006 and Tamil Nadu too, saw a drop in numbers from 1,55,631 in 2006 to 68,732 in 2011. On the other hand, ECR endorsements from Uttar Pradesh went up to 1,55,301 in 2011 from 66,131 in 2006 and Bihar saw a growth from 36,493 persons in 2006 to 71,438 persons last year.
Saudi Arabia remained the top destination for emigrants, followed by United Arab Emirates and Oman. According to Kumar, the Gulf region accounts for 60 per cent of the total cash-to-cash transactions.
In 2011-12, the total non resident Indian remittances through all channels, including money transfer agencies and banks, were $66.13 billion, up from $55.62 billion in 2010-11 and $53.64 billion in 2009-10.
A recent World Bank release has suggested that the total remittances to India this financial year will go up to $70 billion. Higher interest rates of non resident external accounts and rupee depreciation have been leading to increased remittances this year.