Hike interest rates on NRI deposits: IsaacNovember 24th, 2008 - 3:59 pm ICT by IANS
Thiruvananthapuram, Nov 24 (IANS) To increase foreign exchange inflow into the country, Kerala’s Finance Minister Monday urged the central government to hike interest rates on the deposits in non-resident accounts. “The situation in the country is that banks have started regulations on loans and this does not augur well. One way the banks can get more funds into their kitty is by hiking interest rates on foreign deposits,” Thomas Isaac told reporters here.
Quoting a study conducted by the Centre for Development Studies, he said total deposits from abroad in the banks of Kerala ranged between Rs.34,000 crore (Rs.340 billion) to Rs.36,000 crore (Rs.360 billion) in 2007-08.
“On account of the weakening of rupee for 2008-09, it will touch between Rs.38,000 crore (Rs.380 billion) to Rs.42,000 crore (Rs.420 billion),” the economist-turned-politician Isaac said.
He said two million Keralites live in the Middle-East and their savings have formed an important part of the state for nearly three decades now. “But the economic slowdown has affected the Middle East and would affect jobs and salaries in the immediate future. One has to wait and watch if the diaspora would hold their savings in Middle-East currencies or in Indian Rupee.”
Predicting a further slowdown in Kerala, Isaac said growth rate will come down to six percent this year compared to 8.33 percent last fiscal. He added that the central government should call an immediate meeting of all the state finance ministers.
“The crisis will soon affect the traditional and the plantation sector and would see 150,000 people in this sector badly affected. The need of the hour is that the Centre should immediately relax the rules in the National Rural Employment Guarantee schemes and see that they allow Kerala a loan of Rs.1,000 crore (Rs.10 billion) immediately,” he added.