Finance Minister P. Chidambaram ar the plenary session on 'Remittance Services' in Hyderabad on January 8, 2006.

Plenary III

Remittance Services

Chair: Oscar Fernandes, MOS (IC)

Guest of Honour: P. Chidambaram, Minister for Finance, GoI

Opening Remarks: S. Krishna Kumar, Secretary, MOIA

Presentation: Dr. P.J. Nayak, Chairman, UTI Bank

S. Krishna Kumar, Secretary, MOIA, in his introductory remarks, mentioned that Indian overseas workers constituted a unique part of the diaspora. A World Bank report, 'Global Economic Prospects', mentioned that remittances of non-resident Indians (NRIs) to India were around $21.7 billion in the last year. The MOIA felt that remittance is an area of concern, which should be attended to immediately. There are primarily two concerns: reducing transaction costs of remittances and converting the saving potential of overseas Indians into investments. The main objective of the session was to address these two issues.

Dr. P.J. Nayak, Chairman, UTI Bank, explained the process of e-remittance. He identified three areas of concern in the remittances by NRIs: speed, cost and convenience. Today, technology is playing a vital role in improving the banking services, he said. Announcing that the UTI Bank has developed a remittance gateway, he said that this portal would enable NRIs and PIOs to remit money to India to a designated account in any of the 14,500 branches, operating on Real Time Gross Settlement (RTGS). The remittance through this gateway could be made at a very low cost, in real time from anywhere through Internet technology. Dr. Nayak, with the help of R. Seetaraman, CEO of Doha Bank, demonstrated a sample transaction to the audience.

He then explained the variety of advisory services that will be made available through the portal. Currently, information is being developed on taxation, legal, real estate, financial institutions, mutual funds, equity market, and insurance matters. He also emphasised that this information is being developed with the help of some of the best institutions in the respective areas so that the information could be reliable.

Finance Minister P. Chidambaram formally launched the electronic remittance facility. Prominent NRI industrialist Hinduja made some suggestions for attracting NRI investments.

The Finance Minister, in his address, observed that GoI has firmly anchored economic reforms. The Indian economy registered a growth rate of 8.1 percent in the current fiscal, from under seven percent a year ago. This was possible through various measures such as fiscal prudence, rationalising taxes, liberalising trade, integrating with the global economy, tight control over inflation etc. However more investment is necessary in agriculture and irrigation sectors and physical and social infrastructure sectors such as health and education, he said.

He said that the Government has undertaken three major initiatives: public-private partnership, viability gap funding and setting up of the India Infrastructure Finance Corporation Limited. GoI identified the public-private partnership approach for financing infrastructure and has developed a policy on this, he said.

The Finance Minister outlined a number of initiatives to strengthen the regulatory mechanism in the banking sector. The Government is also paying greater attention to pension and insurance sectors. He explained that the financial sector would continue to play an important role in the growth of the Indian economy. He pointed out that, even after repaying the India Millennium Development Bonds worth $5 billion, the forex reserves position of India remained strong. This showed the strength of the financial market in India. Every country is paying greater attention to workers' remittances into their home country, as such remittances constituted a major portion of the national economy, he said.

Therefore, the Indian Government has given attention to facilitating remittances by NRIs, the Finance Minister said. The launch of the gateway is a major step in this direction. Finally, he mentioned that when other developed countries recognise India as a future economic power, Indians also should believe what India can become. True to its tradition, India would not only develop itself but also help build other economies, he said.

Chidambaram said, true to its tradition, India would not only develop itself but also help build other economies