India: Remittances from urban pockets nearing pre-Covid levels

  • In signs that a major part of the labour force has returned to urban pockets, remittances in major corridors like Maharashtra, Tamil Nadu, Delhi – NCR, and Gujarat returned to 80-85% levels of the normal at the end of Nov 20.
  • Pockets such as Mumbai, languishing at 40-50%, also returned to 70% levels over the last two months.
  • Places like Punjab and Kerala recorded more than 30% y/y rise in remittances, data collated by several payment companies showed.
  • The trend on reverse remittances too altered with migrants finding stable jobs and steady income in metro pockets.
  • “Business is back to normal for the segments we are catering to. While we clocked remittances worth INR12bn in Feb 20, it crossed INR14bn by end-Nov 20,” said Anand Bajaj, CEO of AePS facilitator PayNearby.
  • “In the past two months, we have seen that mom-and-pop store owners who had left for their native places at the start of the lockdown returned with their families and are now offering remittance services to the local community, aiding to business growth.”
  • Fino Payments Bank, one of the largest remittance providers, saw a similar trend. It clocked remittances of more INR30bn in Oct 20 alone, a tad lower than the nearly INR40bn it clocked in Feb 20.
  • For Fino, remittances from Maharashtra and Gujarat surpassed pre-Covid levels for the first time in Nov 20 since the lockdown began in Mar 20.
  • “The biggest takeaway is that urban pockets are now bringing in the bulk of the business for us, regions that had taken a severe hit during the lockdown. Labourers are returning and the trend will pick up when infrastructure development returns in full swing,” said Rishi Gupta, MD, Fino Payments Bank.
  • “Our expectation is that remittances will cross pre-Covid levels in Jan 21. If the infections rise and there are sudden lockdowns, that could lead to slump in business, however.”
  • There are predominantly six major corridors in India from where a large chunk of the remittances originates – Delhi, Mumbai, Rajasthan and Gujarat – with the states of Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh known as the BIMARU belt being the largest receivers of these inflows.

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