Remittances from urban pockets nearing pre-Covid levels


Mumbai: 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 November. 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% rise in remittances over last year, 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 Rs 1,200 crore in February, it crossed Rs 1,400 crore at the end of November,” 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 than Rs 3,000 crore in October alone, a tad lower than the nearly Rs 4,000 crore it clocked in February. For Fino, remittances from Maharashtra and Gujarat surpassed pre-Covid levels for the first time in November since the lockdown began in March.

“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 January. 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.

Experts say that remittance flows are a good proxy of the state of the migrant economy. While the channels to send such transfers vary largely, payment companies use NPCI’s Aadhaar enabled payment services and DMT channels such as bank to bank transfers through IMPS or NEFT.

“Month-on-month remittances have been improving steadily but I feel that December will significantly move the needle. With the festive season and Bihar elections behind us, we expect remittances to beat pre-Covid levels by March,” said Abhinav Sinha, CEO, Eko Financial Services.

Eko processed Rs 2500 crore of remittances per month prior to the pandemic, and has crossed 70% of that business in November.

The silver lining has been the cash withdrawals business, which has grown steadily despite an end to the government’s direct benefit transfers under Covid relief.

“A steady rise in remittances has pumped up the cashout business aided by NREGA payments; our business has surpassed pre-Covid levels and now we are clocking Rs 500 crore worth of withdrawals every month,” Sinha added.

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