Outward remittances at all-time high in march : 20-05-2020

Indian remittances overseas surged to a record in March as many wealthy Indians might have shifted a part of their savings to safe haven assets and to purchase popular technology company stocks, taking advantage of the sudden collapse in valuations, said experts.

Indians sent a record $18.75 billion in FY’20 under the liberalised remittance scheme whose scope was widened in 2015 to facilitate investments in overseas markets, send money for maintenance of close relatives abroad and other purposes.

Even as outflows under travel and education dipped, outflows for maintenance of close relatives rose to a record $344 million in March and accounted for a quarter of the total of $1.34 billion during the month.

“There were queries on the scope of investing in dollars overseas. Even if there is no return in terms of interest, dollar appreciation since March when it was trading around ₹73-74, itself could earn investors some valuation gains even if they can get it back after say six months,” said KN Dey of United Financial Consultants.

Many investors have been buying fund of funds that invest in overseas assets. Many brokerages such as HDFC Securities facilitate investments in US-listed shares such as Apple, Alphabet and others.

“It is likely that relatives are really in need of funds and there are economic situations that demand support from family back home. Also, investors are looking at capital buffer overseas at such uncertain times,” said Moin Ladha, partner, KhaitanNSE 1.60 % and Co.

This money is also sent for upkeep of relatives stranded abroad due to the lockdown and also for transfer to safe avenues when financial markets have crashed, said experts.

Source : Times of India