Page last updated at 22:55 GMT, Monday, 30 March 2009 23:55 UK

Downturn hits money transfers

By Dil Neiyyar,
BBC Asian Network

Sujith from Cardiff came to Britain to get a good education, earn some money and help his family back in India.

Surjith from Cardiff at his graduation ceremomy
The falling value of sterling prompted Sujith to stop sending money home

But he's stopped sending money because of the falling value of sterling.

"I used to send about a grand (£1,000; $1,400) every quarter [three months]. But I stopped because of the falling rate," he said.

That means that Sujith's story is not uncommon.

There's been a massive fall in the number of people sending money back to India. Some money transfer agents say customer numbers have dropped by as much as 80%.

Last year £300 million was sent from the UK to family and friends in India. A poor exchange rate and unemployment are being blamed for a sharp fall this year.

Declining business

Inderjit Singh's shop in Handsworth in Birmingham is popular with people sending money back to India. But this year far fewer people are using his money transfer business.

Harpal Singh, manager of the Southall branch of the Punjab National Bank talks to customers
Money transferred to India from Harpal Singh's bank branch has fallen

"After Christmas the customers became very down. Before Christmas normally we send about £4,000 to £5,000 a week to India. And now only £800, £700, £900 maximum. It means 70% to 80% customers drop," he said.

It's a similar story in British-based Indian banks.

Southall in west London is home to the oldest Indian community in Britain.

The manager of the local branch of the Punjab National Bank, Harpal Singh, said there has been a massive drop in transfers between October of last year and January, when sterling was at its lowest point against the rupee.

"At a time near Diwali we were able to send £200,000 daily," Mr Singh said.

"[But] when the rate came down the remittances also came down.

"When the rate was 67 rupees, maybe the remittances were only 20 to 30 a day and the amount was £20,000 to £30,000 a day."

According to the State Bank of India, the exchange rate has recovered to about 73 Indian rupees to the pound. But it is still 15% lower than six months ago.

Unemployment is another reason why there's been a sharp drop in the number of people sending money back to India.

Harjinder Singh from Southall came to Britain to earn money to send back to his family in India. But he can't do that anymore because he hasn't got a job.

He said that he used to do temporary jobs. But now even they have dried up. So he has no money to send to his relations in India.

Vital income

Many people send money to India to help poorer relations or friends. Others send money to buy land or property.

If we don't send money from here, they can't spend money there
Inderjit Singh, who runs a money transfer business in Birmingham

Migrant remittances, as they're sometimes known, have become an important source of income for many around the world.

Ghana is thought to get between 10-15% of its total national income this way.

India is the biggest recipient of migrant remittances. Last year over £31 billion pounds is sent back to India through money transfers. And £300m of that was from the UK.

That's why there is serious concern over the forecast from the World Bank of an 8 to 10% drop in migrant money transfers this year.

Back in Birmingham, Inderjit Singh believes it will hit some parts of India hard.

"Many in our Indian community, we can say Punjabi community, they are very deeply linked to their parents or their grandparents or relatives in Punjab, India.

"They think it's their duty to look after their relatives, their brothers, sisters there. That's the main reason they send money there," he said.

"It's very serious because it also affects the Punjab. If we ask in Punjab, they say we are very quiet. There are no English people coming and we are very quiet. Business, taxis, suit shops and restaurants are all very quiet. We have no expenditure in India," he said.

"If we don't send money from here, they can't spend money there," he warned.



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