The Telegraph
Since 1st March, 1999
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Fill ’em with crores & forget it
- No-withdrawal expats make Madhapar a money mountain

Madhapar (Bhuj), Feb. 1: Honey, the money knows the way in here, but not the way out.

“Leave it there,” a nonchalant businessman based in Kenya advised a bank manger recently, told that the customer’s RBI bonds had matured. The “it” in question: Rs 250 crore only.

Don’t try to impress Madhapar with such figures though. The Kenyan Gujarati and countless other NRIs have made the village near Bhuj what must be India’s richest cash cul-de-sac.

Riffle through another wad of numbers: The Patel-dominated village is home to 50,000 people and Rs 10,000 crore in bank deposits. The source of the money mountain: 20,000 NRIs spread across the world.

Like the Kenyan businessman, rich expatriates from the village have a habit of putting money in accounts back home and never withdrawing any of it.

The funds flow — nurtured by a 63-year-old man named Judavji Varsani — has triggered a race among banks to set up shop in the village. Three decades ago, only three banks — Bank of Baroda, Dena Bank and Central Bank of India — had branches here.

Now there are 12. State Bank of India, State Bank of Saurashtra, Bank of India, Bhuj Mercantile Cooperative Bank and Kutch Gram Bank are among the banks operating in Madhapar. ICICI bank has an extension counter and UTI Bank, too, has obtained permission to open a branch.

Even the local post office has more than Rs 300 crore in deposits, says Varsani, president of the Small Savings Association of Kutch and the force behind the flow of NRI funds. Not a single NRI account-holder has ever withdrawn money, he claims.

Varsani, who owns a supermarket in the village, set out on his mission of attracting NRI deposits way back in 1977. He toured Kenya, Uganda and the Gulf countries — places that people from Madhapar have made their second home — to tell them why they should put their money in the village’s banks rather than in Swiss accounts.

Wherever Varsani went, NRIs from Madhapar not only heard him out but also did as he told them. The trend continues. Although interest rates have dropped, the flow of deposits from NRIs to this arid land has continued uninterrupted since 1977.

At that time, the country’s foreign exchange reserves had depleted. Varsani, then a young man, racked his brain to think of ways to attract foreign exchange. After coming up with the idea of tapping NRIs, he wrote to the then Union finance minister, H.M. Patel. The letter, written in Gujarati, explained how India could encourage NRIs to deposit their money in banks at home.

The finance minister invited Varsani for talks and was convinced by his argument in favour of simplifying the rules for NRIs to open accounts, the 63-year-old said. His suggestions were reflected in subsequent government policy, which made it simpler for NRIs to deposit or withdraw money in Indian banks.

“How much money can you fetch in one year'” Varsani recalled the minister asking him. “At least 10 crore, I said.” But he surpassed the amount many times over, wooing deposits of several hundred crores.

Suresh Bhai Shah, a banker settled in Nairobi who was his friend, agreed to put in Rs 100 crore. “Those were the initial days. Many more Shahs followed suit,” Varsani said.

A few years ago, the village —which boasts of good roads and drainage — offered a Rs 100-crore interest-free loan to the Gujarat government for developing civic amenities and bringing Narmada’s water to Kutch. But the state government did not accept the loan, which was to be returned after 20 years.

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