CEO Forum VI –“Leading the Recovery: Environmental, Social

and Governance Imperatives for DFIs",Organized by ADFIAP,

Manila, October 28-29, 2009Presentation on -

'Development Finance and Migrant Workers Remittances’

By Mr. Yogesh Agarwal, CMD, IDBI Bank Ltd., India

Structure of Presentation

Development Finance and Migrant workersRemittances

Dealing with Remittances

Government initiatives

Development Finance and Migrant Workers Remittances

Development Finance and Migrant Workers Remittances

Money remittances are one of the most visible links between people working abroad and their countries of origin

Remittances impact local economic development activities, entrepreneurial development, savings and job-creation

Multiplier Effect of Remittances

Individual levelBetter livelihood by enhancing migrants’ consumptionProvide better education and health parameters

National levelCoping with Balance of Payment difficultyFinancing development

Types of Migration

International MigrationInternational migration refers to movement of people across national boundaries

Internal MigrationRefers to a move from one area to another within one countryRational decision made by an individual after weighing risks and benefits

* Opportunity for India in tapping intra-country remittances

Dealing with Remittances

Dealing with Remittances

Tapping the official flows and unofficial flows(It is estimated that amount from unofficial channel is double the amount which comes from official channel)

Developing confidence and lower cost banking mechanisms

Improving the investment climate

Reduce the cost and the complexity of making transfers, particularly small transfers

Help Micro Finance Institutions to provide adequate services

New products and investment opportunities to be developed keeping in mind the geographical areas, entrepreneurial capabilities and expectation of migrants

Dealing with Remittances (contd.)

Upstream Remittance marketInflow from destination country to home country

Downstream remittance marketPeople returning to their home states.These returnees contribute more than just Savings,like social network,knowledge & skill

e.g.India’s outsourcing services industry getting benefited

Implication: Need to tap opportunity with retuning emigrants too

Dealing with Remittances (contd.)

Government Initiatives

Welfare funds for assisting returnees

Encourage investment by wage earners

Encourage a remittance-backed lending Programme making remittances work for development

Support NGOs and community initiatives

Government Initiatives

Government initiatives (contd.)However, to support such initiatives, a program of savings mobilization of remittance earners, training and skill development may be a good way

Governments need to continuously strive to establish and strengthen the emotional connect of the migrant with the home country to ensure continuation of financial flows

THANK YOU