The Richmond Hill resident is one of a growing number of Indo-Canadians seizing on more attractive savings rates at financial institutions in India. Instead of parking his money in a Canadian bank at a fraction of 1 per cent interest, he's getting higher returns in the country he left more than 30 years ago.

"There you can get 7, 8 per cent," said Mehta, who has a handful of Indian-based accounts. He estimates people in the community generally send sums in the thousands of dollars.

Banks operating in India, sensing that hunger for higher returns, are actively wooing non-resident Indian clients from all over the world, including Canada. The worldwide Indian diaspora numbers over 25 million with large populations in North America, the United Kingdom and the Middle East.

More than 1.3 million people of South Asian ethnicity live in Canada, with the bulk identifying themselves as East Indian. The community's biggest concentrations are in Vancouver and Greater Toronto.

Given the size of that potential market, many banks are building entire banking strategies around non-resident Indian, or NRI, clients that include services such as investing and wealth management. HSBC, Canada's largest foreign bank, recently launched an office in Mississauga dedicated to serving non-resident Indians through its global operations, including its Indian subsidiary, HSBC India.

"The bank, as a whole, is looking at a global Indian strategy as much more than just Indo-Canada or Indo-UK," Naina Lal Kidwai, group general manager and country head for India, said during a trip to Toronto. "It is about the Indian who could be anywhere, who could have a business which straddles many continents and the ability for us to provide that for him or her."

Some Indian-based banks are even urging the Reserve Bank of India, that country's central bank, to raise deposit rates on non-resident accounts more aggressively or to allow banks themselves to determine those rates, according to Indian press reports.

Some experts warn such NRI savings schemes are not foolproof. Higher returns always entail higher risk, and they say Canadian-based consumers should be aware of that trade-off before sending their hard-earned money to banks overseas.

"They should not proceed down that road - period," said Wendy Dobson, a professor at University of Toronto's Rotman School of Management. Dobson has written about India's banking system and argues the average person cannot fully understand the risks posed by potential currency swings.

Still, statistics suggest growing numbers of non-resident Indians are taking the gamble even though interest rates have fallen during the global recession. Many have a bullish view of the Indian economy's growth prospects and believe interest rates will begin rising again by the end of this year.

Neeraj Mehta says he's aware of the risks, but says it's still worthwhile. He doubts the value of the rupee will fall against the Canadian dollar, especially since India's economy is forecast to grow by 7 to 9 per cent next year.

- Torstar News Service