Dubai crisis may impact remittance flow: RBI

New Delhi, Dec 3 (PTI) The Reserve Bank of India (RBI)
Thursday said the Dubai debt crisis will have some impact on
remittance flow into the country and will particularly affect
those states which receive huge inflows from the Gulf region.

"Some parts of the country are certainly more dependent
on remittances from Dubai, but overall I think it is too early
to say. There could be some impact obviously," RBI Deputy
Governor Usha Thorat said here Thursday. "We have to see how
far the Dubai financial crisis spreads", she said.
Many states, especially the south Indian state of Kerala,
receive large sums from the Gulf as lakhs of Keralites work in
these desert nations and the crisis will have a cascading
impact on the Kerala economy, which is largely dependent on
remittances.
The UAE contributes to around 13 per percent of the
overall remittance flow into the country, with as many as 42
per cent of the 1.5 million population of Dubai being Indians.
In 2008 India received the highest amount of remittances at
$52 billion or 15 per cent of the global total, as per a World
Bank report. This constitutes 3.3 per cent of the GDP.
Thorat, however, ruled out the possibility of the domestic
banks being hit by the crisis saying "the crisis will not
impact our banks as their exposure is not significant and
hence not a matter of concern...It is not something that
materially affects their balance sheets," she said.
Meanwhile, Moody's also said the ratings of Asian banks
are not likely to be downgraded, unless there is a massive
restructuring in Dubai. The Dubai debt crisis erupted late
last month with Dubai World asking for six months time to
repay its USD 59 billion debts. PTI BSP
RDM