NRI loans go up on weak rupee

Falling rupee has resulted in a sharp spike in inward remittances to India by non-resident Indians during the last couple of months.

Remittances are reported to have gone up by 25 per cent since May this year. So much so, the depreciating rupee has set off a trend among NRIs, especially in the UAE region, who are now queuing up the local banks to take personal loans to send money to India. “To take advantage of the depreciating rupee, we see an increasing trend among NRIs to go in for personal loans so that they can send more money back home,” said Sudhesh Giriyan, vicepresident and business head of Xpress Money, one of the top global money transfer agency.

Cashing in on the trend, most banks in UAE that have come up with lucrative personal loan offers at interest rates in the range of four-eight per cent payable over fourfive years. High networth individuals among the NRI population are learnt to be using the opportunity to take loans anything in the range of 150,000 dirhams to 500,000 dirhams (`25 lakhs-`90 lakhs) to remit money back home.

“We learn that this trend is not just restricted to UAE but is also seen in other Middle East nations, UK, New Zealand, Malaysia, US etc,” the Xpress Money person said. Foreign remittances into India have shown a steady growth in the last three years despite tough economic conditions. Inward remittances to India have grown from $55 billion in 2010 to $70 billion in 2012.

For the current fiscal year, remittances are pegged to touch about $80 billion.

Explaining the increase in remittances, Mr Giriyan said, “Tough times always make NRIs to behave more fiscally disciplined. They tend to save a little more than usual so that they can send money back home and invest in assets such as real estate.”