The Reserve Bank on Thursday said the financial crisis in Dubai could have some impact on remittances and would affect those parts of the country that receive inflows from the Gulf nation in larger quantity.
“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, when asked about the impact of the crisis on the country.
Many states, especially Kerala, receive large amount of remittances from persons working in the Gulf region.
“We have to see how far this (Dubai financial crisis) spreads”, she said, adding that it might be too early to say anything about the fallout of the crisis on the country.
As far as banks are concerned, Ms. Thorat said, the crisis will not impact India’s banking sector as the exposure “is not significant and not a matter of concern...It is not something that materially affects their balance sheet.”
Among the state-owned lenders, Bank of Baroda had an exposure of Rs. 5,000 crore in Dubai. State Bank of India too had provided Rs. 1,500 crore to companies in the UAE, of which Dubai is one of the seven emirates.
The financial crisis in Dubai erupted last month with conglomerate Dubai World asking for six months time to repay its $59 billion outstanding loans.