Dubai: UAE banks are trying to muscle into the Indian rupee remittance outflow through special rates and promotions through their Internet banking services for non-resident Indian (NRI) accountholders.
Simultaneously, they are trying to carry the battle to the exchange houses, which are now reaping the windfall from rupee’s nowhere-to-hide slide against the dollar (and the dirham).
With web-enabled banking services – and mobile banking to follow in due course – coming on nicely, some of the major local banks see significant prospects in trying to entice NRI accountholders to use these rather than remit money through exchange houses.
“Web and mobile delivery platforms certainly enable banks to go deep into remittance-led services, but they have a lot of catching up to do with exchange houses,” said Anthony Jos, director at Joyalukkas Exchange. “This is a business where rates on offer count as the only consideration with customers. Exchange houses have a lot of in-built flexibility in offering these.”
But banks do have other advantages they can leverage. Many local banks are loosening their retail-side purse strings in offering loans targeted specifically at NRIs and which can then be sent on as remittances to India. Now, by offering the remittance service as well, banks can build on an existing relationship with an NRI customer.
On Thursday, EmiratesNBD sent out SMS promotions offering “Special INR [Indian rupee] rate of 0.05678 (17.61) today through our Online & Mobile Banking, plus a chance to win your money back! T&C (terms and conditions) apply. Rates may change during the day.”
Banking industry sources were unwilling to comment beyond saying that remittance services were part of their standard offerings.
“But volumes are such that banks will only look to scale up this side of their operations – from offering loans to remitting it creates a longer term relationship with customers,” said a banker. “Longer term relationships are where the margins are.”
Meanwhile, local exchange houses confirmed they have not received any special instructions from their banking partners in India – or from regulatory authorities – on the position they should take as rupee remittance volumes continue their volatile path.
“Though RBI (Reserve Bank of India) has taken measures to arrest the slide of the rupee, it has not yet started showing any results,” said Y. Sudhir Kumar Shetty, chief operating officer – global operations, UAE Exchange. Exchange industry officials confirm that any rate volatility impacts their businesses and that increased remittance volumes on their own need not mean the going is good. “Currently all exchange houses here are on a strong ground but if the rupee volatility continues it will impact margins,” said Jos.
“So far exchange houses are not taking any forward cover positions unless on weekends. The day-to-day arrangements continue to be in place despite the spike in remittance volumes.”
