Dubai: Almost 20 days after India demonetised widely used 500 and 1000 rupee notes, expatriates in the UAE are finding it hard to send money to their families back home due to the continuing cash crunch. Their families are unable to withdraw cash from banks since the announcement on November 8 when the currency notes that constituted 85 per cent of total liquidity were declared illegal tender.
“I sent money for my family’s monthly expenses, but my son is unable to withdraw money from the bank because of long queues,” said Shamseer Singh, 55, who works with an insurance company in Abu Dhabi.
He said many blue-collar workers from his state of Punjab depend on instant money transfers, which are very convenient for their families to collect from nearest post offices or shops. Most of the instant cash services have collection points in almost every village where there are no bank branches at all. “They are confused now how to end money,” Singh said.
The cash crunch has badly hit rupee remittance transaction to India through bank transfers and instant cash transfers, according to the staff at some money exchanges in Abu Dhabi.
Moreover, the situation has deprived Indian expatriates of an excellent opportunity to cash in on a record low exchange rate of rupees. Indian rupee fell to a record low of 68.86 against the US dollar on Thursday, making one dirham worth 18.7 rupees. On Sunday, rupee was around 18.58 against dirham, still there were not many customers to send money to India. A report said on Sunday that the rupee is expected to see further depreciation in the coming months and may breach the 70-level (against dollar) by December and touch 72.50 by the end of 2017, says a Deutsche Bank research report.
According to the global financial services major, post US-elections, EMFX (Emerging Markets Foreign Exchange) has seen a sell-off, which has also led to some weakening in the rupee.
“Whenever rupee goes down against dollar, there was a huge rush; but not now,” said a money exchange employee.
“We used to do at least 250 transactions of Indian rupee a day, which has gone down to between 70 and 80. Around 60 to 70 were instant money transfers to India, which have been reduced to six or eight a day because collection centres in India do not have currency notes to disburse to their clients,” he explained.
Money exchange house rely on small shopkeepers and post-offices for disbursal of cash remitted by expatriates. Rural population in India have limited access to banks and almost all transactions are done in cash.
The money exchange employee said workers from Northern Indian villages, where access to banking system is limited, mainly depend on instant cash transfers.
As Gulf News reported on November 17, this situation had left many expatriates helpless as they do not have any legal means to send money to family members back home for emergencies like hospitalisation.
Confirming the continuing currency crunch at their collection points in India, Western Union said on Sunday that in addition to cash payout, they were facilitating direct to bank account services and providing consumers an option of receiving remittances via account payee cheques. “Meanwhile, our digital business is growing in India,” said Sohini Rajola, Managing Director and Regional Vice President, India and South Asia at Western Union.
Sudhesh Giriyan, COO of Xpress Money, said that despite a reported improvement in the situation in India, money transfer brands are still disbursing small amounts in cash, while higher amounts are given in cheques or through online bank account transfers. “We will return to normalcy in the next few days,” he said on Sunday.
Osama Al Rahma, chairman of the Foreign Exchange and Remittance Group (FERG) — an official platform of the companies engaged in the business of money exchange and remittances in the UAE, said currency crunch in India has affected the remittances. “I don’t have any figures to mention on what scale it has affected the transactions at the moment.” he said. But Indians are hesitant to send money home because of restrictions on withdrawals from banks. “What I understand is people in India can withdraw a very low amount of money at a time. As most of the Indians are sending money to banks in India, families cannot withdraw it in time. It is natural to affect transactions.”
Sudheer Shetty, president of UAE Exchange, however, said between 70 and 80 per cent remittance transactions to India are through banks and the remaining are through instant cash transfers.
Shetty said only middle class and upper class Indian expatriates in the UAE are waiting and watching, as they believe the rupee will fall further.
Even most among them have to send a certain amount every month back home to pay their loan or mortgage instalments and investment commitments, he said.