UAE-India remittance corridor flourishes

The UAE is poised to retain its position as a key remitter to India in 2023.

According to the RBI Remittance Survey 2021, the UAE was responsible for 18 per cent of the total remittance inflow to India. In 2022, the global inward remittances to India touched $110 billion, a 24 per cent increase on the previous year. This year, the World Bank has forecasted a much lower growth largely due to economic uncertainties worldwide, which has affected Indian expats as well.

However, in the GCC, the UAE remains the largest remittance-to-India generator. “The Indian rupee has remained stable in the range of 22.20-22.55 against dirham, and any sharp depreciation may lead to an increase in remittances during the last quarter of 2023,” says Adeeb Ahamed, Managing Director, LuLu Financial Holdings.

The reason for UAE-to-India corridor’s stable growth is three fold, adds Ahamed. First, there are favourable exchange rates. “The rupee’s weakening in recent months against dirham has incentivised higher remittances as expatriates seek to maximise the value of the money they send back to India. This flow could be towards personal savings, investments as well as for family support purposes.”

Secondly, India has a slew of festivals across the year; many expats send money home for the celebrations.

Thirdly, there is a burgeoning portfolio of investment opportunities in India. “We are seeing a surge in the number of Indians who wish to invest in India’s growth story, by investing in stocks, real estate and other investments. While previously Indians remitted for sustenance of their families, today, a sizeable number wants to capitalise on the opportunities back home and reap the benefits made available to them for which they are now remitting beyond just basic savings,” explains Ahamed.

Ease of fund transfer

What is making a huge difference in the sector is ease of transaction. Abdel Kareem Alkayed, CEO, Wall Street Exchange Center, explains the shift.

“In 2023, the remittance sector is experiencing a shift through the facilitation of different channels for money transfer in the UAE. This positive environment is further propelled by the increasing prominence of digital remittance channels. The remittance business is expanding as digital payment platforms provide enhanced convenience and ease in conducting transactions, highlighting a clear trend toward digitalisation within the sector.”

Ahamed explains, “Technology has also enabled third-party service integrations which allow consumer-facing platforms to start offering remittances by managing the user experience.”

And because of the implementation of strategies such as electronic facial recognition technology and scanning of Emirates ID, online onboarding and action are not just easier to undertake but more secure as well.

Then there’s the use of data analytics. “The rise of data analytics is helping companies gain deeper insights into customer behaviour and preferences. This allows companies to offer more personalised services to specific customer segments and understand key customer behaviour, which can speed up their transition to digital payments,” says Ahamed.

The Central Bank Digital Currencies system is another possible way to provide a more efficient way of processing payments. “In the initial phase, its application is expected to be limited to trade payments, although its larger possibilities will lead to the rise of more money transfer operators building hybrid operational networks,” says Ahamed.

Loyalty programmes, exclusive offers

Exchange centres are capitalising on the interest of expats wanting to send money home – and differentiating from one other with competitive rates and cash back or loyalty programmes. At Wall Street Exchange Centre, for example, says Alkayed, “We craft exclusive offers for them – such as ‘Send and win’ campaign and unbeatable exchange rates that not only help them save money but also give them a chance to win exciting rewards with every transaction.”

Meanwhile, at LuLu Exchange, besides a loyalty programme, there are referral programmes and exclusive offers for those who use the LuLu Money app.

Sending money home has never been easier – with new tech that’s easy to use and more secure than before and an exchange rate that favours the expat, the remittance sector is poised for healthy growth. ●