Indian expats laughing all the way to the exchange

 Dubai: Indian expatriates here are taking advantage of the record drop in rupee rates to pay off mortgages back home, invest in real estate and open fixed deposits, financial experts say.

T.K. Raman, Group Chief Financial Officer (CFO), Finance House, said “Bearing in mind that mortgage rates in India hover around 12 to 14 per cent per annum and the fact that AED personal loans in the UAE range between six and eight per cent per annum, NRIs stand to benefit due to this wide interest rate differential.

“Even if you take into account penalty charges for pre-payment of mortgage loans in India, they are still better off taking a personal loan from local banks to repay mortgage in part or full in India.”

He said a good number of Indian expats are also considering real estate investments back home.

“Some NRIs are looking to make fresh investments in India like buying new land or a small house. Some are also looking keen on putting their money in Indian Rupee deposits currently fetching 9.5 per cent to 10 per cent interests per annum. These are people hopeful of a future investment in real estate, planning for their retirement or setting aside funds for higher education of their children in India.”

Sudhir Shetty, Chief Operations Officer (COO) – Global operations, UAE Exchange said a trend is being noted with respect to middle and upper class salaried NRIs sending large sums of money back home. “These people do not always send money home, but when they do, they are large volumes of money. These people are usually thinking of investments in India like land or opening new deposits.”

He added that a vast majority of blue-collared NRIs, however are never able to take advantage of the rupee drop. “Workers never have extra cash stashed away. They have a particular day in the month where they receive a salary and remit back home. If the rate is good on that day – it is to their advantage. They don’t particularly plan to send money like the big ticket players.”

Raman added: “Sentiment amongst NRIs is that the rupee is likely to fall further in the near term as a result of double-digit inflation in India and mass withdrawal of foreign investment funds, although many believe that the rupee will bounce back by more than 10 per cent within a 1-2 year time frame. The RBI could influence the Rupee appreciation sooner, although we have not seen any decisive moves in this direction at the present time.”

An NRI in Dubai said he would be sending money back home to pay off his mortgage. “I am sending money back to reduce my EMI for a mortgage that I have taken to build a home in India.”

On May 28 (Monday) the Rupee was at 55.2400 to a US Dollar.