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The UAE is set to maintain its prominent role as a primary contributor to remittances flowing into India during the year 2023. According to the RBI Remittance Survey 2021, the UAE held a significant share of 18% in the total inflow of remittances to India.
Even though there’s a forecast of a reduced growth rate this year due to global economic uncertainties affecting Indian expatriates, the UAE still holds its ground as the largest generator of remittances to India among the GCC nations.
In the realm of remittances from UAE to India, the stability of the Indian rupee against the dirham plays a pivotal role.
Adeeb Ahamed, the Managing Director of LuLu Financial Holdings, points out that the rupee’s stability within the range of 22.20-22.55 against the dirham is a crucial factor.
“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 Ahamed.
Any substantial depreciation of the rupee might lead to a surge in remittances during the final quarter of 2023.
The consistent growth of the UAE-to-India remittance corridor can be attributed to three key factors, as highlighted by Ahamed. Firstly, the attractive exchange rates contribute significantly.
The weakening of the rupee against the dirham in recent times has incentivized higher remittances as expatriates aim to maximize the value of their sent funds. These remittances are directed towards personal savings, investments, and family support.
Secondly, the multitude of festivals celebrated in India throughout the year prompts expatriates to send money back home for the festive occasions.
Thirdly, the burgeoning investment opportunities in India attract a growing number of Indians residing in the UAE. This newer cohort of remitters is looking to capitalize on the prospects offered by stocks, real estate, and various other investment avenues.
The remittance sector is undergoing a transformative shift in 2023, facilitated by diverse channels for money transfer within the UAE.
Digital remittance platforms are gaining prominence due to their convenience and ease of use. Technology advancements have enabled third-party service integrations, enhancing the user experience and enabling simpler online onboarding procedures.
Incorporation of data analytics is allowing remittance companies to gain deeper insights into customer behavior, leading to more personalized services and accelerating the transition to digital payments.
Moreover, the potential introduction of Central Bank Digital Currencies could revolutionize payment processing in the future.
Exchange centers are tapping into expats’ interest in sending money home by offering competitive rates, cash back, and loyalty programs.
Wall Street Exchange Centre, for instance, offers exclusive deals and exciting rewards through campaigns such as ‘Send and win.’ Similarly, LuLu Exchange features loyalty and referral programs, as well as exclusive incentives for users of the LuLu Money app.
With the advent of user-friendly technology, improved security measures, and favorable exchange rates, the remittance sector is poised for robust growth, making sending money back home easier and more beneficial for expatriates.
