4.15 PM Friday, 29 March 2024
  • City Fajr Shuruq Duhr Asr Magrib Isha
  • Dubai 04:56 06:10 12:26 15:53 18:37 19:52
29 March 2024

Borrowing at 120% per cent to remit money to India suicidal: Financial expert

Published
By VM Sathish

Indian expatriates should resist the urge to borrow and remit money home to take advantage of the current favourable exchange rate, a financial expert has warned.

K V Shamsudeen, Director, Barjeel Geojith Securities, and Chairman of Pravasi Bandhu Welfare Trust, says that some expatriates have started borrowing to remit money to India, but they are taking a big risk because the rate of interest charged by some unofficial money lenders is as a high as 120 per cent, which may result in a debt trap.

He adds that Kerala, home to large number of expatriates, receives about Rs60,000 crore in remittances per year, but claims that 80 per cent of such funds are used for non-productive purposes, like buying gold.

Remittances by Indian expatriates through money exchanges have increased recently after the Indian rupee sank to record levels, and many agents are allegedly approaching people with loan offers.

The Pravasi Bandu Trust has been running a campaign against social evils and suicides.

“Eight per cent of all deaths by Indians in the UAE are caused by suicides and 75 per cent of suicide cases in the past were related to financial problems, credit card debt and other financial liabilities.

“As the Indian currency has depreciated substantially, many agents are approaching expats offering loans and other schemes to provide funds for remittance to India, but they are borrowing at the rate of 100 to 120 per cent,” he says.

“Some of the expatriates are borrowing at the rate of 30 per cent interest from credit cards to remit money, but most of it is used for non-productive purposes,” he adds.

Shamsudeen, who has completed 300 awareness campaigns among expatriates to develop a saving habit and avoid a lavish lifestyle, said borrowing at a high interest rate itself is suicidal, and many poor expatriates were caught in this trap.

He said the hidden cost in such loans is not known and innocent people may end up in a debt trap.

“If there is a job loss or other problems, they will be stuck. The money they send to India must be invested in liquid assets, which can be easily liquidated.

“If they invest money in a house and lose their job, they will get stuck, because an incomplete building or house cannot be sold.”

According to him, 80 per cent of the funds flowing from the Gulf region to Kerala are used for non-productive purposes, causing financial distress when the expatriates return home.

“Even if you choose to borrow and remit money, it should be used for productive and liquid assets,” he says.

Passion for gold

Gold has been a passion for many expatriates, but the gold price has fallen substantially too.

“Even though many Keralties hold huge amounts of gold and gold ornaments, not many people could book profits and make money. When the gold price crashed and continues to do so, they still keep gold as a long term investment,” he says. He advises expatriate investors to buy gold coins and gold bars, and not gold ornaments, to which making charges have been added.

He said many NRIs have made a fortune from the stock market by investing in good stocks and mutual funds. Shamsudeen was speaking at a seminar on Indian currency fluctuations and its impact on Indian expatriates organised by the Indian Media Forum UAE, an association of Indian journalists.

ALSO READ:

Secretary accused of forging signature to take Dh161,800

 

NRI Cheer: Rupee could slump to Rs16.75 vs Dh1

 

Saudi assets growth set to slow