Competition in the money exchange business is getting intense, with leading commercial banks venturing into remittance, especially by Indian blue-collar workers.
Banks, which used to ignore the blue-collar workers, are now targeting them as an important segment in the global money remittance business, which is reportedly booming despite the current economic slowdown.
Bank of Baroda, an Indian bank present in most of the GCC countries, recently started a new Friday remittance service with an initial free remittance offer.
Ashok K Gupte, Chief Executive Officer, Bank of Baroda, said the bank is the first in the UAE to offer the service on Fridays. The launch of this new service was accompanied by a publicity campaign to target Indian blue-collar workers. "We are the first bank in the UAE to start a Friday remittance service. To begin with, the service is available from our Bur Dubai branch and offers instant online remittance to India, free of charge to more than 2,000 Bank of Baroda branches for a limited period, and to more than 30,000 branches of other banks in India."
While Bank of Baroda is the only Indian bank with full-fledged operations in the UAE, representative offices of other major Indian banks are canvassing for customers for the remittance business through local partners and money exchanges. State Bank of India, which manages the City Exchange in the UAE, started a number of branches recently to increase its remittance business.
Recent reports suggest that despite the recession, the US-based Western Union has recorded an increase in total remittance to India. Out of a total global money remittance business worth between $360 billion (Dh1.3 trillion) and $370bn per year, India receives $50bn and personal money remittance accounts for $20bn to $25bn. The Gulf accounts for a major chunk of expatriate remittances to India and Western Union has been expanding aggressively here.
In the UAE, new players are keen to enter the multi-billion money remittance market. The Muthoot Group from south India is planning to open its first money exchange branch in Dubai's Naif area. "The Muthoot Group has over 1,100 branches and its flagship company, Muthoot Finance, has plans to open 400 branches, including 100 in Kerala, and recruit 2,000 employees. The group has opened a travel and tourism company in the UAE. Their next initiative is to enter the money exchange business," said a company official.
The group is waiting for the UAE Central Bank's approval for starting its remittance business in Dubai.
The Emke Group, owner of the Lulu supermarkets and hypermarkets chain, is going ahead with a plan to start a money exchange company. The senior management has already been recruited and the group is awaiting approval to open multiple branches at various Lulu outlets in the UAE.
Other established money exchanges, such as the UAE Exchange, are engaged in customer surveys and studies to keep their customer base intact. The Joy Alukkas Group, which forayed into the money remittance business earlier, has planned to sell off its money exchange business to a Kuwaiti group and is awaiting regulatory approvals.
In Saudi Arabia, MoneyGram International, a global money transfer company, and National Commercial Bank (NCB) agreed on June 30 to form one of the largest money transfer networks in the country. A statement issued by the NCB on June 30 said: "A global remittance leader and home to more than six million expatriates, Saudi Arabia saw remittances grow to more than $17bn in 2006."
Anthony Ryan, President and CEO of MoneyGram International, said: "Saudi Arabia is the second largest sender market in the world behind the United States, and our alliance with a premier financial institution such as NCB represents a significant opportunity for MoneyGram's expansion plans in the Middle East."
John Hempsey, Head of MoneyGram's International, said: "We will be working closely with NCB to rapidly register expatriates across Saudi Arabia. We will provide MoneyGram's 10-minute delivery to a global network of 180,000 agent locations in 190 countries and territories."
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