A charity assisting lower- and middle-income expatriate Indians fields queries on fiscal implications of being laid off.
Indian expats fear economic future
DUBAI // The global economic downturn is causing concern among Indian expatriates who fear they could become victims of the maelstrom. KV Shamshudeen, the founder of the Pravasi Bindhu Welfare Trust, an organisation that assists lower- and middle-income expatriate Indians, yesterday received a number of calls on how redundancy would affect loan and insurance payments during an hour-long, financial advice radio programme he hosts.
One caller, Rashid, asked if there would be help for people with bank loans who were made redundant. Mr Shamshudeen advised people in that position to pay off their loans before they left the country. "People often think that they can escape to India without paying the loan," he said. "Let me warn you that debt collectors will come to your home in India and demand the money. All the banks here have debt collectors back home also."
He said the Indian government allowed up to US$100,000 (Dh367,000) to be sent abroad without prior clearance from the Reserve Bank of India, allowing people to transfer back funds to pay off loans, if necessary. Mr Shamsudheen advised selling assets to pay off loans, which accumulate interest at an alarming rate when monthly payments are missed. "The house will not give any returns to the person living there," he said. "If he sells, he can repay the loans and stop the accumulation of interest.
"This is an expensive way but he will be free. And he will learn an important lesson about borrowing and even though he will start at zero, it will be without debt." Such people should also make enquiries at their banks. Some automatically include insurance to cover the loss of a job. Armed with a termination letter, these insurance payments can be activated to pay off some of the loans, he said.
Non-payment of loans can lead to a jail sentence in the UAE, he warned. "Then they stay in jail till they can pay the money." Other callers asked how the economic crisis would affect the size of their remittances. Mr Shamsudeen advised against giving in to pressure to send more money back home than was needed. The important thing was to balance the books. "The idea is to live within your means and there would be no financial worries," he said.
According to World Bank estimates, the biggest declines in the flow of migrant money next year are expected in the Middle East and North Africa, because of economic slowdowns in the Gulf area and Europe. However, Mr Shamsudheen said he noted during a recent trip to India that banks said deposits were up from even a few months ago. "When the Indian currency appreciated, most people chose to keep their funds here. But now, in the recent month, as the rupee depreciated, they have once again started transferring more money there."