RBI Asks Indian Banks To Expose Dubai Debt Details

State Bank of India, Bank of Baroda, ICICI Bank and Axis Bank

 

The Reserve Bank of India plans to ask banks to furnish details of their exposure, if any, to Dubai World, the government-owned company which is reeling under liabilities of $59 billion and has sought to delay repayment of its debt obligations.

“We will ask the banks to furnish the details regarding their exposure to Dubai World,” said an agency report from Ahmedabad quoting Ms Shyamala Gopinath, Deputy Governor, RBI.

Analysts said that Indian banks having a presence through branch operations in Dubai may feel the ripple effects of the attempts by a State-owned holding firm in the Emirates to reschedule its debt payments.

Exposures to the real estate sector in Dubai, where property prices are believed to have fallen by up to 50 per cent, could impact Indian banks, feel analysts. Further, job losses in the real estate could slow down remittances from Indian workers.

State Bank of India, Bank of Baroda, ICICI Bank and Axis Bank are some of the banks that have a presence in Dubai.

According to Ms Rupa Rege Nitsure, Chief Economist, BoB, her bank has a loan portfolio — retail as well as corporate — of Rs 10,000 crore (or 7 per cent of the global loan book of Rs 1.50 lakh crore) in the UAE. Outstanding loans from the bank's Dubai branches amounted to about Rs 4,000 crore.

“Our exposure to the real estate sector in Dubai is about Rs 600 crore spread over 7-8 projects. We do not have any exposure to Nakheel, the property development arm of Dubai World,” she said.

BoB has six branches in the UAE (including three in Dubai).

A senior SBI official said the bank's exposure to Dubai is about 0.3 per cent of the global assets of Rs 5,80,237 crore, which is approximately Rs 1,700 crore. “We have a cautious approach towards lending. We don't see much impact on us due to the latest developments in Dubai.”

According to a banking analyst, ICICI Bank's West Asia balance sheet is about $6-7 billion, but there is likely to be no impact on the bank's profitability.

A statement issued by the bank said, “There is no material non-India linked exposure to Dubai corporates”.

Similarly, Axis Bank's West Asia exposure is about $300-400 million, which is also unlikely to cause any impact, the analyst said.

Report by Indian Express