JOIN USIn the larger context, the rating agency Moody's also today said the ratings of Asian banks are not likely to be downgraded, unless there is a massive restructuring in Dubai.
Reserve Bank Deputy Governor Usha Thorat said that the crisis will not impact the country's banking sector as the exposure "is not significant and not a matter of concern...It is not something that materially affects their balance sheets."
Moody's also said Asian banks have relatively small exposure to Dubai and Dubai World companies. "Therefore, no rating actions have been taken on Asian banks as a result of the requested standstill on select Dubai World debt payments. Nor does Moody's expects that there will be any need of negative rating action on Asian banks at a later date..."
So far as the domestic banks are concerned, Bank of Baroda has an exposure of Rs 5,000 crore in Dubai. State Bank of India too had provided Rs 1,500 crore to some UAE companies.
Moody's said, "the Asian banks have billions of dollars of exposures to the UAE entities, but this represents small per cent of their assets. To date, we have found no Asian banks to have sufficiently high levels of exposure to members of Dubai World group to warrant any ratings actions."
Thorat, however, admitted that the Dubai crisis can have some impact on remittances and affect those parts of the country that receive inflows from the Gulf nation in larger quantity.
"Some parts of the country are certainly more dependent on remittances from Dubai, but overall I think it is too early to say. There could be some impact obviously," the RBI Deputy Governor said, when asked about the impact of the crisis on the country.
Many states, especially Kerala, receive large amount of remittances from persons working in the Gulf region.
As many as 42 per cent of the 1.5 million population of Dubai are Indians and the UAE contributes nearly 13 percent of the overall remittances to the country. India was the highest recipient of remittance flow at $52 billion or 15 per cent of the global total last year, according to a World Bank report. This constitutes 3.3 per cent of the GDP.
"We have to see how far this (Dubai financial crisis) spreads", she said, adding that it may be too early to say anything about the fallout of the crisis on the country at present.
The financial crisis in Dubai erupted late last month with the conglomerate Dubai World asking for six months time to repay its USD 59 billion debts.