Dubai debt crisis may hit exports, remittances: HDFC Bank

MUMBAI: The Dubai debt crisis may cause significant damage to exports, remittances and real estate sectors in India, besides resulting in build up of asset bubbles in Asia, HDFC Bank today said.

"The ongoing crisis in Dubai will impact specific pockets of the domestic economy and what may seem negligible at an international level may translate to significant damage for specific segments of the economy," the bank said in a research report.

The crisis surfaced when Dubai Government's holding company - Dubai World - asked for a standstill till May to repay its $ 60-billion debt.

The likelihood of a sovereign default may also pose risks of asset bubbles building up in Asia, China in particular, and may also act as a wake up call to financial markets, the leading private lender stated.



Following the crisis, Reserve Bank had asked Indian banks to give an account of their exposure to Dubai, a key financial hub where lakhs of Indians work.

Dubai economy accounts for roughly one third of UAE's GDP and this could mean that a little over 3 per cent of India's total exports could be at risk, post-crisis, it said.

India's key exports to the UAE include gems and jewellery, petroleum products, metals, machinery and basmati rice.