Gulf to South Asia Remittances: Exchange Houses, Costs, Digital Shift
How money moves from the GCC to India, Bangladesh, Nepal and Sri Lanka: record inflows, exchange houses, cost gaps of 3% to 10%, and the move to apps.
Key takeaways
- Remittances to India, Bangladesh, Nepal and Sri Lanka all hit records in 2025 or 2026, and UAE exchange-house outflows rose 27.8% to Dh188.8 billion.
- Costs vary sharply by corridor: about 3.7% from the UAE to India versus about 10.2% from Saudi Arabia to Bangladesh in Q3 2025.
- Senders are moving from counters to apps, and new instant links such as UPI to Nepal could cut intermediaries further.
On a Friday evening in Dubai's Al Karama, the queue outside an exchange house can stretch down the pavement. Inside, electricians, drivers and shop assistants hand over dirhams and walk out with a receipt that becomes rupees in Kochi, taka in Sylhet or rupees in Pokhara within minutes. Behind each receipt is a household budget: a mortgage instalment in Thrissur, a younger brother's college fees in Sylhet, a new roof in a village outside Pokhara. This corridor, from the six Gulf states to South Asia, is one of the densest flows of household money on earth. In 2025 and 2026 it set records almost everywhere, and the way it moves is starting to change.
The scale of the flow
The receiving countries tell the story. On the RBI's fiscal-year count, India took in a record $135.46 billion in remittances in 2024-25 (IFAD's calendar-year estimate for 2025, on a different definition, is $150.7 billion), according to RBI data reported by All India Radio. Bangladesh received $35.56 billion in fiscal 2025-26, up from $30.33 billion a year earlier. Nepal's central bank reported Rs 2,363 billion, or $16.19 billion, in fiscal 2025-26, a 28.1% rise in dollar terms. Sri Lanka passed $8 billion in workers' remittances for the first time in 2025, reaching $8.07 billion, up 22.8%.
On the sending side, the Central Bank of the UAE reported that outward transfers through the country's exchange houses rose 27.8% to Dh188.8 billion in 2025, with personal remittances the largest slice at Dh115.7 billion, as covered by Khaleej Times.
India: the Gulf is still huge, but no longer number one
The RBI's latest remittance survey, covering 2023-24, found that the GCC states together accounted for 38% of India's inward remittances, with the UAE alone at 19.2%. The United States, at 27.7%, has now overtaken the UAE as the single largest source, and the UK has climbed to 10.8%, according to Business Standard. That shift reflects a more skilled, higher-earning diaspora in Western economies. It does not mean the Gulf is fading: Indians in Gulf countries still make up around half of all Indian migrants worldwide, and for many households in states such as Kerala, Gulf wages remain the main income.
Source RBI remittance survey, 2023-24 (GCC states 38% in total, UAE 19.2%); RBI balance of payments 2024-25; IFAD 2025.
Why the cost gap is so wide
South Asia is the cheapest receiving region in the World Bank's dataset, with an average cost of 4.80% for $200 in the first quarter of 2025, against a global average of 6.49% that quarter (6.36% by Q3 2025). But the averages conceal big differences between corridors.
| Corridor ($200 equivalent) | Avg total cost, Q3 2025 | Of which FX margin |
|---|---|---|
| UAE to India | 3.72% | 0.75% |
| UAE to Philippines (for comparison) | 3.04% | 0.24% |
| Saudi Arabia to Bangladesh | 10.20% | 5.30% |
Sending $200 from the UAE to India cost 3.72% on average in the third quarter of 2025, according to World Bank Remittance Prices Worldwide. From Saudi Arabia to Bangladesh, the average was 10.20%, and more than half of that came from the exchange rate margin rather than the fee. Private data points the same way: FXC Intelligence's 2025 rankings placed Bangladesh seventh among the costliest of 35 major receiving markets, while Nepal and Sri Lanka sat among the ten cheapest.
The reason is mostly structural. The UAE to India corridor is crowded with banks, exchange houses and apps competing on a liquid currency pair. Bangladesh has had a managed exchange rate and a long history of informal hundi channels, which keeps formal margins wider. Our piece on the mid-market rate explains why a zero-fee headline can still cost more.
On the same street in Riyadh, two workers sending the same $200 home can pay a threefold difference, depending only on where home is.
From counters to apps
Exchange houses built this corridor, and many are now competing with their own apps. A Visa survey of UAE residents published in September 2025 found nearly two in three preferred mobile apps and digital platforms over visiting a branch, with ease of use the most cited reason and high cost the most common complaint.
The receiving side is going digital too. India's UPI has linked with several overseas systems, and in June 2026 India and Nepal went live with a person-to-person connection between UPI and Nepal's National Payments Interface, bringing the number of countries where UPI is live to 10. Our guide to UPI's global expansion covers the other links. For a worker in Doha whose family banks in Nepal, those connections could eventually mean cheaper and faster routes with fewer intermediaries.
Nepal and Sri Lanka: dependence and resilience
Nepal is among the most remittance-dependent economies in the world, and the 2025-26 surge was striking. One detail deserves attention: first-time foreign employment approvals fell to 406,519 from 505,957, while renewals rose. More money is coming from workers already abroad, which may not repeat if fewer people leave.
Nepal is also a reminder of how much of this corridor is a Gulf story. Qatar, Saudi Arabia, the UAE and Kuwait have long been among the main destinations for Nepali workers on labour permits, and the money they send pays for school fees, house construction and loan repayments in hill districts with few other sources of cash income.
Sri Lanka's record year marks a recovery from the crisis years, when much money moved informally. December 2025's $879.1 million was the highest monthly inflow on record, according to the Central Bank of Sri Lanka figures reported by Ada Derana.
What would actually lower costs
- Price transparency on FX. Showing the margin against a reference rate, not just the fee, would expose the most expensive offers.
- Fast-payment links between Gulf instant payment systems and South Asian ones, so fewer correspondent banks take a cut.
- Direct bill payment. A large share of this money pays school fees, electricity and loans. Paying those directly from the Gulf, as we argue in bills are the real remittance, removes a cash-out step.
The corridor's volume is not in question. Its price is, and that is where the next few years of competition will be fought, one exchange-house receipt at a time.
Frequently asked questions
How much of India's remittances come from the Gulf?
The RBI's survey for 2023-24 found GCC states sent 38% of India's inward remittances, with the UAE alone at 19.2%, while the US was the largest single source at 27.7%.
Why is it more expensive to send money to Bangladesh than India?
The Saudi Arabia to Bangladesh corridor averaged 10.20% for $200 in Q3 2025, mostly due to wide exchange rate margins, while UAE to India averaged 3.72% thanks to heavier competition.
Are Gulf workers moving to digital money transfer apps?
Yes. A 2025 Visa survey found nearly two in three UAE residents prefer apps and digital platforms over visiting an exchange house branch.
Sources and further reading
- Khaleej Times: UAE outward transfers jump 28% to Dh188.8 billion
- Business Standard: Advanced economies overtake Gulf in share of remittances to India
- All India Radio: Remittances scale record high of $135 billion in FY25
- World Bank RPW: UAE to India corridor
- World Bank RPW: Saudi Arabia to Bangladesh corridor
- Business 360 Nepal: Remittance inflows surge in FY 2025/26
- Prothom Alo: Bangladesh receives record $35.56b in FY2025-26
This article is for general information and is not financial, legal or tax advice. Figures are as reported by the sources above at the time of writing.
