Guidelines to Transfer Money from Abroad to India

Posted on Saturday, February 24th, 2024 | By IndusInd Bank

NRI remittances are transfers of money from abroad to India through authorised providers approved by the Reserve Bank of India. Such transfers are known as “inward foreign remittances” or “inward remittances.” For instance, if you live in London and regularly send money to your family in India, the money they receive every month would be considered an inward remittance.

If you are new to this world and are a bit sceptical about money transfers, this article is for you. Read on to learn more about the guidelines for transferring money from abroad to India, the process involved in NRI remittances, and the benefits of the same in this article.

Guidelines for Inward remittance –transfer money from abroad to India

Guidelines have been established by the Reserve Bank of India (RBI) to govern the process of inbound foreign remittances to India. They are explained below: –

• There are specific reasons for which an inward foreign remittance is allowed. When sending money to India, it is permissible only for purposes such as covering medical expenses, education fees, travel costs, investment opportunities, financial aid, living expenses, or as a gesture of gifting.
• FIRC is mandatory which the recipients of foreign remittances receive from their banks in India. It acknowledges the transfer of funds from overseas and contains information like sender and recipient names and account numbers, the purpose of the transfer, exchange rates, and other details.
• In India, inward foreign remittances can be received through the Rupee Drawing Arrangement (RDA) or Money Transfer Service Scheme (MTSS) authorised by the RBI via authorised dealer banks.
• The RDA scheme enables unlimited personal inward remittances to India, while commercial remittances have an upper cap of Rs. 15 lakhs. Funds must be transferred directly to an Indian bank account.
• In India, the MTSS scheme imposes a cap on the amount of inward remittance. Each individual’s inward remittance is restricted to a maximum of USD 2500.
• A beneficiary is permitted to receive no more than 30 MTSS transfers per year.
• To receive inward remittances in India, one must first establish an NRE account. This type of account, known as a Non-Resident External Account, is specifically designed for transferring foreign earnings to India and is not subject to taxation.
• To cover family expenses, you can send money to India, but it’s not allowed to send money for purposes such as making donations, engaging in commercial activities, investing, purchasing property, or transferring funds to a non-resident external (NRE) account.

Process of NRI Remittances

You can conduct inward foreign remittance in India through different modes, such as wire transfers and electronic transfers.

Benefits of NRI Remittances

1. NRI remittances can help inject money into the local economy and contribute to the growth of small businesses.
2. The inflow of money with inward remittances can result in job creation and economic development in the recipient country.
3. Inward remittances can help families pay for education and healthcare expenses, which can be expensive in some countries. So, there is an improvement in the overall health and education levels of the population.
4. Money transfer from abroad to India is an alternative source of income for some households, which can help them weather economic shocks and reduce their dependence on a single source of income.
5. Inward remittances can encourage people who previously did not have access to formal financial services to open bank accounts and use other financial products. This in turn can help promote financial inclusion and improve financial literacy in the recipient country.

Conclusion

India receives the highest amount of inward remittances globally owing to its large diaspora spread across various parts of the world. Advances in technology have made the transfer process easier, faster, and more secure. Consider factors such as fees, exchange rates, and security to ensure a seamless and cost-effective transfer process.

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.