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January 6, 1999


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"What is the cheapest way to send money to my parents in India?"

The Rediff Money Channel presents everything you wanted to know about personal banking, but didn't know whom to ask. Kannan Ranganathan, who has over ten years of experience in banking and financial services, is here to remove all your doubts.

Readers Note: Please keep your questions short.

I have been in Australia since Aug 1998 and I have an NRE savings account in India. I wish to open an NRE Term Deposit account by transferring the funds from NRE-savings account since the interest is higher. Will I be able to transfer the principal and interest amount from the NRE-Term Deposit to NRE-Savings account? Will this attract any tax liability?

Gopal Keshri

Principal and interest earned on an NRE deposit can be transferred on maturity to the savings account. The deposit and interest earned are fully repatriable. Deposit and interest earned are exempt from Indian tax. You are however exposed to exchange rate fluctuations in case the rupee depreciates.

I am a software engineer employed with an Indian company, but presently on a project in Malaysia on work permit. To stay in Malaysia for a period of 10-12 months, I have a work permit and am also paying tax to the Malaysian Government on income earned in Malaysia. While I am on project in Malaysia my company in India pays me a monthly salary in India and on the salary income I pay tax in India. Also the Indian company remits me an overseas leaving allowance to Malaysia on monthly basis. My queries with respect to the above situation are:
Can I repatriate money from Malaysia to NRE account? If so, how?

Rakesh Kumar

Yes. You will have to contact your bank in India, ask for the name of their correspondent bank overseas. Ideally you should convert your earnings in Malaysia to US dollars. If for example your bank in India maintains a dollar account say with ABN AMRO in the US, you will have to remit the dollars to ABN AMRO, US with instructions to remit the funds to your bank in India for final credit to your NRE account. Your bank in India will be able to give you detailed instructions on this aspect.

I have a savings account in a nationalised bank with a cheque book facility. Once I wanted to withdraw money from the account using the withdrawal slip. I presented the withdrawal slip and the passbook to the cashier. He refused to pay the money saying if you have a cheque book you can only withdraw using a cheque. He also quoted the Negotiable Instruments Act. Was he correct legally?

Rahul Kelkar

Banks normally allow withdrawal using withdrawal slips and ask for your passbook. In fact quite a few banks encourage the use of withdrawal slips instead of cheques as this is less expensive for the bank. You should meet the manager and ask him why the teller refused. If he indeed had a problem as per the bank's internal rules, he should have given you a loose cheque for this purpose.

I have been in the US for more than a year and am going to India for a vacation. Can I take money in dollars? If yes, how much and do I need to declare it at the Customs there? If ,say, I take $1500 and don't declare it but get it converted legally through some agent giving my passport, is it illegal and do I need to pay tax?

-- Arvind Sharma

Notification No. F.E.R.A.81/89-RB dated August 9, 1989 as amended up to March 9, 1999 allows one to bring foreign exchange into the country provided:
(a) he makes, on arrival in India, a declaration to the Customs authorities in such form as may be specified by the Reserve Bank in this behalf, of the particulars of such foreign exchange brought in by him;
(b) that it shall not be necessary to make such declaration where the aggregate value of the foreign exchange brought in by such person in the form of currency notes, bank notes or travellers cheques at any one time does not exceed US $ 10,000 or its equivalent and/or the aggregate value of foreign currency notes brought in by such a person at any one time does not exceed US $ 5,000 or its equivalent.

If you adhere to the limits you do not need to fill in a Currency Declaration Form, however, it is advisable to do so in any case. You may subsequently get the forex changed at an authorised dealer in foreign exchange.

I am right now in the US and want to send some money to my parents in India. I know that one method is that I can send a draft which they can encash in SBI or Thomas Cook. But is there any other way to transfer the money and save on draft charges?

Huong Khong

Yes, you can find out from your parent's bank who their correspondents in the US are and send a remittance through this US bank to India for credit to your parents account. This would be faster and the cost would depend on the bank charges. These would normally be fairly nominal and the credit could take between 3-5 working days.

I have an H1-B visa and an staying in New Jersey, USA. I want to transfer my earnings to my parents in India. I have bank accounts in India. What are the ways in which I can transfer money and what is the cheapest alternative?

Jignesh Shah

Please refer to the previous answer.

Can you suggest a better mode of transfer of money from the US to India?

Subba Rao Nimmala

Please refer to the earlier answer.

Currently, I am based at Dhahran, Saudia Arabia. I am having accounts with Andhra Bank and Canara Bank in Mumbai. Can I transfer money electronically (bank to bank) from Dhahran to Mumbai in either of the above banks?

Partha Sarathi Bag

You have to check with Andhra Bank and Canara Bank if they have correspondents in your country and get detailed instructions on how to remit funds. Alternatively, you can route the funds through the US dollar correspondent bank accounts of these banks.

If some one issues a cheque or DD on my name and says it is 'Account Payee only", can I deposit it into my father's account? Or do I have to have a bank account to be able to encash it?

Nagesh Pantula

The 'account payee' crossing is intended as a direction to the collecting banker to put the funds received into the account of the person mentioned as the payee on the face of the cheque. The amount has to be credited to the account of the payee only and not in any other account. So you can deposit this cheque only into your account.


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