Private agencies. The Reserve Bank of India (RBI) has authorised Western Union and MoneyGram to facilitate transfer of money into the country. This is a convenient channel as it does not require either the sender or the receiver to have a bank account. Says Anil Kapur, managing director, South Asia, Western Union, "It takes a maximum of two hours to transfer money into the Indian subcontinent. You can go and collect the money after proving your identity at banks, post-offices, petrol pumps and prominent shopping centres we have tie-ups with." These agencies also allow online transactions, which make the transfer even quicker at the same or a slightly higher cost. The fees charged are roughly $30 for transferring $2,500 (see Remittance Channels).
"The limit here is that the RBI allows a person to have only 12 transactions in a year with a maximum of $2,500 per transaction or its equivalent," says Harsh Lambah, country manager, MoneyGram. "Also, all amounts over Rs 50,000 need to be paid through the banking channels." Going through these private agencies could be quite beneficial if you are receiving small amounts of money and the sender is shelling out the transfer fees.
Remit2india is the only other agency allowed to conduct international money transfer. The transfer is done only through the portal, so you will not find countrywide outlets where you can walk in anytime. Its transactions are done primarily via bank accounts and take far more time than Western Union and MoneyGram. The website's rupee-express service, available only to US customers, protects against exchange rate fluctuations by allowing transfer of a fixed rupee amount to India, regardless of the value of the currency.
Banks. If cost worries you, opt for banks. Wire/telegraphic transfer is much cheaper than sending money via agencies, but may take up to 48 hours. Manasije Mishra, head, NRI services, HSBC India, says, "This is much quicker than the traditional ways of transferring money to India, like mailing local cheques or bank drafts." The minimum charges could be Rs 700-1,000. For instance, SBI charges 0.15 per cent of the rupee equivalent of the amount or a minimum of Rs 700. Both parties should have bank accounts to enable a wire transfer, but not necessarily in the same bank.
Check out the timeframe of the transfer before you use a bank's services as some smaller banks in countries like India hold transfer money for a few weeks. The ideal way of routing funds from abroad is through a branch of an Indian bank or a foreign bank with
a presence in India. This ensures faster processing. For amounts above $25,000, banks need to exercise know your customer norms.
You can also go for home delivery of the money to the beneficiary's residence for a nominal fee. Or you can transfer the money automatically to a bank account through ECS.
The cost of transferring money through online banking is nil in most banks today. "Money can be transferred completely online from an account in a bank in the US, the UK, Europe, Australia and Singapore to an account in a bank in India. This could mean a lot of saving compared to private agencies," says Anup Bagchi, head, international retail banking, ICICI Bank. For example, up to Rs 10,000 can be saved if six remittance transactions of $2,500 each are made in a year through ICICI Bank's portal Money2India. A money transfer company/bank will typically charge $30 for a transaction of $2,500. Additional cost would be incurred on trips to the agent/bank outlet. Online transfers don't require the sender and the receiver to have an account in the same bank.
Card to card transfer of funds through the Visa or Mastercard channel is also done online. However, this is not yet available for transferring money into India. Transactions can be done through this mode within India.
Remittance/debit card. Bagchi says that a remittance card allows the beneficiary to withdraw need-based cash from any bank ATM in India. The card can also be used at merchant outlets to make purchases. Most banks keep this a zero balance account. These cards, typically with an annual fee of Rs 400, can be accessed online and are often used by dependents of people living abroad. The cards don't have limitations on daily withdrawals from ATMs.
Mobile money transfer. Airtel will be the first to begin mobile to mobile transfer of funds in the country. While actual transfers within India will be done by banks, international transfers will be handled by Western Union.
The regulator. The RBI doesn't allow anyone to hold foreign currency. It has to be surrendered to the bank and converted into rupees. There are exceptions to this rule though. "If you have received money for services rendered abroad, or have returned to India after a few years, then you can hold foreign currency in the bank," says Frank D'Souza, foreign exchange expert and partner, BMR Associates, a tax consultancy firm. There is no restriction on the amount that can be sent to India. Says D'Souza, "Earlier, it was not allowed except for a few things. Now, everything is allowed except for a few restrictions."
Outward remittances. You need to declare the reason for transferring or carrying money with you outside India. The ceiling for the amount that can be remitted out depends on the reason for the remittance. On a holiday abroad, a travel card will serve as an ATM or debit card. Traveller's cheques can also be used but the risk of fraud and theft accompanies them. Travel card is the most secure way of carrying foreign currency abroad. A tourist can take up to $10,000 abroad per year. There are rules for overseas investments as well.
Forbidden channel. Never go for the illegal hawala mode of money transfer though it is quick, reduces hassles and bypasses formalities.
It's a networked globe and money needs to flow for it to remain that way.