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Remittances to India

Money can be remitted to India by applying to New York Branch in six ways as mentioned below.

(1) Rupee Remittance to Account: This method refers to the rupee remittances for the credit of the account of the beneficiary. In fact, banks like SBI have an extensive network of over 15000 branches and they can also do instant transfer of money and there is no ceiling on such remittances. The remittance can be sent electronically if the beneficiary’s computerized account number in completely mentioned in the remittance application. The electronic transfer is done by either wire transfer (SWIFT) or Real Time Gross Settlement System (RTGS), and State Bank Electronic Payment System (STEPS).

Remittances to India (b) Rupee Remittance to Beneficiary: This method involves the rupee remittances where the money up to $2500 can be sent directly to the beneficiary in India. For example, the remittance is sent by the wire transfer to the branch of bank in Indian city and this branch issues a rupee draft and arranges to send it by courier or registered post to beneficiary. The draft is crossed “Account Payee Only” and it is payable to the beneficiary.

(c) Rupee Drafts: Sender can also buy the rupee drafts from the bank that is payable at a desired branch. The rupee drafts issued by New York branch have the MICR band and, thus it can be collected by the bank via the clearing system in any Indian city.

(d) Dollar Remittance to Account: This method refers to the dollar remittances for the credit of the account of the beneficiary. It can be sent to any branch of any bank in India. All such remittances are converted to Indian rupees by the Indian Bank. The remittance is sent as wire transfer to the bank branch that forwards it to the beneficiary branch.

(e) Dollar Official Checks: Sender can also buy U.S. dollar official checks that are payable at par at foreign exchange dealing branches of banks in India.

(f) GBP/Euro Remittance to Account: This method refers to the GBP/Euro remittances for the credit of the account of the beneficiary. It can be sent to the branches of banks in India that are authorized to handle foreign exchange. This remittance is sent by wire transfer and such remittances are sent by customers who like to make savings in these currencies in India.

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Remittances – (Foreign Inward Remittance Certificate)

Foreign Inward Remittance Certificate is a document that acts as a testimonial for all the inward remittances coming to India. This document is used as a proof of payment received by the individual from outside the country in the foreign currency. On receiving the money from a foreign country, it is credit to the account of the receiver by authorized body such as banks that are authorized by the Reserve Bank of India. The beneficiary cannot transfer money to his bank account if he does not have a bank account in an authorized bank.

Remittances FIRC is regarded as a very important document as it can be used for many purposes. If the shares are issued on the name of company or person that are outside the country then FIRC can be used as a proof of money received on behalf of share application. In case where a resident Indian transfers or sells his shares to an individual who is NRI or foreigner then FIRC can be used to testify that the resident seller has the share purchase consideration. FIRC is submitted to DGFC in case of EPCG and Advance License and is a very important document.

As per the rules of export of services, there is no service tax is levied when services are exported and in such cases, FIRC can be used as an important proof of export of services and remittances that are received. FIRC is a crucial document that contains various details like the beneficiary’s name, address and name of remitter, mode of payment, exact amount of foreign currency, Cheque/DD/TT no , amount of money, purpose for the remittance and prevalent rate of exchange. Person, who is receiving the remittance from outside India, should also reveal the purpose of remittance. It is asked by the bank as a proof of purpose at the time of receipt of the money.

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Facts Related to Remittances

The facts related to the remittances are mentioned below:

(1) As per the report submitted by the World Bank, almost US$250 billion was sent through remittance throughout the world in the year 2006. The amount of money sent via remittance has been increasing steadily with thirty percent growth every year

(2) The share of the global remittances sent to the developing nations rises from fifty seven percent in 1995 to seventy two percent in 2005. It was equivalent to an amount of $167 billion in the time period of ten years.

(3) India is the leading remittance receiver globally and accounts for the maximum remittance received every year. In the year 2006, $26.9 billion was remitted to India and it increased up to $55.06 billion in 2009. India is followed by China at second position with $22.52 billion in 2006 to $40.5 billion in 2008. These two are followed by Philippines ($17.3 billion); Mexico ($21.2 billion) and Poland.

Remittances (4) A large chunk of remittances from the US is directed to Asian countries including India ( 26 billion USD), Philippines (16 billion USD) and China (23 billion USD). In the year 2003.2004, five out of seven top remittance recipient countries belonged to Asia. The Asian countries were India, Philippines, China, Pakistan and Bangladesh. Non Asian countries in the top seven include Mexico and France.

(5) The Asian countries like India, China and non Asian such as Mexico and France accounts for a third of global remittances.

(6) The remittances make up a high share of GDP gross domestic product in only two countries including the Philippines and Serbia and Montenegro.

(7) In fact, approx ten percent of the population globally is involved directly with remittances.

(8) USA tops the list of countries that offers the largest amount of remittances, with $31 billion of remittance is sent every year from USA to other countries.

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