The Ministry of Overseas Indian Affairs (MOIA) puts the number of Indians in the diaspora at 35 million. In 2018, this population sent home US$79 billion, making India the highest recipient of remittances in the world. The United Arab Emirates, the United States, and Saudi Arabia accounted for over 50 per cent of the inflows.
The Indian emigrants comprise both high-skilled and low-skilled. Uttar Pradesh, Bihar, Tamil Nadu, Rajasthan, and West Bengal are the top five Indian states that send emigrants mostly to the Gulf countries. In terms of inflows, the southern state of Kerala received the highest share of remittances (19%) though it didn’t send even half the emigrants Uttar Pradesh did.
With such insightful statistics, it helps to know how diaspora Indians send money home, the information required to send and receive money, the benefits they enjoy by using money transfer services and the specific issues they should consider when sending money to India. Read along for detailed coverage on this and more.
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There are multiple ways to easily send and receive money in India but these will largely depend on the provider you decide to use. Below you will find everything you need to know about sending and receiving money.
Traditionally, Non-Resident Indians (NRIs) have been using SWIFT and demand drafts to send money home. However, in recent years, banks have graduated to offering money transfer services, making it a booming business in India. About 60 to 80 per cent of the transfers to the country is processed through the banking system.
Online and mobile companies have also come up to offer money transfer services. This development has significantly changed the remittance landscape in favour of these companies. If you want to send money home, there are several ways you can do so, below are some of them:
Indians in North America, Australia, Asia, Europe and the United Kingdom who own verified bank accounts can use ACH transfer to send money home. ACH transfers take 3 to 4 days to reach your loved ones in India. This method is appropriate for small regular amounts. Since ACH transfer is online-based, you do not have to leave your home, thus saving you time and money.
This method is one of the oldest ways of sending money. You’ll have to visit the bank and give instructions of where in India the money should be sent. Bank wire transfers take a few days to complete.
Money transfer operators such as TransferWise, Western Union, MoneyGram, WorldRemit, XE, Ria, Transfast, Remitly, Xoom, and others offer transfers services to India. These services account for 20 to 40 per cent of the money sent to the country.
Setting up is very easy. Most of these companies require that you sign up for an account and fund it. There are several ways of topping up the account including bank transfers, instore cash deposit, using debit and credit cards.
Once topped up, you can transfer to your loved ones online using a downloadable app, directly from the provider’s website, from a physical store or using SendBot for the case of MoneyGram. There are different options for sending through money transfer companies. Some of the top ways include:
If you are sending small amounts of money to India, money orders work perfectly well. They are safe, affordable, and you can get them from banks. You’ll have to purchase them in Indian rupees, the recipient’s currency. Though time-consuming, money orders are traceable and economical.
When sending money to India, there is some documentation and other information tats needed. The information varies depending on the provider and the country in question. That said, the following information will be required.
Instead of going to send with half the information, ensure you carry along all the above information.
In India, NRI remittances form an important part of the family and national income. There are lots of reasons why Indians in the diaspora send money home. Looking at how households in India allocate the money they receive, the following are the priority areas:
According to studies conducted in Uttar Pradesh, Kerala, and Karnataka, 59.2% of remittances were mainly for family expenses like food, rent and utilities. This trend was more pronounced in rural households receiving money from low-skilled diaspora Indians working in the middle east.
The cost of education in India is very high and still soaring. Many families in rural areas struggle to keep their children in school compared to urban families. According to studies done, households receiving remittances spend an extra 17% in education.
The health care system in India is one of the most elaborate. However, there are still disparities between rural and urban health facilities and public and private health care systems. A survey done highlighting the impact of remittances on women health in Kerala shows that women receiving frequent remittances are likely to report increased health autonomy.
Leveraging data from the Reserve Bank of India on private remittances, a study was conducted looking at the investment expenditure behaviour of remittance-receiving households. It was established that remittances from male and older immigrants are likely to be used for investment and asset accumulation. Most of the investments are in financial assets in SEBI approved Stock Exchanges, real estate, and in business.
Whether it is mortgage repayments or other credit facilities taken to facilitate the relocation of the immigrants, part of the money sent home goes towards repayment of such debt obligations.
Other reasons why Non-Resident Indians send money include contributions to social events such as weddings, religious ceremonies, and to cater for travel expenses.
Money transfer operators in India use the cash to cash method more often (96.8 per cent) compared to the direct transfer to bank account option (1.5 per cent). Despite the banking system dominance (private, public, and foreign banks) the popularity of money transfer service providers is on the rise. The following are the reasons for this trend:
Other than the speed, costs, and reliability, there are certain aspects you must consider when sending money to your loved ones back home.
Therefore, whether you are sending money to your loved ones in India for household expenses or investment, using money transfer service providers is the best option. They are fast, efficient, affordable and flexible. As long as you know the recipient's details and what else you need to provide, you can send money in minutes!
If speed is your biggest concern, try looking into MoneyGram. The company offers much in the way of speed and control when it comes to sending money to India. The service is very fast and serves hundreds of thousands of people daily. MoneyGram often offers same-day service as well, and most transfers are verified in under 15 minutes. The main drawback is that they charge a slightly higher fee when compared to similar services. If getting your funds to India extremely quickly is of utmost importance to you, then MoneyGram's pricing is a small price to pay for their rapid service.
MoneyGram’s rates are affordable, if a bit high, but they are number one when it comes to consistently transferring money to India at high speeds. Be aware that they have a slightly low 30-day limit of $6000 for US – India transfers. That limit is generally lower for other countries as well.
If keeping as much of your hard-earned money as possible is a bigger concern to you, then it’s best to stick to money orders. There are even cheaper ways to send money online to India, such as email checks, but they are often less safe and vulnerable to phishing scams.
Money Orders are both safe and affordable, and they are offered at most banks for a small charge. It will ultimately fall on you to find the bank that best suits your needs. You’ll need to bring your ID, but this helps ensure security, and the money you send will be traced.
The drawbacks to money orders are two-fold. First of all, they are not the most convenient way to transfer funds to India. They require you to go to the bank and complete a process that takes more time than most other options. Second, they aren’t very fast either, as they can take a few business days to be completed. Again, if speed or convenience is of any importance to you, then Money Orders might not be the best option.
Many of your options for sending money online to India are quite convenient, depending on whether you are using an online service or a mobile app. As far as the larger transfer services go, let’s look at two options…
Western Union is well known for both its dependability and ease of use. The company is highly active in India, so it serves as a great option for money transfer to India and is unlikely to let you down. There is a flip side, however. While Western Union is dependable and convenient, they charge a heavy fee. As such, we’d recommend you don’t use it to send small amounts of money to India. If you prefer to send money less frequently but in higher amounts, that can mitigate the company’s fees. Furthermore, if speed is your primary need, you should look elsewhere, as transfers can take up to a week to be completed.
TransferWise also offers a convenient, yet an inexpensive option to send money online to India. Like Western Union, it is very easy to use. Both their online service and their mobile app are simple and user-friendly. However, like Western Union, expect longer wait times. It can take multiple business days for the money to be sent to India, depending on your location.
The current exchange rate for the Indian Rupee (INR) is 71.7275 INR per American Dollar (USD). The INR reached a high of 72.4703 INR per USD, and a low of 68.3776 IDR per USD during the last 90 days. The average exchange rate for the INR was 70.3395 IDR per USD during the last 90 days.
The answer is first and foremost dependent on your individual needs. That being said, services such as TransferWise offer the most generically useful service amongst all of the providers. Their app is easy to use and relatively cheap, while the transfer times are not as bad as many other options. If you don’t mind waiting a few days for the money to arrive at its destination, then TransferWise is a well-rounded option for you. It’s best to first consider your own values and primary concerns before determining your new method of choice.