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.
Sending money to India is simple and easy. Follow these steps to get started.
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, Remit2India, 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.
The remittance market in India comprises banks, non-bank money transfer operators (MTOs), India Post, and foreign exchange bureaus. These institutions have jointly broadened the avenues through which Indian’s can receive money sent by their loved ones in the diaspora.
Direct Bank Deposits
The banking system in India plays a major role in disbursing remittances to recipients. Remittances are considered a banking activity in India and banks are permitted to receive direct deposits from abroad on behalf of their customers. The deposits could be from banks in the sending countries or from nonbank institutions.
The interbank infrastructure has lessened the remittance-processing time meaning beneficiaries can receive money in a matter of hours or days.
Cash Collections from Agents
Money transfer operators such as Western Union, MoneyGram, TransferWise, WorldRemit, Remitly, Ria, and Xoom, have thousands of agencies, sub-agencies, alliances and partnerships with financial institutions. This makes it convenient for beneficiaries in India to receive their money.
Thanks to technology and the power of the internet, it now takes minutes to send money through money transfer service providers. The MTOs use the National Electronic Funds Transfer (NEFT) to move funds to their agents in India for the beneficiaries to collect.
Informal Community-Based Arrangements
India much like other South Asian countries has community-based arrangements for receiving money. In-kind remittances, courier services and hawala/hundi are still used as transfer channels though their popularity is fast decreasing.
The hawala system is less formal and unregulated. Therefore, senders and recipients have no legal protection of any sort and lack recourse in case of loss during transfers.
When the money arrives, most providers notify the recipients through a short message service (SMS) or email pick up notification. Alternatively, you can check your transfer status on the website, mobile app, or by calling in with the transfer reference number.
Once you have established that your money is ready for pick up, you’ll need to put together some information and documents to help you in the verification process. The information required may vary from one provider to another, but the following is a general list of what’s needed.
In the past, money movements that stand out in terms of size of amount or frequency, have been flagged pending further verification. Though rare, but in case this happens to you, all you need is to answer to the queries raised by the authorities as truthful as possible.
India has an Enforcement Directorate that monitors the sources of money and points of remittance. This practice ensures the legitimacy of the money coming into the country.
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!
Sending money anywhere else in the world is as easy as sending money to India. If you’re looking to send money to another country, here is the list of the most popular destinations.
Jonathan is the founder and editor of MoneyTransfers.com. Jonathan is highly experienced in the currency transfer market, having previously worked in the FX trading industry, alongside being an avid traveller. Using his knowledge he identified a need for transparency and further education to help people save money on their money transfers, leading to the creation of MoneyTransfers.com