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How does one remit money overseas without spending a fortune? Parents and students share their experiences

Your children live abroad, you would love to transfer money to them in a jiffy but think it is a complicated thing? Remitting money overseas is often considered arduous compared with transferring money domestically, right? But that need not be the case.

Also, transferring money abroad need not necessarily be a costly affair. That is something especially important for Indian students abroad, because every dollar or euro spent is a drain on the pocket.

Portfolio spoke to some parents, students and experts to know about the platforms used to remit money abroad, the costs incurred, and ways to optimise the process. Here goes:

Traditional routes

M R Srinivasan, a Chartered Accountant, preferred the banking channel to transfer money to his son who went to the US to pursue education at Stanford University.

He says, “We are obliged to fill and sign Form A2 (that is submitted by the bank to the RBI) before sending money outside India. I found the banking platform an easy way to submit the required documents and transfer money directly to my son’s account opened in the other country.”

For a bank transfer abroad, most remitting banks require maintenance of an active account. In the banking route, the sender has to visit the bank branch and after the required documents are submitted, the money gets credited to the beneficiary’s account, usually in a time period of two to six days, which varies from bank to bank.

 

 

 

Apart from the banking route, one can also avail himself the services of NBFCs (non-banking financial companies) or forex money transfer agencies like UAE Exchange and Thomas Cook to remit the money directly to the foreign bank account. One has to visit the branch and a cheque has to be given in favour of the agency who will, in turn, remit the money to the beneficiary’s account after deducting the charges applicable.

Now, one need not go the banks’ or transfer agent’s branch every time to transfer the money. New platforms have been launched by banks such as ICICI Bank and DCB Bank using which one can transfer the money completely online without the requirement of visiting the bank’s branch.

Praveen Kutty, Retail and SME Banking head of DCB Bank, says, “Using our platform DCB Remit, KYC verification and form A2 submission can be done online instead of the need for customer visiting the bank’s branch. Also, transfer can be done from any bank account in India (non-DCB accounts also) to abroad.” As of now, no transfer fee is being charged for customers of DCB Remit as a part of the exclusive offer.

Similarly, ICICI Bank has a platform called ‘Money2World’, where outward remittances from India could be done completely online even by non-ICICI customers without the requirement to visit any bank’s branch.

However, the demerit of using the online platforms is that the total amount that can be remitted through the online route is restricted to $25,000 per annum. Under the Liberalised Remittance Scheme, all resident individuals are allowed to freely remit up to $2,50,000 per financial year (April to March). In case of remittance for education or medical purposes, permission from the RBI has to be obtained for any remittance beyond this specified limit.

Different banks quote different exchange rates for conversion. For instance, as on March 23, Bank of Baroda quoted ₹65.46 to a dollar, while Muthoot Finance quoted ₹65.53. HDFC Bank and ICICI Bank quoted ₹66.22 and ₹66.61. These rates are only indicative and can vary for different customers and volume of transaction. Do shop for the best rate before choosing the bank/agent. For the benefit of customers, some money transfer agencies allow you to set an exchange rate alert online that will notify you by a message or a mail when your desired exchange rate is reached.

Save a little

When money is transferred directly to the bank account of the receiver abroad, in addition to the transaction charges in India, the foreign bank also deducts some amount as charges before crediting the amount to the beneficiary’s account.

Robin Thomas, chief manager of International Remittance Department in Muthoot Forex, says, “charges by foreign banks are based on the Nostro balance they maintain with the intermediary bank. It varies from bank to bank and currency to currency. The approximate charges range from 10- 20 USD in the US, 30- 50 AED in Dubai and 10- 15 GBP in the UK.”

Saketh Varma, who is pursuing his education abroad, does not prefer receiving money directly to his Wells Fargo account opened in the US. He says, “Whenever I receive money directly into my bank account, $25 gets deducted from my account as bank charges.” To save some money, he started using SBI foreign travel card that he got while opening an NRE account with SBI. “This travel card saves me hefty bank charges but one has to be cautious while using these cards as it charges $1.25 for every ATM withdrawal apart from loading and other fees,” says Saketh.

To save on transaction charges on his multi-currency forex card, Shiva Ganesh, who recently graduated from the University of Missouri, US, transfers the money loaded on his card to his foreign bank account.

He says, “It is always good to maintain balance in the bank account. I transfer dollars loaded on my UAE Exchange travel card to my US bank account almost at negligible charges and then I am free to use my account for any purpose.”

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