Remittance is one of the most common words when talking about international financial transactions. It means to send money as a payment or as a gift across borders. However, remittances are not necessarily overseas transfers of funds but can be domestic too. There are two types of foreign emittance– inward and outward. Read on to find the details and meaning of inward remittance, examples and process.
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What is Inward Remittance?
In simple words, inward remittance is the transfer of money from a foreign country to a recipient in the home country. For example- the transfer of funds in India from overseas. NRI (Non-India residents) living abroad might want to send money back to India to their parents and support their family or for purposes like gifts, donations, travel, education, investments etc.
- There is no limit on the amount of money that can be sent. However, financial institutions set daily transaction limits to avoid fraud and scams.
- The Liberalised Remittance Scheme (LRS) by the RBI states the limits on the amount of transfers that can be made in a financial year.
- Generally, the limit on inward remittance is USD 250,000.
- Also, inward remittances must comply with FEMA guidelines, ensuring that they do not violate foreign exchange rules.
Example of Inward Remittance
Some of the examples of inward remittance are-
- When working professionals or international students send money to India while working and living abroad.
- Receiving a salary from an international employee in your bank account.
- Payment received for offering freelance services to a client abroad.
- If you have investments in stocks, mutual funds, or real estate in another country, and you receive dividends, interest, or rental income from those investments, those returns are considered inward remittances.
- Gifts or donations received from members living abroad fall under the category of inward remittance.
- Sending money to India by entrepreneurs or investors for business purposes like capital infusion, project funding, or business expansion is another example of inward remittance.
MTTS (Money Transfer Service Scheme) and RDA (Rupee Drawing Arrangement) are the two main channels of RBI for receiving remittances in the country.
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Process of Sending an Inward Remittance
In an inward remittance, the transaction is initiated by the sender who is outside of the home country. These transactions are initiated through bank transfers, prepaid cards, money transfer service providers or online payment platforms like PayPal and TransferWise. The process is as follows-
- The first step is to choose a suitable method for sending money to India.
- Provide necessary information about the beneficiary (recipient), including their name, bank account details, and the purpose code for inward remittance.
- Select the local currency of the home country and check the exchange rates to overcome currency exchange risks.
- Submit the transfer request along with details like the amount of money to be sent and any applicable fees.
- Confirm the details and transfer the amount. Once the funds are received, you will be intimated about the same via an SMS or an e-mail.
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Documents Required for Inward Remittance
To process inward remittances, some essential documents are required. These relate to valid identity documents like a passport or PAN card, FIRC documents stating the purpose of fund transfer, and KYC documents. A bill or an invoice related to the transaction called remittance advice may also be required if the transaction is made by a customer to a business.
- Beneficiary’s Identification Proof: Passport, PAN card, Voter’s ID, or Aadhaar card.
- Foreign Inward Remittance Certificate (FIRC): Testimonial for the inward remittance, issued by banks.
- KYC Documents: Proof of identity, address, and photograph.
- Invoice or Bill: For remittances related to services or products, clarifying the purpose.
- Purpose Code: RBI-assigned code indicating the reason for the remittance.
- Bank Account Details: Account number, bank name, branch, and IFSC code.
- Declaration Form: Sometimes required for large amounts, detailing the source and purpose of funds.
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Best Banks for Inward Remittance in India
Banks are one of the best modes of making inward remittances. They offer reliable and efficient services and help people manage their finances and send money back to their home country. Some of the popular banks understand the importance of reliable inward remittance services and offer convenient services. Check out the best banks for inward remittance in India–
State Bank of India
- One of the largest and oldest banks in India, with an extensive international presence.
- It offers various inward remittance facilities like SBI Express Remit Facility, Demand Drafts, and Telegraphic/Wire Transfers.
- The bank ensures a high level of safety through the VeriSign-powered online banking system.
HDFC Bank
- HDFC Bank is a leading private sector bank known for its transparent fee structure and competitive exchange rates.
- HDFC Bank remittance services are quick, easy, and safe inward remittance services.
- They have a large network of correspondent banks in foreign countries.
ICICI Bank
- It is renowned for its global banking solutions and user-friendly mobile app.
- The ICICI Bank offers both inward and outward remittance services with settlement completed within 24-48 banking hours.
- The transfers are available in over 26 currencies.
Axis Bank
- Another popular choice among students for its dedicated services and fast turnaround time for inward remittance is Axis Bank.
- Funds are credited within 2 hours after submission of documents.
- They offer a convenient online mode for settlement instructions using Internet banking.
Kotak Mahindra Bank
- Kotak Bank offers streamlined global transactions with a comprehensive range of services.
- They have a fast turnaround time with a strong network of global and local financial institutions.
- One can avail of inward remittance services at low transaction fees and competitive exchange rates.
This was all about the meaning of inward remittance, examples, processes, documents required and the best banks for inward remittance in India. To know more about education loans, the best bank accounts for students, forex and banking experience for global students or international money transfers, reach out to our experts at 1800572126 to help ease your study abroad experience.
FAQs
In simple words, inward remittance is the transfer of money from a foreign country to a recipient in the home country. For example- transfer of funds in India from the States.
Some examples of inward remittance are when working professionals or international students send money to India while working and living abroad or if you receive a salary from an international employee in your bank account. Gifts, donations or sending money to India by entrepreneurs or investors for business purposes like capital infusion, project funding, or business expansion is another example of inward remittance.
There is no limit on the amount of money that can be sent. However, financial institutions set daily transaction limits. Also, the Liberalised Remittance Scheme (LRS) by the RBI states the limits on the amount of transfers that can be made in a financial year. Generally, the limit on inward remittance is USD 250,000.
The first step is to choose a suitable method for sending money to India. Then, provide necessary information about the beneficiary (recipient), including their name, bank account details, and purpose. Select the local currency of the home country and submit the transfer request along with details like the amount of money to be sent and any applicable fees.
To process inward remittances, some essential documents are required. These relate to valid identity documents like a passport or PAN card, FIRC documents stating the purpose of fund transfer, and KYC documents. An invoice related to the transaction called remittance advice may also be required if the transaction is made by a customer to a business.
Some of the best banks in India offer inward remittance services at low transaction fees and competitive exchange rates. These are- SBI, Axis Bank, Kotak Mahindra Bank, HDFC Bank, and ICICI Bank.
