What are inward and outward remittances, and how do they work?
Remittance, sometimes referred to as Foreign remittances is an overseas fund transfer facility. Remittances enable the smooth transfer of funds between people living in India and abroad. You may be a non-resident Indian (NRI) sending money to your family in India, or you may be an Indian parent sending money abroad to support your child who is studying in a foreign university.
The above mentioned examples of fund transfers are called remittances. Since these transfers typically take place between two countries, wherein two different currencies are exchanged, they are referred to as foreign remittances. In this article, we will help you understand the different types of foreign remittances.
There are two types of remittances in banking.
Outward remittance: When a parent sends money to their child studying overseas, it is an outward remittance. Simply put: Sending money abroad is outward remittance.
Inward remittance: When a family in India receives funds from an NRI abroad, it’s an inward remittance. Simply put: Receiving money from abroad is inward remittance.
For an individual who wants to make a transfer, the process is relatively straight forward and simple. Go to a bank or its website, fill out the sender’s and recipient’s details, enter the amount of transfer and initiate the process.
The time a transfer will take depends on the country to or from which the transfer is being made, the type of transfer, the purpose for the transfer etc.
In an inward remittance, you are usually a passive participant. You have to provide your details to the sender, who will initiate the transfer.
In an outward remittance, you are the initiator, so you will have to choose the best way to make the transfer so that the recipient gets it on time. Here’s what you should look for when choosing the right bank for outward remittance:
Your child may need urgent funds. Choose a bank that facilitates money transfers within a week. A few banks can complete a transfer within 48 hours, and that too with zero paperwork!
A bank that tells you upfront what they charge for, and what is free, is a bank you can trust.
A month’s rent may not cost a lot, but tuition does. Opt for a bank that enables you to help your child with whatever financial support they need without unnecessary restrictions.
Before you initiate a transfer request, you can ask for a conversion rate quote. The best banks will offer better exchange rates.
Some banks will deduct charges from your transfer amount and then remit funds. If you want your child to receive the total amount, look for a bank that will promise full credit to the receiver.
Remittance services offered by banks work to strengthen the support you wish to extend to your family in another country.