Different Types of Foreign Remittance
What are inward and outward remittances, and how do they work?
- Foreign remittance is a transfer of money from a sender in one country to a receiver in another.
- There are two types of foreign remittance - Outward and Inward.
- When you send money from India to your family or relative abroad, it is an outward remittance.
- When you receive money in India from a foreign country, it is inward remittance.
- When choosing a remittance partner, opt for someone who offers high-speed transfers, competitive foreign exchange rates, has no hidden fees, and higher transfer limits.
Introduction to Remittance
Foreign 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.
These transfer of funds are called remittances, and since the transfers are taking place between two countries, they are referred to as foreign remittances.
In this article, we will help you understand the different types of foreign remittances.
What are the types of remittance and their definitions?
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.
How does remittance work?
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.
How to choose the right bank for remittance services
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:
1. High speed of transfers
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!
2. No hidden fees
A bank that tells you upfront what they charge for, and what is free, is a bank you can trust.
3. Higher transfer limits
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.
4. Preferential rates
Before you initiate a transfer request, you can ask for a conversion rate quote. The best banks will offer better exchange rates.
5. Full credit
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.
Download the digibank app to ensure that distance is never an issue for you and your loved ones.