International Money Transfer

Updated: 09-07-2025 06:48:13 AM

International Money Transfer involves several rules and regulations, Governmental guidelines and stringent controls regarding foreign exchange. This is applicable for both outward remittance that is money transfer from India to abroad, as well as inward remittance which is receiving funds from abroad. There are several options available with financial institutions for both the scenarios. Following discussion will deal with the various related aspects.

While considering a fund transfer internationally, you have to take decision on the following aspects :

(A) Selecting the Method for Remittance, and

(B) Transferring the Funds

(A) Selecting the Method for Remittance

There are numerous banks and non-banking agencies who are involved in money transferring outside India, as well as from abroad to India.

1. Transferring fund through a bank– Currently, almost all the banks provide facility to transfer money internationally. You can visit the nearest branch of the concerned bank for this purpose.  Methods of remittance could be by wire transfer or by Foreign Currency Demand Draft. Depending on the bank, the sender might have to have an account with that particular bank. You need to produce your identification, declare the account from which you intend to do the transfer, state the purpose of transfer and provide information about recipient of the fund.
2. Transferring through Online Banking– Instead of visiting the bank, you can avail the online transferring features of the bank to remit funds internationally. For this you have to log in to your bank account and transfer money. You have to provide information of recipients bank account and the proof of the purpose for money transfer.
3. Using Transfer Services offered by Third Party– Several Third-party services are available like:
4. ACH Transfer — Automated Clearing House (ACH) is an electronic funds transfer system. It takes some days (about 4 days) for the money to get transferred to recipient bank. It is cost effective and even bank visits are not required.
5. Wire Transfer – Very common method for International money transferring. Agencies like Western Union, Remit 2India, and Xoom etc. collect information regarding recipient and recipient’s bank account. Sender’s institute initiate a wire transfer to recipient’s institution. This is faster than ACH (Automated Clearing House) and charges involved is also more. Fund is transferred within 2 working days.
6. Electronic Transfer – Transferring funds through entities like PayPal, Book My Forex and Money2World is done electronically. Also certain banks provide similar services to the non-account holders.

There are certain rules involved in this type of fund transfer involving third party service provider that include:

• Proof of residence and identification is needed,if you are not holding an account with the remitting organisation through which you are transferring funds abroad.
• You have to do an one-time registration with them and provide them personal details and account information.
• Your recipient details also need to be registered. This is to prevent any type of fraud and protect the fund that you intend to remit.
• Once registration is completed with third party services for fund transfer, there might be a brief waiting period (like 24 hours) after which outbound remittance could be done.

4. Transferring funds via International Currency – There are more restrictions for transferring INR in the outbound remittance. Other international currencies like US Dollar or Euro could be an easier option if you have access to those through some account. These foreign currencies could be sent through cashier’s cheques or wire transfer.
5. International Money Order– This is safe, fast and inexpensive way to send money in India, especially in remote locations. It is simple to purchase and need no account creation for the purchaser. Money orders could be deposited in banks or could be encashed in check cashing locations. Check cashing requires an ID proof and it is a good way to transfer money internationally, if the amount is small.
6. Cashier’s Checks and Bank Drafts– These could be purchased from any bank and some fees is associated with these. Encashing in India takes some time. Checks and drafts are traceable in case they do not reach destination.
7. Personal Checks – Money could be transferred through Checks of the foreign currency. This is time consuming since verification of deposit will be done. Recipient might have to pay fees for exchange rate additionally. This is safer way of transfer since there is option of cancelling the check in case it is lost in transit.

(B) Transferring the Funds

After selecting a method of remittance, the fund will be transferred from sender to the recipient. There are certain things to remember while sending the fund.

1. The purpose of Fund Utilisation should be acceptable– There is restriction of purpose for transferring money abroad. And the proof of purpose like a debit note, invoice or bill needs to be provided. These documents should bear the same name as of the account holder who is receiving the remittance. Acceptable purposes for transferring money abroad are:

• Visiting abroad for personal purposes
• Educational expenses
• Employment
• Visa Fees
• Emigration Fees
• Medical Treatment
• Treatment of family members and close relatives
• Police Verification

2. Limiting the Amount of Transfer– There is a limit of transferring money abroad, which is USD 25,000 for each financial year. This is called ‘Small Value Remittances’. However, there are certain exceptions where higher amount could be transferred:

• Under Liberalised Remittance Scheme, an Indian resident can send up to USD 125,000each financial year for investing in shares and debt instruments.
• Remittance of USD 100,000 for treatment purposes. In case doctors estimate the cost to be more, then that could be remitted with proof of expenses.
• An amount up to USD 100,000 could be sent abroad by an Indian resident for the purposes of education, medical, employment, emigration expenses or familial purposes. This restriction does not hold good for non-resident accountant holders.

Finally, while sending money internationally, you have to make sure that your account reflects the remittance to the recipient account. In case you are not holding an account, then the transfer will happen through cashier’s cheque, bank draft or by cash deposit. It is important to select the right mode of transfer and both the sender and the recipient of the fund has to work out jointly to decide on that based on the available options.