How To Use Your Indian Savings Account To Send Money Overseas?

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Financial requirement or shortage may knock at your doorstep anyday or anytime. Just imagine that there is a financial emergency of your family member staying overseas and for his or her support, you need to remit money overseas via your Indian savings bank account. For this occurrence, you need to send money smoothly and quickly. You may not necessarily know how exactly to transfer funds, but will always like to gain information on what are the associated rules and regulations, avenues, time-frames, documentation and charges related to funds transfer.

Apart from transferring your money overseas via post offices, banks, or online and offline modes, you may also leverage global payment service providers, such as Western Union or MoneyGram, etc for the same. With several transfer options at your disposal, lets try understanding few important points that may help you to send money overseas at ease.

For Starters:

Thanks to the RBI’s Liberalised Remittance Scheme, you can remit funds from your Indian or current account to a foreign country to the tune of USD 250,000 per financial year. The good news is that presently there is no cap on the frequency of remittances. However, if you are transferring funds for education courses or medical treatments, wherein the actual costs exceed this limit, you may remit a higher amount after securing the necessary permissions and by submitting applicable estimate proofs.

Permissible Purposes as per RBI

Under the Foreign Exchange Management Act (FEMA), you can avail foreign exchange service and remit funds abroad for any of the below-mentioned purposes:

1. Personal travel to any country (except Nepal and Bhutan)
2. Employment abroad
3. Education abroad
4. Emigration
5. Financial support to close relatives living abroad
6. Business travel
7. Expenses for medical treatment
8. Gifts or donations
9. Any other current account transaction (For instance, acquisition of shares)

Transfer Avenues:

Currently, the two leading methods for you to transfer money abroad through your savings account are through Wire Transfer (online) or via Foreign Currency Demand Draft (offline).

The Online Mode:

SWIFT (Society for Worldwide Interbank Financial Telecommunication) is an electronic payment messaging system and act as an efficient online wire transfer option for its customers. By using this online transfer option, any savings account holder in India is able to send money to a bank abroad that facilitates the transaction.

The Process:

1. Get the SWIFT (Society for Worldwide Interbank Financial Telecommunication) and International Bank Account Numbers (IBAN) of both the accounts.
2. Fill in the forms used for remittances, A2 Application and Declaration form, with a clear mention of the receiving bank’s SWIFT code. (Now these forms can be filled and submitted online for your convenience).
3. Following the forms submission and transaction approval, the beneficiary should receive the amount in as less as 2-3 working days.
4. Do remember that bank holidays, public holidays and weekends on both the sending bank and receiving banks’ end may delay the transfer process.
5. You may also do a real-time transfer of funds abroad via the popular National Electronic Funds Transfer (NEFT). It is a national fund transfer process that can be used for transferring money only to India-based accounts. However, the only exception to this rule is Nepal, as you can use the facility to transfer funds only to Nepal and no other country. Make sure to check the arrangement between the local bank and the overseas bank before opting for NEFT service.

The Offline Route:

The offline route for overseas money transfer is depositing a Foreign Currency Demand Draft – which is available in most of the major currencies, such as United States Dollar, Euro and Pound Sterling. Being an offline method, demand draft transfers are much slower and could take from 10-12 working days. In case of exigencies requiring urgent fund transfers, it is better you opt for a wire transfer instead. Also the only role your savings account plays here is that the funds are drawn from your savings account and converted to the relevant currency.

Cost Incurred on your pocket:

The speed of transfer and associated costs are directly proportional. Before settling on the mode of transfer, consider how heavy it would be on your pocket. By virtue of the transfer speed, a wire transfer will naturally be costlier than a demand draft.

While a wire transfer costs anywhere between Rs. 500-800 per transaction excluding taxes, a demand draft for the same transaction will cost between Rs. 200-500 plus taxes. Some banks however do not offer the SWIFT facility, so you will need to make a demand draft and hand it over to a bank offering this facility. In this case, you as the remitter will have to pay the SWIFT and demand draft charges to the issuing bank.

Specialised money transfer services, such as Western Union usually charge a higher commission, almost 25-30% more than most banks, however Western Union completes the transfer process in about 30 minutes and the beneficiary can receive the money in cash from any registered Western Union location. On the flipside, their exchange rates may not be the most competitive; hence it is recommended that you perform some ‘rate shopping’ before settling on any option. Do remember to check for add-on charges like service tax on each transaction.

Limitations on the International Transfer process are as follows:

• An individual can only deposit foreign currency in his/her NRE savings account.
• An individual cannot deposit Indian Rupees in his/her NRE account, nor can he/she can transfer Indian Rupees from their NRO Savings account or any other resident savings account in India.
• The Money Transfer Service Scheme (MTSS) in India is often mistaken as a vehicle to remit funds abroad. MTSS and NEFT are used only for fund transfers within India.
• Whether you choose online or offline transfer modes, it is mandatory to provide your PAN number, except in case of permissible current account transactions not exceeding USD 25,000.

Conclusion:

Keep a watch on the RBI’s website to keep a track on their remittance policy amendments and also confirm the specific requirements of the banks in question. This will eliminate bottlenecks and ensure a seamless and hassle-free money transfer overseas.