India, some say, is still stuck in the past with its archaic laws that control the money flow in and out of the country. However, the situation is as it is. Although not quite as difficult as invading Mordor, the sentence “One does not simply send money out of India” does adequately define the arduousness associated with the task of making a foreign remittance from India.
Why really is the process so hard?
Whilst in the rest of the world, plenty of online services such as paypal and the like work flawlessly, in India, thanks to the laws, those options are off the table. Transferring money from India by using cash to cash services such as Western Union and MoneyGram are also not allowed. Ironically, all of the above options work great if you want to send money to India. The reason for this is that RBI, India’s central bank and regulatory authority, likes to keep a close check on inflation and other forces that affect the country’s economy. Sounds pretty logical but the common man is stuck with but a few options when in need of making a foreign remittance.
The real devil in the process is the documentation required. All service providers are required to perform a fair degree of scrutiny before processing any kind of foreign outward remittance. Recently, RBI has relaxed some of these requirements. As of now, if you’re sending up to USD 25,000 and as long as the purpose of your transfer is legitimate, all you need is to fill out a simple application form, specify the purpose of your transfer and submit a valid government ID. If you’re sending over USD 25,000 or if your purpose of transferring funds abroad is non-standard (not education, maintenance, immigration, employment etc.) then you can expect the banks or your service providers to do a bit more due diligence which, as you might guess, will end up taking more time. Additionally, in these cases you may be asked to produce some more documents as well.
So What are my options?
Every legitimate option of sending money from India requires the involvement of a bank in India. The banking instruments that one can use to make the transfer are the following: wire transfer (swift transfer) or demand drafts (money orders). Let’s go through each one in detail.
Option 1 – Bank to Bank Wire Transfers – Quick but somewhat expensive
Wire transfers are probably the best and most hassle-free way of making a money transfer from India. Only banks are capable of actually initiating a wire transfer but many a times it is cheaper to go through some external forex companies as they get preferential rates from the banks. Wire transfers require you to mention your beneficiary’s bank details including the account number and SWIFT code (IBAN code, routing number). These transfers typically take between 2 – 10 business days to complete. However, wire transfers can be a bit heavy on the pocket. Banks in India charge anywhere from Rs. 250 to Rs. 1000 to process a wire transfer. Additionally, most foreign banks that receive the money also charge a foreign correspondent fee that ranges between USD 10 to USD 40. Overall, the process can be expensive. It is therefore wise to choose a low cost service provider when sending money from India using this method. BookMyForex.com, an online forex portal, charges a low commission of Rs. 250 to process a wire transfer. We also provide the best currency rates, which is another important consideration to keep in mind when choosing your service provider
Option 2 – Foreign Currency Demand Drafts – Cheaper but more inconvenient
Foreign currency demand drafts, also known as foreign currency money orders or foreign currency pay orders, are physical paper drafts, issued in a specific foreign currency in lieu of a specific beneficiary. Demand drafts are a good idea in case the time to transfer the funds isn’t an issue and cost is an important consideration. DDs aren’t as convenient as wire transfers since you are responsible to mail them to the beneficiary abroad yourself through post/ courier etc. Banks and other service providers typically charge between Rs. 250 and Rs. 500 to issue a demand draft but in case of a demand draft there are no foreign correspondent fees so you do end up saving some money. The main problem with using demand drafts is the fact that they can sometime take a while for the funds to become available (upto 10 business days). This combined with the time it takes for the DD to be mailed abroad can lead to a fairly large gap in receiving the funds.
Is that it? Are there any other options?
Unfortunately, demand drafts and wire transfers are the only legal ways of sending money out of India. The one exception is if you have a US Dollar NRE account in an Indian bank account. If you do indeed have an account of this sort, you could send a personal check abroad. However, it bears mention that the time for fund realization when using personal checks is much worse even in comparison to using a DD. If you’re not just transferring money abroad but also traveling abroad yourself the options available do increase. You could carry physical cash currency, prepaid forex cards or traveler’s checks, all of which you can use abroad.