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What is remittance and how is it sent?

A remittance is money that's sent from one party to another. It usually refers to an overseas transfer but it can also be domestic.

Sending money across different countries is often complex because the funds must be sent through international payment networks. 

You can make an inward or outward remittance, depending on the transaction purpose. Both international remittance transactions are subject to FEMA (Foreign Exchange Management Act) Regulations and must be made through an Authorised Dealer (AD).

What is inward remittance?

An inward remittance means the transfer of funds into India from outside India. As a non-resident Indian (NRI) living overseas, you may want to send money back to India to support your family, to save money or for other purposes. 

When sending an inward remittance to India, you must:

  • fill out a form at a bank that offers NRI account services
  • provide the details of the beneficiary and their bank account details, and the nature of the inward remittance
  • provide a Purpose Code

An inward remittance arrives in a foreign currency. It's then converted to Indian rupees at the prevailing exchange rate and credited to the recipient's bank account.

What is outward remittance?

Outward remittance means the transfer of money from India to another country or region. This may be to cover tuition fee or living expenses, pay for medical treatments abroad, buy assets, and more. 

You can use HSBC Global Money Transfers to send money to over 20 countries, instantly and fee free. You can also remit to other third-party HSBC accounts, all through your HSBC India mobile banking app.

As per FEMA Regulations, residents:

  • can remit up to USD250,000 outside India under the Liberalised Remittance Scheme (LRS)
  • must fulfill compliance procedure, such as furnishing Form 15CA/15CB, instruction letter, debit authority advice, FEMA declaration and Form A2
  • must provide evidence for the need to remit funds outside India

Additionally, as per the provisions of the Income Tax Act, TCS (Tax Collected at Source) provisions are also applicable at specified rates for remitting funds outside India. Find out more about the fees and charges for international remittance through HSBC.

How are remittances sent?

In an inward remittance, the initiator of the transaction is the person sending money from outside India. They are also undertaking procedural compliances to conclude the receipt of funds.

For outward remittances, the account holder sending money outside India initiates the transaction along with necessary documents and declarations as required under the Reserve Bank of India (RBI) Regulations.

Remittances can be done via wire transfers, online money transfer services, bank drafts, cheques, or electronic payment systems.

Foreign currency inward and online outward remittances at HSBC are processed through the SWIFT (Society for Worldwide Interbank Financial Transactions) messaging system. Global Money on the HSBC India app, on the other hand, uses an internal messaging system which costs less.

How to initiate an international remittance with HSBC online

  1. Log on to HSBC Internet Banking
  2. Tap on the 'Global View' link and then go to the 'Global Transfer' tab
  3. Choose 'From' and 'To' countries
  4. Choose the account and enter the transfer amount
  5. Preview applicable foreign exchange rates
  6. Choose to make future dated or recurring transfers
  7. Select 'Purpose of remittance' for your transfer
  8. Select 'Submit' and complete your transaction

Move money through the HSBC Mobile Banking app

How to make a Global Money Transfer with the HSBC India app

Watch our short video for instructions on making convenient, fast and free overseas transfers.

Why are remittances important?

International remittances enable a smooth flow of funds across different countries. On a macro level, inward remittances increase the flow of foreign currency within India, thereby allowing a higher supply of such currency in the country. This, in turn, leads to an appreciation in the value of the Indian rupee against such currency. 

Remittances are integral to the smooth functioning of a developing country like India, which is now connected across different geographies.

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Note: The information provided in this article is for informational purposes only. You may consult professionals for specific guidance for the applicable Income Tax rules and FEMA Regulations, as these are subject to changes.


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