Inward remittances can broadly be classified into two types
- Business Transfers
- Private Transfers
Business Transfers are usually repatriable, whereas Private Transfers stay within the country.
The Private Transfers are remittances are essentially meant for maintenance of the recipient household or for foreign tourists visiting India.
RBI allows only personal remittances such as remittances towards family maintenance and remittances favouring foreign tourists visiting as permissible.
From a balance-of-payments perspective, remittances are permanent foreign currency inflows and help finance the current account, unlike NRI deposits which are repatriable.
India is the largest recipient of worker remittances in the world. In financial year 2012, it received $66 billion, according to the RBI. Remittances form about 22-23% of the country’s foreign exchange reserves.
In 2012, the diaspora pumped as much as $69.13 billion in remittances. Out of this, the cash segment or MTSS were $15 billion, while the balance came from account credit segment.
Now, Xpress Money is in talks with Reserve Bank of India, to allow it operate in the account credit segment i.e . a rupee drawing arrangement licence.
Presently, Xpress Money offers three channels to remit money in the country– cash-to-cash, cash-to-ATM and cash-to-card.
The company has over 45,000 agent locations across the country, and nearly 1,00,000 ATMs serve as payout locations for its cash-to-card product.
The move comes amid reports that the country will continue to top the remittances market this year as well. Last week, the World Bank had pegged the inflow this year at $71 billion, which is a record. Last year, total remittances stood at $69.13 billion.
The company is also in talks with various banks to partner for remittance using the rupee drawing arrangement.
- World Bank: Migrant worker remittances over $414B (nzherald.co.nz)
- Remittances to developing countries to exceed US$410bn in 2013 – World Bank (caribbean360.com)
- Bitcoin isn’t ready for prime time as a world wide remittance replacement. (gigaom.com)
- Festivals brings more remittance to Baglung (thehimalayantimes.com)
- World Bank says remittances from migrant workers top $414 billion (vancouverdesi.com)
- Migrants sending cash home is a lifeline for poor nations (independent.ie)