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India, China among top remittance recipientsThe top five remittance recipients in current US dollar terms in 2021 were India ($87 billion), China ($53
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Tag: remittance
Many Indian expats turn to crypto to remit money, BFSI News, ET BFSI
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Abir Roychaudhary, a 39-year-old engineer working in Qatar, has transferred around ₹2 lakh to his family based in Mumbai every month using traditional cross-border, cross-currency players.
In October for the first time, Roychaudhary bought cryptocurrencies worth half that amount – ₹1 lakh – and his wife who has access to his wallet could use the sum when needed.
Roychaudhary like many Indian, Pakistani, Bangladeshi and Filipino expats are increasingly experimenting with cryptocurrencies to remit money to their families back home and save on commissions charged by wire transfer companies and other middlemen.
Industry trackers say that the sudden growth in the crypto investments even in smaller towns across India has also led to people exploring various uses.
“The process of remittances through cryptocurrencies into India is a lot more efficient and faster than the conventional process, and all transactions are visible on the blockchain network from a regulatory point of view,” said Edul Patel, CEO of Mudrex, a Global Crypto Investing Platform.
“Looking at current hype in crypto assets like Bitcoin, Ethereum, Binance Coin, United Farmers Finance and Grain, it should be easy to remit money to India and anywhere in the world, more over you can earn more from this crypto by staking or by providing liquidity in our ecosystem,” said Santhosh Bhhandarii, co-founder, United Farmers Finance, a crypto farming platform.
Remittances in India are pegged at about $80 billion which are mainly transferred through banking or other financial channels.
Industry trackers say that the way Indians are warming up to crypto assets as well as decentralised finance, remittances through crypto assets is only set to grow, especially because transferring smaller amounts can be expensive through the traditional services.
Globally, several blockchain startups like Satoshi Citadel in the Philippines have started offering services to facilitate bitcoin remittances in a user-friendly way.
There are close to 1.5 crore crypto investors in India holding digital assets worth ₹15,000 crore. All the large cryptocurrency exchanges saw at least 100% increase in their trading and investment in the last few months.
Experts say that though Bitcoin was the preferred choice for remittances but its transaction costs are rising, currencies like Ripple and Dash are good replacements due to substantially lower fees.
Cryptocurrency remittances became a lifeline for Afghans after Western Union ceased operations for some time after the US withdrew from Afghanistan.
Experts also say that crypto is becoming popular in places with high inflation like Lebanon, Turkey and Venezuela.
Experts point out that remittances in crypto are finding favour because people want to protect themselves against hyperinflation.
Most of those looking to remit money are doing so through some of the less volatile crypto assets such as Stablecoins, say industry trackers. “While remitting money, users would want the value to remain as intended, unhindered by market volatility. Stablecoins pegged to the US dollar are the preferred choice for doing such transactions. Users mostly use stable currencies like USDT/USDC to do these transfers,” said Patel.
The RBI has had a faceoff with cryptocurrency exchanges in the past. It had asked banks to stop dealing with cryptocurrency exchanges, but had to back off following a Supreme Court order.
The government is planning to define cryptocurrencies in the new draft bill and could treat it as an asset/commodity for all purposes, including taxation.
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Indo-Nepal Remittance: RBI enhances per transaction ceiling 4-fold to ₹2 lakh
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The Reserve Bank of India has made enhancements to the Indo-Nepal Remittance Facility Scheme, whereby the ceiling per transaction has been increased four-fold to ₹2 lakh and the cap of 12 remittances in a year per remitter has been removed.
The aforementioned enhancements, which come into effect from October 1, have been announced to boost trade payments between the two countries, as also to facilitate person-to-person remittances electronically to Nepal, RBI said in a circular to all Banks participating in the National Electronic Funds Transfer facility.
Under the scheme, the beneficiary receives funds in Nepalese Rupees through credit to her / his bank account maintained with the subsidiary of State Bank of India in Nepal, — Nepal SBI Bank Limited (NSBL) or through an agency arrangement.
The central bank said as hitherto, banks shall accept remittances by way of cash from walk-in customers or non-customers. The ceiling of ₹50,000 per remittance with a maximum of 12 remittances in a year shall, however, continue to apply for such remittances.
The central bank asked banks to put in place suitable velocity checks and other risk mitigation procedures.
Thje RBI emphasised that “the enhancements are also expected to facilitate payments relating to retirement, pension, etc., to our ex-servicemen who have settled / relocated in Nepal.”
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Indo-Nepal Remittance Facility: RBI enhances transaction ceiling 4-fold to ₹2 lakh
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The Reserve Bank of India has made enhancements to the Indo-Nepal Remittance Facility Scheme, whereby the ceiling per transaction has been increased four-fold to ₹2 lakh and the cap of 12 remittances in a year per remitter has been removed.
Theenhancements, which come into effect from October 1, 2021, have been announced to boost trade payments between the two countries, as also to facilitate person-to-person remittances electronically to Nepal, RBI said in a circular to all banks participating in the National Electronic Funds Transfer facility.
Under the scheme, the beneficiary receives funds in Nepalese Rupees through credit to her / his bank account maintained with the subsidiary of State Bank of India (SBI) in Nepal, — Nepal SBI Bank Ltd (NSBL) or through an agency arrangement.
RBI said hitherto, banks shall accept remittances by way of cash from walk-in customers or non-customers. The ceiling of ₹50,000 per remittance with a maximum of 12 remittances in a year shall, however, continue to apply for such remittances.
The central bank asked banks to put in place suitable velocity checks and other risk mitigation procedures.
RBI emphasised that “the enhancements are also expected to facilitate payments relating to retirement, pension, etc., to our ex-servicemen who have settled / relocated in Nepal.”
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Western Union aims to scale up outbound remittance service
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Western Union, a global leader in cross border, cross-currency money movement and payments, wants to scale up its outbound remittance service from India this year, Sohini Rajola, Head of Network — APAC and Middle East, has said.
“Today sending money to India is easy. But for sending money from India there is still a room for process streamlining and improvement. We need to make it as seamless as sending money to India currently is. Scaling our outbound remittance service will be the focus area for Western Union India business this year,” Rajola told BusinessLine in an interview.
“As infrastructure develops at our end, we need to offer the same convenience to people sending money out as well. As and when we are able to offer direct debit or have simplified documents based on guidelines, our product will keep changing,” Rajola added.
India is the largest remittance recipient market in the world with annual inbound remittance of over $80 billion. The market for outbound remittance is however smaller at estimated level of $14 billion as of end March 2021. Infact, there has been a steady growth in outward remittance under the Liberalised Remittance Scheme (LRS) route over the last few years with volumes going up from as little as $1.33 billion in 2014-15 to $ 13.79 billion in FY’18-19 and touch high of $18.76 billion in FY’19-20.
Outbound market biz
“In any country we operate, we want to offer both inbound and outbound services. Outbound is definitely a smaller market in India. But if we have been serving the Indian consumer for 25 years, we definitely want the next phase where we can serve that segment well. It is not about whether it is worth it or not. It is about the gamut of services that Western Union offers,” Rajola said when asked it was worth the effort to focus energies on relatively smaller outbound market in India.
Rajola said that her aspiration this year would be to see how Western Union can work together with the regulator and authorities to simplify the processes and offer the same level of convenience of digital remittances to people sending money out of India as available for those making inward remittances.
Impact of Covid-19
On the overall impact of Covid-19 on remittance business, she said that personal remittances saw resilient volumes despite the pandemic. “Overall as a business we processed more business in 2020 than in 2019. We don’t share corridor-specific information, but our principal increased globally,” she said.
“When the pandemic struck initially, there was an apprehension that this will drop overall remittance volumes. What we saw was there was only minor impact. We saw a big jump on the principal volume that was transacted through Western Union,” she added.
Infact, in the first wave, given the cash restrictions, Western Union’s digital business took off in a big way as from people were sending money to support their family, she added. Also, RBI categorising remittance service as an essential service helped some locations to remain open, according to Rajola.
However, in the second wave there was not that big impact on the retail locations. The impact on the physical retail business has been more muted and digital continues to be showing healthy business, she added. At a global level, Wester Union is on course to clock digital revenues of $1 billion this year.
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Domestic remittances down 20%, may fall further on reverse migration, BFSI News, ET BFSI
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Domestic remittances, which are largely by the migrant workers to their families, have reduced drastically due to pandemic led lockdowns and resultant unemployment.
Money transfers have fallen 10-20% across the country, though the fall is not as sharp as last year during the national lockdown.
According to major remittances companies, the rapid spread of Covid in urban areas and concerns over a total lockdown have already prompted a section of the migrant workforce to leave the big cities. Also, night curfews have halted remittances after 8 pm.
Reverse migration
Fino Payments Bank which sees about Rs 3,000 crore remittances per month, sees further hit due to some reverse migration.
Several migrant workers are fleeing urban centres as they are concerned that a complete lockdown will leave them without jobs and no rents to pay.
Experts see remittances slowly recovering after lockdowns are lifted and may take about four to five months for normalcy to return.
Payment companies are hoping that the lockdowns are lifted in 15 days.
Remittances hub
There are six major corridors within India from where a large chunk of the remittances originates: Delhi, Mumbai, and Gujarat are among them. On the other hand, the states of Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh are among the biggest receivers of these flows.
Remittances had started picking up in January to March quarter but were impacted in the second half of April and May due to the lockdowns,
However, infrastructure and manufacturing projects, which have put in place an enabling ecosystem for the migrant staff at worksites, could mitigate the impact of reverse migration.
According to the Centre for Monitoring Indian Economy, the unemployment rate for the week of May 23 shot up to 14.73 per cent pan-India and was at 17.41 per cent for urban areas.
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Federal Bank, Mashreq Bank of UAE ink pact, to offer money transfer
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Federal Bank has entered into a tie-up with Mashreq Bank, a leading financial institution in the UAE, to facilitate money transfers to India. The partnership will support Mashreq’s faster payment product, QuickRemit. Mashreq is one of the oldest banks in the UAE, and has a presence in twelve countries across Europe, US, Asia and Africa.
Shalini Warrier, Executive Director, Federal Bank said, “With a market share of 17 per cent in personal inward remittances to India, we have been always at the forefront of ensuring our remittance business. Federal Bank adds one more partnership to its fold through this tie-up”.
Tooran Asif, Executive Vice-President, Head of Consumer Banking at Mashreq Bank said, “This partnership with Federal Bank comes at an important time, as the growth of the UAE remittance market improves and begins to return to pre-pandemic levels.”.
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