Remittances and Bank Issuance by Non-Residents of India
The Reserve Bank of India (RBI) reports that foreign Indians sent US $ 24.6 billion to India between 2005 and 2006. In this way, India continues to maintain its position as the largest recipient of international remittances. The World Bank estimates in 2005 that India leads with US $ 23.5 billion, followed by China and Mexico with US $ 22.4 billion and US $ 21.7 billion respectively. This article focuses on remittances and banking of non-Indian citizens.

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If you are an Indian citizen and want to send money abroad under LRS, or if you want to invest or buy houses abroad,, we have to send a Form A2 to the transfer bank. However, if the amount sent by LRS exceeds Rs 70,000, the bank will charge an additional 5% of the additional amount such as tax withholding (TCS). You can pay this income tax debt if you submit your tax return. For NRI or OCI, you must submit Form A2 with a statement stating that you have not exceeded the limit (and current income) imposed abroad under the Exchange Act. Like NRI / OCI, transfers are not performed by LRS, so TCS does not apply to transfers.

Remittance of current income

Related importance ​​of Remittances

  • The impact of remittances on major economies such as India is generally accepted as being ignored. However, their relative importance is significant compared to other major economic and financial indicators.
  • Today, exports account for 3.08% of the country’s GDP, strong growth from 0.7% in 1990 to 91 (see Table 1). From 2005 to 2006, remittances exceeded $ 23.6 billion in revenue from Indian software exports. This is particularly surprising as software shipping increased by 33% that year.
  • The impact of remittances is most evident in other countries with high immigration rates. In southern Kerala, for example, exports account for 22 per cent of the country’s gross domestic product. Kerala economists have found that Kerala’s per capita income is much higher than the country’s export figures. Including tariffs, the per capita tariffs from 2002 to 2003 were significantly higher than national figures and 34% higher than higher tariffs.

Indian Remittance

According to the remittance consists of two streams. Inbound and outbound transfers to non-residential Indian savings (NRI) accounts. The term NRI usually refers to members of the Indian Diaspora, which includes immigrants of Indian citizens and people of Indian descent. Home remittances are the direct transfer of funds from one person abroad to another in India, usually through a bank or remittance office. Such transfers are often understood as family support. Indian banks have opened NRI deposit accounts specifically for NRI. These deposit systems, approved by the Government of India in the 1970s were used to attract foreign exchange when the Government of India felt the need to strengthen its foreign exchange reserves.

To make your account more attractive, NRI depositors can choose to hold their deposits in foreign currency units or Ian Rupee. Foreign exchange depositors, if they choose, can send capital and interest on foreign currency to their country. Therefore, refunded deposits are considered as a direct deposit, while the RBI handles funds in the area issued by the NRI in rupee deposits as remittances. In the case of the RBI, these operations are no longer liable and take the form of “non-refundable remittances”. To understand India’s remittances today, the relationship between the two parties and the rest of the remittances is important. Personal remittances (“total remittances”) increased by 88% in total, but not from 2000-2001, but remittances increased by only 30% (from 2003-2004 2000). 40% at the highest level). Over the past three years, local withdrawals from NRI savings accounts have exceeded deposits. The difference between 2005 and 2006 was $ 2.3 billion. Local withdrawals exceeded 1.02: 1 rates from 2003 to 2004, while 1.23: 1 from 2005 by analysts that India wants withdrawal. 

Remittance of assets in of NRO/PIO

Indigenous Indian (NRI) or Indigenous Indian (PIO) may withdraw up to USD 1 million, per financial year, from the balance in his Non-Resided (Ordinary) Rupee (NRO) / sale account of the goods (including assets acquired in the form of an inheritance or payment), for all reasonable purposes, to the satisfaction of the authorized merchant bank, in producing the sender agreement and certificate by the Chartered Accountant in the prescribed manner. by the Central Board of Direct Taxes, with its Circular NO.10 / 2002 dated October 9, 2002. NRI / PIO may issue funds for the sale of immovable property purchased by Rupee or as a resident of India as indicated above any lock time. With regard to the issuance of the sale of assets acquired in the form of inherited property or non-closing compensation, NRI / PIO may provide written proof supporting the estate or estate, promise of sender and certificate from the Chartered Accountant in the prescribed formats. Payment is also a means of inheritance from the parent, the only difference being that the term of the agreement passes to the beneficiary when the owner / parent dies without legal proceedings / problems and helps to avoid delays and interruptions in the application of probate, etc. Export services for the sale of immovable property are not available to citizens of Pakistan, Bangladesh, Sri Lanka, China, Afghanistan, Iran, Nepal and Bhutan.

Factors that cause remittances

Regardless of the amount of remittances to local deductions, the fact is that remittances to India have grown dramatically. A combination of factors is involved in this.

India’s radical electronic economic reforms in the early 1990s provide an important platform. Economic independence, which began in 1991, is sometimes called “India’s second independence.” It gradually abolished world domination in many industries, allowed foreign investment in many economic sectors, reduced taxes and taxes, and eliminated monetary policy. The crisis has accelerated India’s integration into the global economy and changed India’s thinking.


India has achieved a great deal of stable thinking. Government policy initiatives by banking agencies have achieved two outcomes. First, most remittances go to official channels. Second, many financial firms have developed from “savings” to “investors”. Indian policy demonstrates the potential for attracting NRI funding through NRI savings accounts and ongoing bond issuance. The challenge is to direct some of this flow to socio-economic development. Strategic action by the government and the banking sector has the potential to provide high returns on remittances invested in certain assets in the domestic financial markets.


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