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Banks should reduce the cost of NRI remittance
By siliconindia
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Wednesday, 27 September 2006, 19:30 IST
Mumbai: A working group created by the RBI has reported that banks should bring down the cost of NRI remittances by trimming their charges. It further stated that banks should review their existing scale of charges both at the foreign and domestic center.
According to the group report, Indian banks should be allowed to enter the Money Transfer Operators business abroad. Banks have been advised to extend the scope of existing electronic transfer facilities like the Real Time Gross Settlement and also set up Centralized Remittance Receiving Centers.
Currently, remittance charges vary. For a remittance of $1,000, from a major financial center to a bank in India the overall cost could be in the 2 to 3 percent range, which will drop with the size of the remittances.
The working group looking for better deals for the NRIs, suggests that they should route their remittances through a branch of an Indian bank or a foreign bank having a branch in India, to reduce costs wherever possible. Currently an RBI cap controls the number of exchange house relationships an Indian bank can enter into. It also mentions that the limits should be relaxed or even done away with, as it is a low-cost channel.