==Main note - [External - Current Account Transactions](External%20-%20Current%20Account%20Transactions.md)== 1. In this note, we discuss about inward private transfers (a type of inward remittances under the current account), and the use of word "remittances" here shall mean private transfers/current transfers. 1. [Liberalised Remittance Scheme (LRS)](Liberalised%20Remittance%20Scheme%20(LRS).md) is for outflows, and while the scheme for individuals is open for both current and capital account transactions is largely (more than 90%) in current account transactions like travel, studies etc. 2. The components of current account transactions are: 1. Trade Balance Net (Exports-Minus) 1. Imports 2. Exports 2. Invisibles, Net 1. Non-factor services 2. Income (like income from investments, payments of interest) 3. Private transfers 3. Here private transfers/secondary income are worker remittances, official transfers, etc., whereas sources of income are interest, dividends, compensation, etc. While remittances like regular transfers of wages are recorded in the _current_ account, the sale of the person's asset in India due to relocation and transfer to the new country of residence would be recorded in the _capital_ account 4. Net of Private Transfers = inward (credit) - outward (debit) 5. In this note, the use of word "remittances" shall mean inward private transfers. 6. Remittances are an important source of family and national income and also are one of the largest sources of external financing 7. About Inward Remittances - [Box I.19 Inward Remittances](RBI_Annual%20Report_2006.pdf#page=110&selection=4,0,4,18) in RBI's Annual Report-2006 8. Factors Influencing Remittances to India - [Box II.5 Factors Influencing Remittances to India](RBI_Annual%20Report_2016.pdf) in RBI's Annual Report-2016 9. [Workers’ Remittance Inflows to India](RBI_Annual%20Report_2007.pdf#page=118&selection=3,0,4,35) in RBI's Annual Report-2007 1. [Box II.34 Impact of the Global Slowdown on Remittances](RBI_Annual%20Report_2009.pdf#page=200&selection=55,0,56,44) in RBI's Annual Report-2009 2. [Box VIII.1 General Principles for International Remittance Services](RBI_Annual%20Report_2007.pdf#page=238&selection=151,37,151,47) in 2007 1. January 2007 - Report on General Principles for International Remittance Services, Committee on Payment and Settlement Systems, Bank for International Settlements (BIS) 10. May 2008 - Indo-Nepal Remittance Scheme *(outward)* was launched by the Reserve Bank of India (RBI) in May 2008 to provide a safe and cost-efficient avenue to migrant Nepalese workers in India to remit money back to their families in Nepal. 1. [Box IX.2 Indo-Nepal Remittance Scheme – Salient Features](RBI_Annual%20Report_2008.pdf#page=308&selection=74,0,74,47) in RBI's Annual Report 2008 2. [FAQs](https://rbi.org.in/scripts/FAQView.aspx?Id=67) on Indo-Nepal Remittance Facility scheme 11. [Aug 16, 2012](RBI_Press%20Release_20120816_Survey%20of%20Private%20Remittances%20to%20Indian%20Households%20with%20Non-Resident%20Accounts%20-%20Release%20of%20Survey%20Data.pdf) - The Reserve Bank had conducted a survey on _Private Remittances to India_ for the reference years 2007-08 and 2008-09, in the selected districts of four states (that is, Maharashtra, Gujarat, Kerala and Punjab) with high concentration of inward foreign remittances, during December 2009 to July 2010. 12. [Nov 14, 2018](https://rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=17882) - Globalising People: India’s Inward Remittances in RBI's Bulletin Nov-2018 13. [Oct 21, 2022](RBI_Speeches_20221021_Internationalisation%20of%20the%20Rupee%20Is%20it%20time%20to%20shift%20gears.pdf#page=5&selection=80,0,82,17) - Total inward remittances between 2012-13 and 2021-22 in speech by T Rabi Sankar, the then Deputy Governor, Reserve Bank of India 14. [Feb 15, 2024](RBI_Press%20Release_20240215_Terms%20of%20Reference%20signed%20between%20Reserve%20Bank%20of%20India%20and%20Nepal%20Rastra%20Bank%20on%20Integration%20of%20Unified%20Payments%20Interface%20(UPI)%20of%20India%20with%20National%20Payments%20Interface%20(NPI)%20of%20Nepal%20for%20cross-border%20remittances.pdf) - UPI was integrated with NPI (Nepal) for cross-border remittances. ## Channels for Inward Remittances to India 1. The remitting country can transfer remittances to India (or beneficiaries in India can receive cross-border inward remittances) through three channels: [^1] 1. Postal Channel 1. International Financial System (IFS) platform of Universal Post Union (UPU) is generally used for the postal channel. 2. [Jan 2026](https://www.upu.int/en/news/2026/january/india-post-upu-link-up-for-global-lowcost-remittances) - India Post partnered (and sponsored) with UPU and NPCI, which would connect UPI directly to the UPU’s global network of more than 190 national postal operators. 2. Overseas Banks; 1. Overseas banks may either send funds to the Nostro account maintained abroad by the Indian AD Category-I bank with its correspondent bank, or maintain a Vostro account with the partner AD Category-I bank in India 2. The instruction to transfer remittances may be sent using the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging service or the bank’s own application programming interface (API). 3. The funds received by the correspondent bank / partner bank can be further sent to the beneficiaries’ account via various payment arrangements such as NEFT, RTGS, IMPS and Bharat Bill Payment System (BBPS). 3. MTOs (Money Transfer Operators like Western Union, foreign exchange houses, etc). MTOs can transfer funds to India via two schemes – Money Transfer Service Scheme (MTSS) and Rupee Drawing Arrangements 1. MTSS - Money Transfer Service Scheme 1. MTSS permits only personal remittances, and transfers for trade, property purchases, investments, or charitable donations are prohibited. 2. There is a cap of USD 2500 per transaction and 30 remittances (*earlier 12*) per beneficiary annually. 3. No outward remittance from India is permissible under MTSS 4. It involves tie-ups between overseas money transfer companies (overseas principals) and domestic entities (permitted Indian agents like AD-I, II, FFMC, India Post) authorised by the RBI under the Payment and Settlement Systems Act, 2007. Thus 4 entities are involved(the other are remitter and beneficiary) 5. The final settlement in MTSS happens through normal bank transfers, typically using SWIFT 6. [Master Direction – Money Transfer Service Scheme (MTSS)](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=10868) 7. [List of Overseas Principals, Indian Agents and their Sub- Agents](https://rbi.org.in/scripts/femaview.aspx?femaid=60) - Money Transfer Service Scheme (MTSS) 2. Rupee Drawing Arrangement (RDA) 1. RDA enables cross-border remittances through tie-ups between AD Category-I banks in India and *non-resident foreign exchange houses (and fintechs)* in Gulf countries, Hong Kong, Singapore, Malaysia (for Malaysia only under Speed Remittance Procedure) and all other countries which are Financial Action Task Force (FATF) compliant (only under Speed Remittance Procedure), through the latter's Rupee Vostro accounts with their partner AD Category-I bank in India. Here a exchange house means a money transfer/remittance company abroad. 2. While such non-resident exchange houses could be fintechs too as per their classification in the remitting jurisdiction, fintechs as a specific category is not envisaged in the RDA scheme. 3. RDA allows private remittances between individuals, with limited provisions for trade-related transactions capped at [₹15 lakh](RBI_Notification_20150521_Rupee%20Drawing%20Arrangement%20-%20Increase%20in%20trade%20related%20remittance%20limit.pdf) (*since March 2015 as earlier it was ₹5 lakh*). 4. Unlike MTSS, RDA has no limit on the amount or frequency of personal remittances and is exclusively for inward transfers. 5. In other words - RDA allows exchange house/fintechs abroad to drawing rupees from its INR Vostro (theirs) account in an Indian bank. 6. Nostro = our account with them (abroad), and Vostro = their account with us (in India)** 4. fintechs (also known as remtechs or digital only MTOs) 1. fintechs (that hold valid licenses issued by the local monetary/ supervisory authority concerned to transact currency exchange/money transfer business) can operate only through the RDA channel. 2. [FAQs](https://rbi.org.in/scripts/FAQView.aspx?Id=112#AS1) on Remittances [Money Transfer Service Scheme (MTSS) and Rupee Drawing Arrangement (RDA) 3. ==[Chart 5: Channels of Transmitting Inward Remittances to India – A Schematic Representation](RBI_RBI-Bulletin_20250319_Changing%20Dynamics%20of%20India’s%20Remittances%20–%20Insights%20from%20the%20Sixth%20Round%20of%20India’s%20Remittances%20Survey.pdf#page=6&selection=17,0,17,90)== ## India’s Remittances Survey 1. [November 2006](RBI_20061120_RBI-Bulletin_Invisibles%20in%20India’s%20Balance%20of%20Payments.pdf) - "Invisibles in India’s Balance of Payments" in RBI's Bulletin of Nov-2006 monthly Bulletin *(first in the series, conducted in July 2006). 2. [April 2010](RBI_RBI-Bulletin_20100413_Remittances%20from%20Overseas%20Indians-Modes%20of%20Transfer,%20Transaction%20Cost%20and%20Time%20Taken.pdf) - India’s Inward Remittances Survey *(second in the series, conducted in Sept 2009)* 3. [December 2013](https://www.rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=14610) - "Remittances from Overseas Indians: Modes of Transfer, Transaction Cost and Time Taken" in RBI's Bulletin Dec-2013 *(third in the series, conducted in April 2013)* 4. [Nov-2018](https://rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=17882) - "Globalising People: India’s Inward Remittances" in RBI's Bulletin of Nov-2018 *(fourth in the series)* 1. [Aug 09, 2018](RBI_Press%20Release_20180809_India’s%20Inward%20Remittances%20Survey%202016-17.pdf) - Preliminary findings of the survey were published 5. [July 2022](RBI_RBI-Bulletin_20220716_Headwinds%20of%20COVID-19%20and%20India’s%20Inward%20Remittances.pdf) - "Headwinds of COVID-19 and India’s Inward Remittances" *(fifth round of the survey for the reference period 2020-21)* 6. [Mar 19, 2025](RBI_RBI-Bulletin_20250319_Changing%20Dynamics%20of%20India’s%20Remittances%20–%20Insights%20from%20the%20Sixth%20Round%20of%20India’s%20Remittances%20Survey.pdf) - "Changing Dynamics of India’s Remittances – Insights from the Sixth Round of India’s Remittances Survey" in RBI's Bulletin of March 2025 *(sixth round, conducted for 2023-24)* ## FAQs 1. Inward Remittances through [Money Transfer Service Scheme (MTSS) and Rupee Drawing Arrangement (RDA)] - [Link](https://rbi.org.in/scripts/FAQView.aspx?Id=112) ## Rules/Regulations/Master Directions 1. Act 1. Various current account transaction are provided under the Section 5 of the Foreign Exchange Management Act, 1999 2. Rules 1. Rules - FEM (Current Account Transactions) Rules, 2000 (May 3, 2000) (as amended from time to time) For release of foreign exchange to persons resident in India for various current account transactions, Authorised Dealer banks are to be guided by the Rules made by the Government of India under Section 5 of the Foreign Exchange Management Act, 1999 which are detailed in the ==FEM (Current Account Transactions) Rules, 2000 2. In other words, Miscellaneous remittance facilities for residents are allowed in terms of Section 5 of the Foreign Exchange Management Act, 1999, read with (governed by) FEM (Current Account Transactions) Rules, 2000 3. Regulations - [Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10258&Mode=0) 4. Regulations - [FEM (Foreign Currency Accounts by a person Resident in India) Regulations, 2015](https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=12916) ([January 1, 2016](https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10261&Mode=0)) (effective from January 21, 2016.) 1. [FAQ](https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=357) - Foreign Currency Accounts by Resident Individuals 2. [Master Direction](https://rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10198) - Deposits and Accounts 5. **Master Directions (Inward Remittances)** 1. [Master Direction – Money Transfer Service Scheme (MTSS)](https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=10868) 2. Master Directions - Reporting instructions related to Overseas Investment are provided in Part I of [Master Direction no. 18 on 'Reporting under Foreign Exchange Management Act, 1999' dated January 01, 2016](https://rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10202). ## Data Releases 1. Quarterly - Data on India’s Invisibles (released quarterly) for First Quarter (April - June) 2023-24 1. [Balance of Payment (BoP) data](https://rbi.org.in/scripts/SDDS_ViewDetails.aspx?Id=5&IndexTitle=Balance%20of%20Payment) - The data on India’s Balance of Payments (BoP) are published by the Reserve Bank on a quarterly basis with a lag of one quarter, prepared with BPM6 methodology, and reported in line with Special Data Dissemination Standard ([SDDS](https://dsbb.imf.org/sdds/dqaf-base/country/IND/category/BOP00)). 2. Annual - [Handbook of Statistics on Indian Economy](https://rbi.org.in/scripts/AnnualPublications.aspx?head=Handbook%20of%20Statistics%20on%20Indian%20Economy) 1. Table - Invisibles by Category of Transactions - US Dollar 2. Table - Invisibles by Category of Transactions - Rupees 3. Annual-Annual Report 1. Invisibles by Category of Transactions 4. Cross-border payments in Payment Systems Report (Half Yearly) ## Related Notes 1. [External - Current Account Transactions](External%20-%20Current%20Account%20Transactions.md) 2. [Liberalised Remittance Scheme (LRS)](Liberalised%20Remittance%20Scheme%20(LRS).md) ## References ### [[Speeches & Media Interactions|Speeches]] 1. Sep 01, 1993. Speedy Payment of Remittances - Speech by C. Rangarajan. [Link](https://rbi.org.in/scripts/BS_SpeechesView.aspx?Id=1163) ### [[Publications (Data Releases) & Research#Research|Research]] [Groups/Committees](Groups%20and%20Committees.md) 1. Sep 26, 2006. Report of the Working Group on Cost of NRI Remittances. [Link](https://rbidocs.rbi.org.in/rdocs//PublicationReport/Pdfs/72983.pdf) | [pdf](RBI_Group-Committee_200605_Report%20of%20the%20Working%20Group%20on%20Cost%20of%20NRI%20Remittances.pdf) ### [[Publications (Data Releases) & Research#Publications|Publications]] 1. RBI. (June 1992). Inward Remittances in Foreign Exchange. Press Release of May 2, 1992. [Link](https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/1INWARDREMITTANCESINFOREIGNEXCHANGE_MAY219925A91AE7C4E784BC69AACE146D4C068EC.PDF) 2. RBI. (2006). Box I.19-Inward Remittances in RBI's Annual Report 2006. [pdf](RBI_Annual%20Report_2006.pdf#page=110&selection=3,0,4,18) 3. RBI. (Feb 13, 2008). Invisibles in India's Balance of Payments: An Analysis of Trade in Services, Remittances and Income. RBI Bulletin-Feb 2018. [pdf](RBI_Monthly_Bulletin_Article_20080213_Invisibles%20in%20India's%20Balance%20of%20Payments-%20An%20Analysis%20of%20Trade%20in%20Services,%20Remittances%20and%20Income.pdf) 4. RBI. (Aug, 2009). Box II.34-Impact of Global Slowdown on Remittances in RBI's Annual Report 2009. [pdf](RBI_Annual%20Report_2009.pdf#page=200&selection=56,0,56,44) 5. RBI. (Mar 16, 2009). Invisibles in India’s Balance of Payments: An Analysis of Trade in Services, Remittances and Income. [pdf](RBI_Monthly_Bulletin_Articles_20090316_Invisibles%20in%20India’s%20Balance%20of%20Payments-%20An%20Analysis%20of%20Trade%20in%20Services,%20Remittances%20and%20Income.pdf) 6. RBI. (Mar 10, 2010). Invisibles in India’s Balance of Payments: An Analysis of Trade in Services, Remittances and Income. [pdf](RBI_Monthly_Bulletin_Article_20100310_Invisibles%20in%20India’s%20Balance%20of%20Payments-An%20Analysis%20of%20Trade%20in%20Services,%20Remittances%20and%20Income%20Date.pdf) 7. RBI. (Aug, 2016). Box II.5-Factors Influencing Remittances to India in RBI's Annual Report 2016. [pdf](RBI_Annual%20Report_2016.pdf#page=59&selection=117,0,117,39) 8. RBI. (Nov 14, 2018). Globalising People: India’s Inward Remittances. RBI's Bulletin Nov-2018. [pdf](https://rbi.org.in/Scripts/BS_ViewBulletin.aspx?Id=17882) 9. RBI. (Mar 19, 2025). Changing Dynamics of India’s Remittances – Insights from the Sixth Round of India’s Remittances Survey. RBI Bulletin-March 2025. [Link](https://rbi.org.in/scripts/BS_ViewBulletin.aspx?Id=23260) | [pdf](RBI_RBI-Bulletin_20250319_Changing%20Dynamics%20of%20India’s%20Remittances%20–%20Insights%20from%20the%20Sixth%20Round%20of%20India’s%20Remittances%20Survey.pdf) [^1]: [Mar 19, 2025](RBI_RBI-Bulletin_20250319_Changing%20Dynamics%20of%20India’s%20Remittances%20–%20Insights%20from%20the%20Sixth%20Round%20of%20India’s%20Remittances%20Survey.pdf) - "Changing Dynamics of India’s Remittances – Insights from the Sixth Round of India’s Remittances Survey" in RBI's Bulletin of March 2025 *(sixth round, conducted for 2023-24)