Inward Remittance Meaning

Inward remittance refers to the transfer of money to India from a foreign country

TLDR Points

An inward remittance refers to the money received by you in your account from a foreign country.
The upper limit on inward remittances is $2500 per transaction.
The cap on the number of inward remittances per calendar year is 30.
Banks may charge a fee for facilitating the remittance.

Introduction

Every year, non-resident Indians worldwide send billions of rupees to India for a variety of reasons, from funding investments to supporting family back home. Inward remittance refers to the transfer of money to Indian from abroad. For example, when you receive money in your Indian bank account from a relative abroad, it is called inward remittance.

What is inward remittance?

Let us illustrate with an example. Alok works abroad as an engineer. Every month, he sends a sizeable chunk of his salary back home to his elderly parents. Now, whenever he transfers money to their bank account, probably a savings account, he is making an outward remittance. For the parents who receive the money, it is an inward remittance.

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Inward remittance RBI Guidelines

The Reserve Bank of India (RBI) has laid down a few guidelines to regulate inward remittances:

An inward remittance can be done only for these reasons - education, medical treatment, pay for travel expenses, investments, donations, pay for living expenses or provide financial support, or as a gift.
Each inward remittance must have a foreign Inward remittance certificate (FIRC) issued by the recipient's bank. This document includes details such as but not limited to the name and account numbers of the sender and recipient, the purpose of the transfer, the exchange rate applied to the transaction etc.
Individuals in India can receive an inward remittance in one of two ways: Rupee Drawing Arrangement (RDA) or Money Transfer Service Scheme (MTSS).
Under the RDA, there is no upper limit on the amount of inward remittances for personal purposes.
Under MTSS, every inward remittance is capped at $2500.
Under MTSS, a beneficiary can receive a maximum of 30 inward remittances in a calendar year.

The guidelines are periodically updated. It's best to visit the official RBI website or consult with your bank to know the latest inward remittance guidelines.

Benefits of Inward Remittance

Let's take a look at how inward foreign inward remittances are helping families as well as the economy of India.

Benefits to individuals and families

Foreign inward remittances help NRIs support a good lifestyle for their family in India, provide medical care, and fund their children's education.

Benefits to economy

India is one of the biggest recipients of foreign remittance. In 2019, NRIs sent $83 billion back home. Inward remittances are a great source of foreign exchange and also help spur consumption in India. This has a positive impact on the local economy.

Process of Inward remittance

The process to receive money online through a remittance is relatively straightforward. All you need to do is share certain details with the sender. The details include your full name, address, local bank account number, bank name and address, bank's SWIFT code, and purpose of remittance. Your bank may require additional details, so it's best to check with your bank what else they need. Once you have these details, ask the sender to initiate the remittance from their bank account.

You will receive a notification on your phone or by email when your inward remittance arrives.

Bank charges for Inward Remittance

Charges for inward remittances vary. The costs depend on factors such as the prevailing currency exchange rate, correspondent bank charges, type of transfer, the type of account, country from which the remittance is being made etc. However, your bank will inform you about the estimated charges before you complete your transaction.