A family member living overseas is in a financial emergency and you need to remit money immediately using your Savings Account. We’ll tell you how to do it without breaking a sweat.
There are plenty of options that allow you to transfer money overseas these days. Starting with global payment providers like Western Union and MoneyGram, to banks and post offices that allow transfers via both online and offline modes. In this article, we’ll tell you how you can use your Indian Savings Account to remit money overseas.
But first, you might want to understand what a Savings Account means
What is a Savings Bank Account?
A Savings Bank Account is one of the most basic products that a bank offers you to keep your money secure and easily accessible. You can track your balance, transactions and even transfer funds via online and offline modes using your Savings Account.
Here’s a list of banks providing the best Savings Account interest rates in India:
Additional reading: Do You Know The Difference Between A Current And Savings Account?
RBI rule on overseas money transfer using Savings Account:
As per RBI’s Liberalised Remittance Scheme, the cap on overseas money transfer initiated from any Indian Savings or Current Account is capped at USD 250,000 per financial year. There is, however, no limit at present on the frequency of remittances.
For special cases that involve transferring funds towards education or medical treatments wherein the actual costs exceed this limit, it is possible to remit a higher sum after securing the necessary permissions and submitting the applicable estimate proofs.
Purposes allowed by RBI for overseas funds transfer:
Under the Foreign Exchange Management Act (FEMA), you can undertake foreign exchange and remit funds abroad for any of the following purposes:
- Personal travel to any country (except Nepal and Bhutan)
- Employment abroad
- Education abroad
- Emigration
- Maintenance of close relatives living abroad
- Business travel
- Expenses for medical treatment availed abroad
- Gift or donation
- Any other current account transaction (example: acquisition of shares)
Transfer modes:
At the moment, you can follow either of these two methods to transfer money abroad from your Savings Account – A Wire Transfer (online) or through a Foreign Currency Demand Draft (offline).
Online mode:
To send money to a bank abroad using your Savings Account, you can make use of SWIFT (Society for Worldwide Interbank Financial Telecommunication), which is a quick and efficient online wire transfer option. However, the bank that you will be wiring the money to should be able to facilitate this transaction.
Procedure to use SWIFT:
- Get the SWIFT number and international bank account number (IBAN) of both your own account and the account you will be transferring your money to.
- Fill in the forms used for remittances, A2 Application and Declaration form, clearly mentioning the beneficiary bank’s SWIFT code (these forms are now available online and can be filled from the comfort of your home).
- Following the forms submission and transaction approval, the beneficiary should receive the amount within 2-3 working days.
- Remember that the funds transfer process can be delayed due to public holidays, bank holidays and weekends, both at the beneficiary’s account as well as the sender’s account end.
For real-time transfer, use NEFT:
The National Electronic Funds Transfer (NEFT) is one of the most popular ways of real-time funds transfer. However, since it supports only national funds transfers, you can use it to transfer money only to India-based accounts. Nepal is the only foreign country that supports NEFT transfers. But before opting for NEFT, check the arrangement between the local bank and the overseas bank.
Additional reading: All About NEFT Fund Transfer
Offline mode:
If you feel uneasy about transferring money online, you can opt for the traditional money transfer method by depositing a Foreign Currency Demand Draft. This is available for most currencies like the US Dollar, Euro, and Pound Sterling etc. Demand draft transfers, however, take longer (10-12 working days). During financial emergencies, it is, therefore, advisable to opt for wire transfers to save time.
Payable charges:
Before zeroing in on a mode of transfer, consider the charges that it will entail. A wire transfer by virtue of its speed will naturally be costlier than a demand draft. While a wire transfer costs anything between Rs. 500-800 per transaction excluding taxes, a demand draft for the same transaction will incur charges between Rs. 200-500 plus taxes.
Some banks do not have the SWIFT facility so you will need to make a demand draft and hand it over to a bank offering this facility. In this case, as a remitter, you will have to bear the SWIFT and demand draft charges to the issuing bank.
Specialised money transfer services like the Western Union usually levy higher charges, almost 25% – 30% more than most banks. However, Western Union completes the transfer process in about 30 mins and the beneficiary can receive the money from any registered Western Union location.
Their exchange rates though may not be the most competitive, so before deciding on an option, you may want to shop for the best rates. Look out for add-on charges like service tax on every transaction.
Additional reading: Getting Started With Money Transfers
Limits on International Transfer process:
- Foreign currency can be deposited by an individual only in his/her Non-Resident Rupee (NRE) account.
- The Money Transfer Service Scheme (MTSS) in India is often mistaken as a mode of transferring money abroad. Like NEFT, MTSS is only for fund transfers within India.
- Whether you opt for an online or offline money transfer, you will need to furnish your PAN details for every transaction you make. The only exception is for Current Account transactions not exceeding USD 25,000.
International funds transfer can be seamless if you follow the steps above. Do you know what else is seamless? The process of securing a Personal Loan or Credit Card through BankBazaar.