1.How to transfer money
The online options include e-transfers and power transfer(a web-based wire transfer that eliminates errors associated with a normal wore transfer),while the most common offline modes are cheques and bank drafts. While there is a no single option that can be considered best, you should opt for a reputed player with established system in place so you can be assured of a safe transfer.
While opting for online options, be sure to ask your bank to list its correspondent banks. This becomes especially important if you are remitting money from abroad. Take a look at eh foreign banks your financial instruction has partnered with to make the money transfer smooth.For instance, Federal Bank has tied up with the Arab National Bank of Saudi Arabia and Doha Bank of Qatar. In addition, several Private Exchange Houses(PEHs) have come up in the Gulf region to facilitate remittances to India, and several Indian Banks have signed up rupee drawing arrangements with them.
On the other hand, when it come to sending money abroad, not all online option fit the bill due to RBI guidelines.For instance, the Money Transfer Service Scheme(MTSS) is limited to inward personal remittances(to India).
2.Speed of disbursement
If you are in a hurry to transfer money, your only viable option is an online one, Such as wire transfer and the National Electronic Fund Transfer(NEFT) system. This typically takes 24-96 hours, but can also take place in real time. For instance, you can instantly move money through ‘direct transfer to bank account’. This is operated through an arrangement with overseas correspondent banks or via the automated clearing house facility in countries such as the US.
Of course, the offline options take time. If a cheque is issued in a foreign currency, there can be a delay of 7-15 days before the holder can encase it as the bank needs to verify the deposit. Remittances made though money orders can take from three to 30 days, while transfers made through debit/credit cards are quicker, taking 1-4 days, Keep in mind that most banks and financial instructions do not remit money on public holidays.
Not all money transfer options are available at every location. While you can avail of the offline rout at all bank branches, the online ones are mostly limited to urban areas. If you are remitting money from abroad, you will also have to check if the currency you want to transfer is covered by the bank;the US dollar, euro and pound sterling are generally remitted by all banks. However, remember that not all banks allow you to rout money through foreign currency cheques. A handy option for non-resident Indians is the foreign currency (Non-Residental)Account(Banks)Scheme. The currency in the account is denominated covers all freely convertible foreign currencies like the Australian dollar,Bahrain diner, Deutsche mark, euros, HK dollar, Japanese yen, Kuwaiti dinar, pounds sterling and the US dollar. This can be held jointly with relatives in India.
4.Cost of service
Before you choose a mode of transfer, consider the damage to your wallet. It’s an accepted fact that there is an inverse relationship between the speed of transfer and the associated cost, According to an RBI survey, SWIFT(an international wire transfer system) is costlier vis-a-vis draft and cheques. While the cost of sending up to $500 from the US to Indian through SWIFT is less than 1-5% of the funds transferred, the comparative rates for demands drafts/cheques is just 2% of the remitted amount. Money transfer services like western Union charges a higher commission, nearly 25-30% more than banks.This is because they offer more specialized services-neither the sender nor receiver needs to own a bank account, for one-and have a better reach. However, they don’t generally offer a competitive exchange rates,so rate shopping is a much before picking any option.Also check for hidden charges such as service tax.
It’s not just the speed and cost, but also convenience of transfer for both you and the recipient, that matter. If either party is not comfortable using the internet option, an offline route would be better. Another factor is the amount to be transferred. While there is no ceiling on demand draft(Cash perches are not permit for over ₹50,000), a cap of ₹5 lakh has been imposed by some bank on NEFT transactions, and $2,500(₹1.35lakh) is the maximum limit under the MTSS scheme. Also make sure you ask the service provider about its refund policy and your and your rights in case the money is not received within the specified period.