Indians sent record remittances abroad in January this year, whether it was by gifting stateside relatives or spending money for children's education in foreign universities. According to Reserve Bank of India (RBI) data, Indians more than doubled the remittances sent overseas in January from a year earlier.
As per the central bank's data, outbound remittances by individual residents reached $1.2 billion in January. Cumulative outflows in the first 10 months of this financial year were $8.17 billion. In comparison, $4.6 billion was sent in the same period a year ago, reported Economic Times.
Gifts, maintenance costs for relatives abroad, travel and education accounted for more than 90 percent of the total flows, the report said.
Sending money from India by an Indian resident or an NRI to people abroad falls under the Foreign Exchange Management Act (FERA). At present, resident Indians can send up to $250,000 per year to their relatives abroad.
To make it easy for Indian residents to do foreign-exchange transactions, in 2014, the government announced the Liberalized Remittance Scheme (LRS). Initially, the amount limit under LRS was set at $25,000 a year.
As of now, the government allows all resident individual, including minors, to send up to $250,000 per financial year abroad under the scheme for any permitted capital or current-account transactions. To conduct the transactions, remitters should have a bank account with an authorized bank. A Permanent Account Number or PAN card is also compulsory.
Some banks require the remitter under LRS to have a bank account with them for at least one year.
Once a remittance is made for an amount up to $250,000 during the financial year, a resident individual would not be eligible to make any further remittances under LRS.
A study titled "One Family at a Time", released by the UN International Fund for Agricultural Development (IFAD) in January 2017, found that 200 million immigrants globally sent $445 billion to their home countries as remittances in 2016 and Indians topped the list. A total of $62.7 billion was sent to India from abroad in 2016.
According to the study, 80 percent of the remittances are received by 23 countries, and the top four were India, China, the Philippines, Mexico, and Pakistan.