A bank account is designed to fulfill your financial goals. Banks offer various types of accounts, which are designed specifically to meet the unique needs of customers.
A savings account allows you to earn interest on your account balance. Besides, you may opt from a varied range of alternatives to meet your savings goal in an optimal manner. Moreover, there are certain banks, which do not levy any monthly or transaction fees. .
A saving account allows you to transfer money overseas to your friends or loved ones. The good news is that your bank accounts allows such transfers smoothly and quickly.
The Reserve Bank of India (RBI) introduced the ‘Liberalised Remittance Scheme’ in February 2004. According to rules and regulations of this scheme, you may remit funds from your bank account to a foreign country up to USD 250,000 per financial year. There is no limit on the number of transactions that may take place per financial year as long as the remitted funds are within the specified cap. However, should need arise, you may remit a higher amount after securing the necessary permissions and corresponding proofs. This is allowed in cases such as medical treatment or education expenses, where the actual costs exceed the USD 250,000 limit.
Purpose of remittance
The Foreign Exchange Management Act (FEMA) of 1999 allows individuals to remit funds to friends and family to serve the following purposes.
- For foreign employment
- For pursuing higher studies in a foreign country
- For emigration purposes
- For covering costs associated with maintenance of close relatives living outside the country
- For covering expenses related to a business trip
- For meeting medical costs for treatment availed abroad
- Towards gifts and donation
- For traveling to a foreign country (with the exception of Bhutan and Nepal)
- For any other current account transaction, say acquisition of shares
Method of transfer
You may use your savings account to remit funds through two popular methods, namely Wire Transfer or Foreign Currency Demand Draft.
- Wire transfer
Wire transfer is an online method of transfer, and hence is quick and highly-efficient. For transfer through this method, you may obtain Society for Worldwide Interbank Financial Telecommunication (SWIFT) number and the International Bank Account Number (IBAN) of both the accounts. After filling the necessary forms, the transaction needs to be approved. The amount will then be transferred within two-three working days. You may also use National Electronic Funds Transfer (NEFT) to remit funds to Indian-based accounts abroad.
- Foreign Currency Demand Draft
Foreign Currency Demand Draft is an offline method of transferring funds. This type of transfer generally takes around 10-12 working days. In this method, funds are drawn from your savings account and are converted to the currency of the country of transfer.
You may, therefore, use any of the above-mentioned means to remit funds to a foreign country. It is necessary to keep yourself abreast of the remittance policy amendments made by the RBI on a regular basis to ensure a smooth transfer.