India is said to be the largest recipient of inward remittances. It should not come as a surprise.
Indian diaspora is one of the biggest in the world and traditionally money has always been sent back home.Even though RBI is quite lenient on the money that enters the country, it does not mean it comes with no restrictions.
Hence in this blog post, we will talk to you about the inward remittance limit in India for business and non-business transactions under RBI guidelines for foreign remittance.
Read on …
Inward remittance limits India
There is no legal constraint on the sum of money you can send or receive. However, financial institutions and money transfer service providers commonly set daily transaction limits, and these limits vary based on the particular establishment. The restrictions may vary, ranging from $3,000 per day to no limit at all.
Inward remittance limit India: For non-business transactions
In 2004, the Reserve Bank of India implemented the Liberalised Remittance Scheme (LRS) to facilitate non-business-related transactions. According to this initiative, Indian residents can remit up to $250,000 in a given financial year to individuals living abroad, covering both capital and current account transactions.
LRS allows remittances without restrictions on frequency. However, the total amount of foreign exchange acquired from or remitted through all sources in India during a financial year must adhere to the specified limit of USD 250,000.
Inward remittance limit India: For business transactions
In short, India does not impose a specific limit on inward remittances. there is no limit for inward remittance in India. However, under the OPGSP model mandated by the RBI, there is a transaction cap of USD 10,000. Hence any high-volume B2B cross border payments will be split into 10,000 USD each until the full payment is completed. Post each transaction, the total amount transacted will be considered for one invoice.
What is the best way to get inward remittance?
Opt for a fintech or bank service that automates your transactions. Opt for services that conduct the transactions smoothly, given all documents are provided from your end.
In the case of inward remittances, a service that helps you save money and time can be considered the best. Fintechs in India like Karbon offer a fully automated, hassle-free experience. Click here to know more.
Which is the best Indian bank for foreign remittances, inward, and outward?
You can utilize UPI for monthly transfers of up to $10,000, and it also facilitates receiving money on your UPI/Gpay number. However, this feature is limited to certain countries, including the US, Hong Kong, Singapore, the UK, UAE, and a few others.
For inward remittances, PSU banks typically take 48-72 hours to credit the sum to your account, while ICICI and HDFC may take up to 7 days. HSBC stands out as the preferred choice for faster inward remittances.
Regarding personal outward remittances, SBI is recommended for transactions to London, Tokyo, Europe, while Citibank and SBI are suitable for the USA. For Malaysia, SBI and IOB are suggested, and for Singapore, options include DBS, SBI, and IOB. Citibank is preferred for remittances to Australia, SBI for China and Nepal, and Western Union, Wise, Hubpay, etc., are mentioned for the Middle East.
For outward remittances, IndusInd Bank offers speed, good service, and transparent/easy-to-understand charges. HDFC and ICICI have broader currency support, but HDFC lacks certain purpose codes like a gift, available with IndusInd and ICICI. IndusInd or ICICI is recommended for outward remittances.
Personal Inward remittance is smoother with ICICI or HDFC, ensuring seamless documentation processes. Government banks may pose challenges in case of issues during transfer or if the authorized person fails to update the purpose code promptly. For these reasons, ICICI or HDFC is suggested for more reliable inward remittances.
For international business remittances, Karbon Forex is a fintech you should consider. This contrasts with the variable 1-3% charges in traditional banks, which may also include additional tax fees. If you're exploring your options for a straightforward and clear-cut approach to managing cross-border transactions, signing up with Karbon Forex could be a step in the right direction.
FAQ’s
What is Rupee Drawing Arrangement (RDA)?
Rupee Drawing Arrangement (RDA) is like a pathway for getting money from other countries. Category I banks team up with Exchange Houses in certain countries, following rules, to open and handle their Vostro Account.
Under RBI’s Rupee Drawing Arrangement (RDA), is there an inward remittance limit in India?
No. It means that if you want to send money to someone in India for personal reasons using the Rupee Drawing Arrangement (RDA), there isn't a set maximum amount you can send. However, if the money transfer is for trade-related purposes, like buying or selling goods, there is a maximum limit of INR 15,00,000 as of November 15, 2023. Exceptions to this rule of course exist since business inward remittances aren’t bound by limitations. Money coming into India is never under as much scrutiny as the ones leaving India.
What is the MTSS under RBI rules for foreign remittances?
MTSS is a service provided by the Reserve Bank of India (RBI). It lets companies that aren't banks help people send money across borders. MTSS is mainly created to make it easier for money to come into India from other countries and go to the people who should get it.
What types of money transfers are allowed under the MTSS?
This setup allows only personal online money transfers across borders, like sending money for family support or helping foreign tourists in India. However, you can't use this arrangement for donating to charities, trade transactions, buying property, making investments, or putting money into NRE (Non-Resident External) accounts.
Is there a maximum limit on the amount of money that can be sent through MTSS?
Yes. There is a rule that says you can send up to USD 2,500 at a time using this system. Also, one person can get money through this system up to thirty times in one year.
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