Money remittance

Money transfer from abroad to India

From last few days, rupee is hovering around 60 per dollar and it is good news for non-resident Indians (NRIs) who send money to their families in India. India is the largest recipient country in the world. A few innovative ways have been introduced recently for money transfer in these days. Here are some of the innovative ways of remitting money to India.

Remittance card:

It is a rupee-denominated prepaid card. Your relative in the US, the UK, Canada, the UAE or any other country can load cash in the prepaid card at any UAE exchange centre. The card is only issued to the beneficiary or receiver in India. All you have to do is apply for it online on the bank website. After ensuring compliance with know-your-client norms, the bank would activate the card. You will also get a personal identification number. Once the sender remits the money from the overseas UAE Exchange branch, the funds will be automatically loaded into the prepaid card, which can be used at any automated-teller machine (ATM) or point of sale (PoS) terminal like a debit card.

The cash withdrawal limit is Rs.50,000 per day and PoS transaction limit Rs.15,000 per day varying from bank to bank. Currently, ICICI Bank Money Transfer Money2India and PNB Xpress Money Remit card—launched by Xpress Money and Punjab National Bank—are available.

There is no issuance fee for the ICICI Bank card. But there is a one-time processing fee of Rs.300. The charges vary from card to card.

Mobile-based remittance:

Banks and money transfer operators have started providing mobile-based remittance via instant money transfer. For instance, Xpress Money and Axis Bank Ltd together have launched a platform where you can receive money using a code sent to the phone. For this the sender has to visit an Xpress Money outlet. While sending the money, she has to mention the beneficiary’s mobile number. The receiver will then get a code on her mobile. She can walk into any Axis Bank ATM and key in the code to withdraw the money. For this, the sender and the receiver need not be an Axis Bank account holder.

Only the transaction fee is applicable here and it varies from country to country. 

Mobile Apps:

For smart phone user, there are aslo more action in the remittance space soon. Xoom Corp., a digital money transfer provider and Vesta Corp. have introduced an app for money transfer. You can download the app only on an android or iPhone. Once you download the app, you will have to create a login ID. Through this you can remit money after which the receiver will get a transaction number. The receiver has to quote the transaction number to withdraw the money. Some banks offer apps to track the money transfer process.

The app is free. However, transaction fee is applicable and it varies from country to country.

Quick remit:

The current environment has pushed traditional remittance service providers to upgrade their existing platforms. Money transfer companies are seen focusing on instant cash. In quick remit, transactions are done instantly on a one-on-one basis. Even before you leave the counter, the sender and the receiver will get an SMS on their mobile phones confirming the credit of the remittance.

Only transaction fee is applicable, which varies from country to country. If you plan to send money through any of these modes, remember to check transfer charges, exchange rates, service charges and the number of days required to send the amount. Also, ensure to initiate transaction with an authorized remittance provider.

For more detail about any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com                               (Sources: Mint Money Daily Newspaper)

Weakening rupee against dollar

Rupee at all time low against the dollar

Today’s very important news on all business channels are that rupee has trading all time low against dollar. Every analyst wants to know that what is the reason behind this weakness of rupee and how would it impact on overall economy. The rupee has been falling for five straight weeks. Right now it is at 57.92.

According to analysts, there may be many reasons for this weakness. According to my view, the widening trade deficit of our economy is the prime reason for this slide. However, government is struggling to control it but has not got succeed till now.

There is overall consensus among the masses that the UPA government is not likely to implement the reform programme. It is unlikely for this government to generate heavy capital inflows for reform the economy. Oil and gold imports bill are still worry factor for deficit.

Foreign Institutional Investors are selling index future for hedging their stock position. It is again expectation of weakness in the stock market in near term. The main reasons behind this slide of rupee are weak economic fundamental and widening trade deficit.

Exporters like IT firms will gain from this rupee weakness as these firms earn majority of revenue in dollar term. This weakness would also give some support to falling gold prices. The gold prices has been down in rupee term 15% during 2013.

It is bad for the student who wants to go abroad for higher education. It will increase India’s current account deficit as oil companies will pay in dollar term. As of now, the global prices of oil are falling so not near term threat for price hike. The companies who import the raw material would be affected by this weakness of rupee.

For more detail about any other query related investment, you can contact me through my email.

Regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Impact of current falling of  Indian Rupee against US Dollar

We all are witnessing falling value of  the Indian rupee against the US dollar. Our policy maker and economists are trying to find out the way to come out from this situation with their best efforts. RBI has become mute spectator as it has no more options to stop this fall. The windfall from a 23% drop in the value of the rupee against the dollar in the last one year has impacted our equity market, debt position of the corporates , fiscal deficit , capital inflow, import and export figure and overall economic environment. It is very difficult to analyze the overall impact of the falling rupee but here in this article we are trying to study the major impact of falling rupee to the some extent.

Impact on Export and Import Industry

In normal sense, a depreciating rupee should have made Indian exports cheaper and more competitive. But in this fall exporters are not happy due to a combination of shrinking global markets and rising import content of Indian exports, a weakening rupee does not necessarily translate into enhanced exports. Worse, because imports are largely inelastic, with oil and gold accounting for 44% of India’s purchases from overseas, declining exports can only mean that the trade deficit would widen, putting further pressure on the balance of payments.

A weak rupee should make exports cheaper and imports costlier. Both these should have a positive impact on the trade deficit and current account deficit, which is somehow not happening. A part of the problem is that over the past few years, the composition of India’s exports has changed in favour of value-added products, in contrast with the past when primary products and textiles products dominate in import segment. While sectors such as engineering, chemicals, and gems and jewellery have been the key drivers of India’s exports, due to a high import content in such products, the depreciation of the rupee does not fully translate into gains for exporters.

It is a big challenge for India to assess the fair value of its currency. Sometimes, speculators can take the currency far away from its fair value. The rupee depreciation will also put additional pressure on domestic inflation by making imports costlier. A 10% depreciation could have an impact of 140 basis points on inflation over a period of time. (A basis point is one-hundredth of a percentage point)

Impact on debt

On account of their aggressive global expansion strategy and the need to find cheaper sources of funds, as opposed to depending on costly domestic credit, Indian companies have taken dollar-denominated loans. The weakening of the rupee is expected to significantly raise their debt burden in rupee terms. Many information technology (IT) firms do see a benefit in their rupee revenue and, therefore, their margins and profitability, but for quite a few quarters now, the concern has shifted to the revenue front— particularly in Europe and the US.

Impact on capital inflow

Policy paralysis and an inability to pursue serious fiscal correction are great worry for foreign investors, particularly institutional investors. There is a risk of capital inflows holding out due to fears of a weakening rupee, which triggers another round of currency depreciation, setting off another round of a negative macroeconomic response. This has resulted in diminished capital inflows, which in turn have only increased the pressure on the rupee, pushing it down to a record low of 56.38 on 24 May.

Outlook

Since India is globally more integrated than it was in the past—not just in terms of merchandise trade, but also in the actual movement of people and a rapidly expanding corporate footprint . The uncertainty surrounding Europe, struggling with a debt crisis, has only made the outlook that much bleaker. A current account deficit that’s above 3% of GDP will be difficult to finance. The medium-term target should be to bring the deficit below that level. According to many analysts if the overall macroeconomic situation does not change, it is likely that the rupee will remain weak.

Regards,

Arvind Trivedi

Certified Financial planner