What are the tips to keep in mind when sending funds to India?

It could be very simple to select any money transfer service and send money to India. However, there are several important factors you will need to consider before taking this step. For one, you need to consider the foreign exchange rates as they are constantly fluctuating. At the same time, you also need to be aware of the charges and fees before initiating a transfer. Apart from these factors, there are plenty more that can make a difference to your money transfer.

Given below are some tips you can consider to help you make an informed decision that will help you save time and funds with any international money transfer to India:

• Compare the different money transfer services available in your destination. It will only take a few minutes, especially if the services and rates are presented online. In this way, you can compare for the beset exchange rates, transfer fees and the most reliable service.

• If you must, make a single large money transfer as compared to multiple transfers. Large money transfers will attract fewer fees and charges, as compared to smaller and multiple charges. If you most, look out for services that offer specialised services for small transfers for better exchange rates and fees.

• You need to be aware of the transfer limits. Normally, the transfer fee will be incurred depending on the amount of the transfer. So the more you transfer, the higher the fees will be.

• Pay close attention to the total cost you will be spending to send money to India. While the incurred fees may be low, the exchange rates could be high. On the other hand, a higher fee could be worth your expenditure, if the exchange rate will benefit you. In order to get a true comparison, calculate the final amount the recipient will obtain

• Don’t pay additional fees to make the transfer, unless there is an urgent requirement to do so. If the funds don’t have to be wired urgently, you can opt to choose a standard transfer, which will save your money and unnecessary charges.

• Keep a look out for fluctuating or indicative rates, especially when making an international money transfer to India.  The foreign exchange market is always active and always changes by the second. In other words, you can experience a significant plummeting or soaring of rates in a short span of time. Any transfer made during this time will benefit you or affect you. The only way to avoid such a situation is to be observant of the rates.

• Always stay informed about the procedures, alternative options and liabilities you may face in case your funds are not transmitted promptly. Don’t be afraid to ask for clarification or details whenever required. If you must, keep the second option in consideration so that you are prepared for any transfer during emergencies.

Credit cards: Common FAQ’s answered

Amongst the several banking cards that are available, the credit card has always been a popular choice for several reasons. While the requirements and reasons of the usage of the credit cards would differ from person to person, some of the common reasons would include convenient payment access, the means to access large sums, and the ability to repay back the borrowed funds with a low interest rate.

However, like any other banking card usage, there will be several questions and queries asked about the credit cards in India. Given below are some of the FAQ’s and their respective answer about credit cards:

Do I need to opt for a co – signer when applying?

If you don’t have the appropriate credit history or even little credit history, it is not uncommon for the lender to ask for a co – signer before your approval. As a co – signer, the individual must have an established credit history that would share the financial responsibility for the card. Normally, these individuals can be anyone who is a close friend or even a family member. This individual is equally liable for any debt that the principal card owner may gain when using the card. Therefore, the co – signer must be as responsible to using the card, as the primary card holder.

Is opting for a credit card a wise choice for my financial future?

While credit cards can be used for payments and transactions, it can also be used for another purpose, building a credit history. By building a credit early in life, you build a credit history right in the beginning itself, where rates are more affordable. In the future, a good credit would mean lower rates on loans, mortgages and a wide variety of credit cards. One way to start off, is by opting for the student’s credit card where you can opt for small and affordable purchases, while increasing your card limit as your expenditures and income increases.

What are the risks of a credit card?

Applying for the credit cards in India is often the first step to building a credit history. However, the expenditures you make it on is still a choice that depends on you. If you indulge in any irresponsible activity on the card, it will lead to the logging of negative information, which can stay on your credit report for a maximum of seven years. This in turn, will eliminate credit options for certain time lengths. Therefore, it makes sense to keep things easy right from the beginning than to get into trouble later on. However, there are a few steps you can take to ensure that you don’t risk your card:

• Pay your bills on time and in full to avoid added interest and fees
• Always create a budget as it will help you stay within your means
• Do set up account alerts as a security feature.

Facts you need to know about the NRO account

When a resident Indian becomes an NRI, the whole aspect of financial management will change. The normal rules and regulations pertaining to the residents will be completely for those who come under the NRI category. In this case, the NRI individual will be required to open an NRI account, which can either be the NRE or the NRO account. But in order to access funds and operate any investment in Indian, you can convert the current savings account into an NRO account.

But what is an NRO account? This account can be used to receive foreign remittances and can have a joint holder who is an Indian resident. In addition to this, the RBI also permits repatriations abroad, which is limited by a maximum annual amount.  At the same time, the interest that is earned in this account and credit balances are subjected to respective tax brackets. It is also subjected to wealth and gift tax.

Now that you are aware of what is an NRO account given below are some of the factors that you need to be aware of. They include:

Opening the account: In order to open the account for NRO, you will need to provide certain documents. It is important to provide documentary proof that you, as the account holder is now a non – resident, as defined under the government regulations and Indian tax laws. Once an individual becomes an NRI, he or she is not allowed to hold any bank accounts under the Indian residency status.

Converting the resident saving account into the account for NRO: As mentioned previously, you can get your resident savings account converted into the NRO account when required. However, you will need to submit a certain set of documents. As a part of the conversion process into the non – resident account, you will need to provide documents supporting your identity, your NRI status proof, proof of foreign address and two photographs.

Attesting proof of documents: When submitting the documents for the account conversion, especially when it comes to the proof of residence abroad, it can be submitted in the form of employment details, student status or dependent visa status. It can also be doneunder the copy of a resident permit in the overseas destination. However, this documented proof must be attested by the Indian embassy, notary or an Indian bank with an overseas branch. You can contact your bank to know which are the official institutes they recognise and accept.

Provision of local Indian address: If you as an NRI would want to ensure a convenient ease of operation, you can always mention a local Indian address. Like the previously mentioned documentation process, you will need to provide proof of the address along with attestation proof. 

Are you aware of the benefits of the NRE account?

As an NRI, the residential financial products, rules and regulations will not apply to you. That is because, you will need to opt for a specialised account, designed for the needs and formulated under government regulations known as the NRI accounts. Under this account, you can either opt for the NRO or the NRE account. Each of these accounts has their features and benefits which can be utilised for different purposes.
However, between both the accounts, there the NRE account is an ideal choice. But what is the NRE account? This type of NRI account can be held in the savings or current account, allowing the account holder to repatriate funds that come from outside earnings. The earnings can be easily transferred to India in a convenient and secure manner. The funds that are normally transferred to this accountis done in INR.
Now that you are aware of what is the NRE account, here are the different benefits you will be getting through this NRI account:

Tax benefits: This is one of the most important benefits to opening the NRI account. The interest that is earnedin this account, whether in the savings account or the fixed deposit, is tax-free in India. They are not included in your taxable income. This makes for an ideal benefit, especially if you have any income in India. Due to this factor, investing in an NRE fixed deposit will offer you one of the safest and secure investments that will offer you a high return.

Repatriation benefits: After the tax benefits, the second key advantage to this account is the repatriation benefits. You can easily move funds from the saving account because you can repatriate both the interest as well as the principal amount abroad. In other words, the funds in the account for NRE is fully and freely repatriable.

Low balance requirement: Due to the increase in competition amongst the banking institutes, both public and private sectors, the minimum balance for the NRE account has dropped significantly. Several bank and financial institutions are now opting for Rs. 10,000 as the minimum balance.

High-interest rate: Both the savings and the fixed deposits of the NRE account offer high-interest rates. However, this can vary between the different financial institutions. One of the most beneficial factors of this account is that the interest rate is calculated on a daily closing balance and the interest is paid half-yearly in June and December. With the right calculation and investment strategy, you can easily invest and get high returns.

Convenient benefits: Adding to the list of benefits of the account is convenience. While it can be easy to open an NRE account, you can now open this account online. You only need to fill a form online, take a printout and attach the self – attested copy of the required documents. Once all the required documentation and attestation is done, you can courier it back to India.
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FCNR Account: Are you aware of the pros and cons?

Earning in foreigncurrencyoffers you plenty of benefits, one of which includes, the high conversion rates. But while you, as an NRI, can always exchange the foreign funds for a higher conversion value, you get an added advantage if you invest the funds for a return on investment. This is when the foreign currency non – resident fixed deposit account will work in your favour.

Given below is all that you need to know about the fixed deposit pertaining to the FCNR account.
Advantages:

• The FCNR account works like the fixed deposit. It offers the ideal protection against forex rate risks, especially if they are maintained in foreign currency. In other words, if the funds are transferredin the currency value that it is invested in, it will be done without any loss of exchange.
• Any interest that is earned on the FCNR deposit in India is exempted from the Income tax.
• The FCNR account can have more than two NRI joint account holders. However, a joint account holder with another resident in India is not permitted.
• Funds in the FCNR account can be held in several major currencies, including Pound Sterling, US Dollar, Yen and Euro.
• The principal amount and interest earned are freely repatriable, to the depositor’s country of residence without any restrictions.
• The interest rates on the FCNR term deposits are payable after the end of the first year. The interest is then compounded on a half – yearly basis.
• The tenure of the account offered is not less than one year and not more than three years.

Disadvantages:

• The FCNR deposits are held only in term deposits. It cannot be held in current, savings or recurring accounts.
• There is a risk of investing in an FCNR deposit in a weak bank. The said bank may be unable to pay back the interest or even the invested funds upon maturity. Most credit guarantees in India covers accounts in India to around Rs. 1,00,000 or 1600 USD, which is considered low.
• In the event a financial meltdown occurs, banks may not be able to repatriate funds. One major example is the Greek crisis. Most individuals were restricted from withdrawing over 40 euros from their accounts.
• If the FCNR deposit is withdrawn in less than a year, no interest is payable on the deposit.
• If the account holder wants to take out a foreign currency loan in India against the FCNR accounts, it can be taken by the account holder only.
• The FCNR account can be transferred to the NRE accounts before maturity. However, any premature withdrawals will attract penalties. Additionally, swapping charges are applicable by the bank where the FCNR accountis held.
• The FCNR account can be renewed within 14 days after maturity. If it is not dining, then the bank will fix the interest rate on renewal.

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NRI Home Loan: The ideal checklist to consider before applying for a loan

Plenty of NRI’s who’ve travelled abroad are looking for ways and means to invest in financial products that will earn them an income. Out of the several available options, residential properties have proven to be the ideal investment option.

In order to finance this purchase, you can opt for NRI home loan that will offer you the ideal financial convenience and flexibility. Not only does it cater to the needs of NRI’s such as yourself, but it is also designed to offer the ideal financial benefits at the same time.

So if you are planning to purchase a home with the NRI home loan, here are a few factors on the checklist you need to tick off:

Check your official NRI status: The RBI defines an NRI as an individual who holds a valid Indian passport. Additionally, the individual should be emigrating abroad for employment purposes, or to carry out any business, in a duration of stay that is uncertain. It is these individuals who are employed or carry out business outside India who can apply for the home loan for NRI’s under this scheme.

Maximum loan amount: While you may be able to apply for the loan, the amount you get in the loan will differ on certain factors. For one, your educational qualifications and income will play an important role. Normally, the standard rate for home loans extends to 80 to 85% of the value of the property you want to purchase. However, this will also depend on your monthly income. The maximum a loan amount that will be granted to your will be around 38 to 40 times your gross monthly income. However, some financial institutes equate a calculated EMI by your net monthly income. Even the location of your current employment will be taken into consideration. If you are earning in the Middle East or Europe, you may be viable to get a loan amount that is high.

Loan tenure:The Home Loan interest rate in India for NRI’s is normally higher that the interest rates that are offered to residents. This is due to the increase in the risk factors, and short tenure will be elements to be considered. Normally, the difference usually ranges from 0.25 to 0.5%.

Documents Required: Like any other loan, when you apply for the NRI home loan, you will need to submit a certain set of documents. They will include a copy of your passport, visa, employment, contracts, work permits, salary slips and your NRI bank account statements. You may also need to submit your employment card, especially if you are working in the Middle East.

Repayment of loan: The down payment and the repayment will need to be done in the Indian rupee and not in any other currency. Additionally, the transactions would need to be made through your NRI account with the remittances made from abroad. In the event, your status changes from NRI to the resident Indian, the terms and conditions of your loan will be revisedin accordance with your new income.

How to make a money transfer through NEFT?transfer money online, transfer money to India,

In today’s day and age, sending funds from one location to another is now made easy. However, if you want to send funds to a friend or purchase a forex card for a vacation, your banking cards will offer only little assistance. If you don’t have physical cash in your hand, you may write a cheque. However, it will take sometime to clear.

One way to avoid this lack of funds is by using the National Electronic Funds Transfer also known as NEFT. By using this service, you can transfer funds of up to Rs. 10 Lakh using your own bank account. So if you need to make a transfer money online here are the steps you need to follow:

Step 1: In order to initiate a transfer money to India or any city using the NEFT service, you first need to have access to the net banking service. You will also be required to have some information about the individual or the merchant you would want to transfer the funds to. This would include the account number, type of account, IFSC code and the beneficiary’s name. You will need to log into your account and fund the tab, for the third – party transfers. You will need to click that option where you can further choose between transferring within the bank, transferring to other banks or transferring via a banking card. You can even add a beneficiary from your account.

Step 2: After you add the beneficiary, you will be presented with two additional options, namely to add the beneficiary within the bank or add a beneficiary of another bank. If the receiver has an account in the same bank, you can go for the first option, else opt for the second option. In the next step, you need to input the bank account related details to make the transfer money online. This would include the account number, name and IFSC code. You will get an OTP from your bank to initiate the transfer and confirm it. Once you confirm the transfer, the beneficiary’s account will get added within a few minutes. However, this can depend on your bank.

Step 3: Once the account has been added; the bank will send you an SMS. In order to send money using NEFT, you will need to login to your account. You will then need transfer money to Indiaor within the bank itself. You can choose the account number from which you would want to send the funds and then choose the receiving account number. You will need to enter the amount you would want to send. Once you confirm the transaction, the payment should reach the receiver’s account within an hour’s time.
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