Most Indian parents aspire to send their kids abroad for higher education for the learning experience and exposure that studying overseas offers. Nearly 3 lakh Indian students travel abroad each year. Being able to hand finances is a critical aspect of foreign education. Often students, who have travelled to distant lands for educational purposes, face complications due to less or no information about the remittance policies of India and inadequate knowledge of how to manage their finances. Foreign remittances for tuition, boarding and lodging and other overheads are vital to a seamless experience while studying abroad. Typically an undergraduate degree in a good American university can easily cost upwards of $50,000 or nearly Rs 33.5 lakh a year. Therefore, before sending your close relatives to far-off places, have a quick glance at everything that you need to know about the subject.
Remittances from India can only be processed by banks or certain moneychangers who possess an AD-II license. As per present regulations, the total amount of remittances in a financial year must not exceed $250,000 for educational purposes. When the parent wants to send money to their children studying abroad, it is sent under a RBI approved category called “maintenance of close relatives”. Parents need to produce only proof of identity and proof of residence apart from a PAN card. In case the funds are being transferred directly to the university they can be sent under the “education” category that requires the student to submit the air ticket, education visa, passport and PAN card (an I-20 form is also needed for American universities). Payments for remittances must come from a savings bank account and can be transferred via NEFT/RTGS or cheque.
With the emergence of new-age tech-backed currency exchange marketplaces, you can simply send a remittance via India’s top banks in just a few minutes. These online portals simplify the complex rules and regulations associated with sending remittances from India and the end customer need not worry about the same. Additionally these marketplaces are able to offer remittances and other forex products at wholesale rates, which are more economical than dealing directly with your own bank. Being online, these sites are able to show live and transparent rates 24×7 and some even let you freeze the rates that you see online or set an alert to get notified when the rates become better.
Contrary to popular belief, there are more than a few ways to send money abroad. Most people choose to do an electronic bank-to-bank wire transfer (SWIFT transfer) but this also happens to be the most expensive option. Apart from the exchange rates, there are several types of fees associated with these transfers that are levied by the sending bank in India, the receiving bank abroad and in certain cases some banks in the middle. A more economical alternative if you’re also travelling abroad is to carry a foreign currency demand draft that eliminates any receiving charges.
A relatively new alternative to transferring money abroad using traditional bank remittance products is to use a forex card, which can also be carried abroad. Forex cards are Visa/ Mastercard powered cards that can be used just like international credit or debit cards. These cards come with zero overhead charges. One can avoid both bank sending charges and receiving charges using a forex card. Additionally, the exchange rates on these cards are much better than what is available on traditional remittance products, especially when bought online.
Using the right forex product and provider could save the end customer an average of 5 per cent over a traditional bank transfer, which over the course of a 4-year college term could translate to well over $10,000.
The author is co-founder and CEO,BookMyForex