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  1. Studying abroad? Here’s how to make remittances for expenses

Studying abroad? Here’s how to make remittances for expenses

According to the HSBC survey (Value of Education Learning for Life report) – 88 per cent Indian parents want to send their children abroad for post-graduation.

By: | Published: April 16, 2016 11:49 AM
stidying-reu-L Foreign remittances for tuition, boarding and lodging and other overheads are vital for a seamless experience while studying abroad. (Reuters)

Going for studies abroad is often the most thrilling experience in life, whether you are the student or the parent. Most Indian parent cherish the thought of sending their child to a top global university. According to the HSBC survey (Value of Education Learning for Life report) – 88 per cent Indian parents want to send their children abroad for post-graduation. This figure stands way ahead of other Asian countries including Turkey (83 per cent), Malaysia and China (82 per cent each).

However, apart from a good score and being prepared to handle pressure of studying among some of the most intelligent students in the world, financials are a critical aspect of foreign education. Foreign remittances for tuition, boarding and lodging and other overheads are vital for a seamless experience while studying abroad.

Hence, it becomes imperative that while dreaming of making it into a celebrated university abroad, parents and students are also updated on all the legal and regulatory aspects of foreign remittances for education. They spend a lot of time planning and budgeting for this.

In India, foreign remittances for education form a huge part of the money being sent abroad, as per the latest report by RBI. Only banks (also called Authorized Dealer, category I or AD-I) in India are allowed to remit funds. RBI has allowed some category of money changers called AD-II to accept request to transfer funds for specific purposed such as remittances on account of travel agents, immigration etc but including capital transfers or trade finance related etc. Almost all AD-II remittances are further routed through banks only.

Sending money abroad to one’s dear ones is no longer as complex and intimidating as it used to be. With the emergence of new-age tech-backed currency exchange marketplaces, you can simply do a wire transfer or send a demand draft from India’s top banks in just a few minutes. Of course, there are a few stipulations that must be followed. Checking your transaction eligibility is a must as is ensuring all the requisite documentation is in place. The total amount of remittances in a financial year should not exceed $250,000. When the parent of a student wants to send money to their children, it is sent under category called “maintenance of close relatives”.

Parent need to produce only proof of identity and proof of residence apart from PAN card.

Foreign remittances can be made through a few prescribed methods such as NEFT and RTGS. Cheques are also acceptable but are subject to clearing. Similarly, the payments must be made directly to the partnering bank of the Fintech Company that you are using through your savings account only. The bank’s account details are typically provided through an automatic notification upon your reconfirmation of the transaction.

Transferor has to send money only from his/her saving fund account to transferee’s account. While send money using wire transfer, the details of transferee’s bank account, full details of the transferee’s bank including SWIFT code (an international code to identify banks) must be carefully mentioned in the application or else the funds may not get transferred or get delayed.

Firstly, education may mean payment of fee. In that case, one needs only the admission letter or I-20 in case of US. But in case of sending money for day-to-day expenses of students, the remittance will fall under ‘maintenance’. Booking rates for remittances is critical to ensure that you don’t end up blowing your budget.

Rates can be frozen with banks until the third working day. Freezing rates required adjustable/refundable advance of only 1-2 per cent to avoid cancellations or adjust loss due to cancellations. Payments by cheques, on the other hand, are only eligible for open rates.

While these are the most critical aspects of foreign remittances, there are several finer points that also need to be paid attention to. For instance, if the address on your identity proof is not local, the bank may require a local residential proof such as a landline bill or an electricity bill. Similarly, in case of international wire transfers, foreign intermediator banks could levy transaction charges. These are normally deducted from the transaction amount. However, you may choose to pay these charges up front in Indian rupees.

Keeping all of the above aspects of foreign remittances in mind will help you plan better and avoid last-minute stress when the student is set to embark on his/her new journey. With the advent of new-age foreign remittance companies, the parents and students are in for a much easier experience when looking at overseas remittance products. Information is available at a click and so are the services. All you need to do is be mindful of the basics and the rest will follow very conveniently.

The author is CEO & founder, BookMyForex

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