The Reserve Bank of India (RBI) is an apex institution that regulates and monitors the system of foreign remittances directly or through its subsidiary bodies in India. It is the sole regulator of foreign exchange in India and maintains the value of the rupee in the global economy. It does so by regulating the transactions of Non-Resident Indians (NRIs) when they send money to India called Inward Remittance and act as the custodians of foreign exchange reserves in India. Any amount transacted from or to India is directly or indirectly regulated by the policies of the Reserve Bank of India.
The Reserve Bank of India defines and designates the Foreign Exchange Management Act (FEMA) which establishes the unique set of rules and regulations that controls foreign remittance and its exchange. If you are an NRI residing overseas and want to send money to your family members in India, you should be aware of the foreign remittance guidelines enforced by FEMA.
The Foreign Exchange Management Act (FEMA) was enacted by the Parliament of India in 1999 with the RBI as the regulatory power. Through FEMA, the RBI facilitates external trade and payments to and from India. Its purpose is to make sure that the money sent online to India doesn’t come from and for illegal activities. Furthermore, it helps the RBI keep local currency markets stable by ensuring that a definitive amount of money is sent from India, avoiding a decrease in the currency exchange rates.
When an NRI sends money online to India or acquire immovable property, the following FEMA guidelines need to be followed:
When a Foreign Institutional Investor (FII), NRI or PIO (Person of Indian Origin) wants to invest in an Indian Company, the following RBI guidelines for foreign exchange transactions are applicable:
In the last few years, India has received a tremendous amount of foreign remittance summing up to $62.7 billion in the year 2016 and $65.3 billion in 2017. With this, India has regained the top position in receiving the highest foreign remittance according to the 2018 report of the World Bank. Every single rupee of the billions received was regulated and controlled by the RBI through the FEMA guidelines. At CompareRemit, you can find the best digital money transfer platform to send money online to India from your current country of residence.