Hassle Free Ways of Sending Money Online in 2020

Brexit’s impact on remittance has been felt throughout the world. Last year, migrant workers in the UK sent home an approximate $24.9bn making it the fourth-largest source of remittances in the world. This year, the World Bank reported that the stirling has shrunk to 14.6 per cent and 13.2 per cent against the dollar and euro respectively. This means that people back home are receiving less for their money. The savings of migrant workers are thousands of euros less than they used to be before the Brexit vote. A weak pound means a drop in remittances, with migrants working harder and sacrificing other savings to make up for that decline.Impact of Brexit on Remittance-Receiving CountriesThe repercussions go way beyond individuals and families having to tighten their belts. The native countries of these recipients suffer, too. For 25 countries, remittances provides more than 10% of their GDP.Eastern EuropePoland, Hungary, Latvia, Slovakia, Czech Republic and other so-called EU8 countries that joined the EU in 2004 have become the second largest recipients of remittance flow from the U.K. after Germany. Remittance makes up between 3-6 per cent of GDP for many of these nations.In Hungary, the Magyar Nemzet reported that the GBP declined in value roughly HUF 70 since the UK voted to leave the European Union in June, and by HUF 100 since last November. Further deviation was expected by the end of this year. Remittances make up about USD 3.6 billion, or three percent of the total GDP of Hungary's economy, according to a report in Hungarian business daily Világgazdaság. In 2015, Time Magazine reported that Hungarians in the UK send back an annual average of USD 7,700 per economic migrant. The result could be several billions of forints in losses, according to the Magyar Nemzet report.Other Regions and Developing CountriesNigeria, India and Pakistan list among the top three countries that receive remittance from Britain. In 2015, Nigeria received almost $4 billion, India received $3.6 billion and Pakistan just over $1 billion. Each of these regions have fragile economies, and millions of people who depend heavily on remittance of overseas workers for support. Each has now have to had to acclimate themselves to a devalued pound and have come to expect a lot less than they used to.Although other countries such as Bangladesh, Pakistan and Nepal received less remittance from Britain than India, their more fragile economies make them more dependent on the remittance for substance. Respectively, remittance from UK makes up about 8.5 per cent, 7 per cent and 29 per cent of each of these countries GDP, respectively.In countries such as these, remittance pays for education, startups and healthcare. It, also, lifts families and communities out of poverty and spurs development. Kenya is another example of a region that lost millions of dollars in remittance, according to the UK-based think tank Overseas Development Institute (ODI) in September.The list of countries that suffered because of Britain’s devalued currency continues.The Future?Some experts believe that the fall of the stirling will prompt more migrant workers to leave Britain and fewer to move there. Jonathan Portes, an economist at the UK’s National Institute of Economic and Social Research adds that migrant workers may feel less welcomed making them less likely to stay and more likely to tell their friends to keep away.Other research by the UK’s Department for Work and Pensions found that many migrant workers in Britain relocated to healthier economies with stronger currencies during the 2007-09 financial crisis. Experts say that more migrant workers are likely to follow that pattern now.In short, the Center for Global Development predicts a dreary next two years where the UK economy may stagnate leading to a recession that will, further, lower the value of remittances.

The Indian Rupee has closed at a 20-week low against the US dollar. Paired with the unexpected outcome of the US presidential election this past week, the main reasons for dragging the rupee down can be accredited to the strike on black money via demonetization of high-value currency notes and weak industrial output. The US currency, in turn, has strengthened based on speculations that the policies of the US President-elect Donald Trump would be inflationary and lead to a rise in the interest rates, thus impacting foreign money flow to emerging countries like India.Foreign investors withdrew over Rs. 2,350 crore from the stock markets as the US-backed assets are looking more attractive and as a result, the economy is expected to improve in the coming quarters.According to India ratings, the sudden decline in money supply and a simultaneous increase in bank deposits - due to withdrawal of 500 and 1000 rupee notes - will adversely impact consumption demand in the economy. This, coupled with the depreciation of real estate, construction and informal sectors, will further weaken the rupee in the upcoming months. It is very much possible in the upcoming months, as well as even forecasted by many agencies, that US Dollars will become stronger against Indian Rupees. All this means is that the spending power of the NRIs will increase, leading to a rise in the remittance flow to India.Compare. Save. Send Money Home Wisely.TODAY'S BEST RATE USD to INRAdditional ReadingHow will India's Currency Ban Affect NRIs in the USA?How India's currency ban of Rs. 500 & Rs.1000 will affect NRIs?How much Indian Rupees can one carry to India?

An Overseas Direct Investment (ODI) refers to investments made by a domestic firm in a foreign country to expand its operations.From an Indian context, Overseas Direct Investment refers to investments outside India as a business strategy. ODI can be made in different forms depending on the company such as:by way of contribution to the capitalor subscription to the Memorandum of a foreign entityor by way of purchase of existing shares of a foreign entity either by market purchaseor private placement or through the stock exchange, by setting up a Joint Venture (JV), or a Wholly Owned Subsidiary (WOS), signifying a long-term interest in the foreign entity.*ODI does not include portfolio investment.Difference Between FDI and ODIForeign Direct Investment (FDI) is when a non-resident Indian invests in an Indian company. Outward Direct Investment (ODI) is when Indian resident companies invest in a wholly-owned subsidiary or a joint venture in a foreign country as part of a strategy to expand their business.Routes of ODI From IndiaDirect investment outside India is governed by Foreign Exchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2004, as amended from time to time. Overseas Investment from India can be made through two routes:i) Automatic Route andii) Approval Route.Under the Automatic Route, an Indian Party does not require any prior approval from the central bank, the Reserve Bank of India (RBI), for making overseas direct investments in a JV/WOS abroad. All those proposals not covered by the conditions under the automatic route require prior approval of the RBI.Who Can Invest Through the ODI Route?An Indian Party can make ODI under the Automatic route in any bonafide activity. However, Indian parties are prohibited from making investments or financial commitments in a foreign entity engaged in real estate or banking business without the prior approval of the RBI.For the above restrictions, real estate means buying and selling of real estate or dealing in Transferable Development Rights (TDRs), not including the development of townships, construction of residential or commercial premises, roads, or bridges.Guide on property related taxation and money transfer for NRIsAn Indian Party is also not permitted to invest in an overseas entity, which offers financial products linked to the Indian Rupee (such as non-deliverable trades involving foreign currency, stock indices linked to the Indian market, rupee exchange rates, etc.), and need prior approval from the RBI.Who Is an Indian Party?Indian Party encompasses:a company incorporated in India or a body created under an Act of Parliament, ora partnership firm registered under the Indian Partnership Act, 1932, ora Limited Liability Partnership (LLP), registered under the Limited Liability Partnership Act, 2008, andany other entity in India as may be notified by the Reserve BankWhen more than one such company, body, or entity invests the foreign JV/WOS, such combination will also constitute an "Indian Party."Furthermore, the Indian Party should not be on the following list:RBI's Exporters' caution list/ list of defaulters to the banking system circulated by the RBI/ CIBIL (Credit Information Bureau of India) orList of defaulters by any other credit information company as approved by the RBI or under investigation by the Directorate of Enforcement or any investigative agency or regulatory authority.Also, all transactions relating to the investment in a JV/WOS should be routed through only one branch of an authorized dealer designated by the Indian Party.Investment Limit of an Indian Party:Indian Party can make ODI up to 400% of its net worth (paid-up capital and free reserves) as per its last audited balance sheet.Any Financial Commitment (FC) exceeding USD 1 billion (or its equivalent) in a financial year would require prior approval of the RBI even when the total FC of the Indian Party is within the eligible limit under the automatic route (i.e., within 400% of the net worth as per the last audited balance sheet.The prescribed limit will not be applicable if the investment is made out of balance held in the EEFC account (Exchange Earner's Foreign Currency Account) of the Indian Party or out of funds raised through the issue of ADRs/GDRs (American Depository Receipts/ Global Depository Receipts).The total financial commitment of the Indian Party in all the JV/WOS comprise of the following:100% of the number of equity shares and/or CCPS (Compulsorily Convertible Preference Shares)100% of the number of other preference shares100% of the loan amount100% of the amount of corporate guarantee issued by the Indian Party100% of the amount of bank guarantee issued by a resident bank on behalf of JV/WOS of the Indian Party, provided that the bank guarantee is backed by a counter-guarantee/collateral by the Indian Party50% of the amount of performance guarantee issued by the Indian Party.** Investors need prior approval from RBI before transferring remittance beyond the limit prescribed for the financial commitment.Can Resident Indians Make Investment Through ODI Route?Resident Indians can make overseas investments, including purchase of securities and also setting up/acquisition of JV/WOS up to the limit prescribed by the RBI from time to time, per financial year under the Liberalised Remittance Scheme (LRS). Currently, LRS comes with a maximum cap of $250,000 a year per person.Why Is the RBI Warning People About ODI Transfers?RBI regulates ODI made by Indian entities and resident individuals in joint ventures and wholly-owned subsidiaries outside India pursuant to Foreign Exchange Management Regulations, 2004.Recently, RBI has been sending queries and notices to several domestic entities, including companies and large family offices, seeking the status of unutilized money remitted abroad through the ODI route.The remitted funds parked in foreign countries in financial assets including liquid funds by these firms could be a violation of ODI guidelines. Under the general permission, the remitted funds must be used for a specific business purpose. In this case, the firms would need to explain the retention of the remitted money in liquid funds.As per the rule, any Indian Party that plans to make an ODI needs to approach a designated authorized dealer (AD) for investing along with duly signed ODI form, along with supporting documents like Board Resolution, Statutory Auditor Certificate, and many other documents to essentially satisfy the bonafide business test.The investment can be processed once the AD Bank examines and approves the documents according to the regulatory guidelines. A Unique Identification Number (UNI) will be generated for the particular JV/WOS before the remittance. The UNI can be used for further remittances/ investments in the JV/WOS.Mutual funds are another concern of RBI. Investment in mutual funds abroad is that only entities registered as non-banking financial companies (NBFC) can invest the outward remittances in foreign securities. This means funds transferred via the ODI route cannot be used for investments in mutual funds abroad.Resident individuals can remit money outside India under the Liberalised Remittance Scheme (LRS) which has a maximum cap of $250,000 per year per person. The funds remitted under LRS can be used for investing in foreign securities, travel expenses, or sending money to Non-resident Indians (NRI) abroad.The low limit under the LRS is allegedly making more individuals route the remittances through their family offices via the ODI route because the cap for an entity sending money through the ODI route is $1 billion per year or 400% of the net worth.However, the ODI route is for large companies, corporates, or trusts that need to send large amounts of money out of India for business purposes. Sending money from India abroad through ODI to avoid the LRS limit is a violation of the ODI guidelines.ODI From India Dips 68% To USD 754 Million in February 2022ODI is also called outward foreign direct investment or direct investment abroad. The appetite for foreign investment was picking up and many Indian investors and companies were investing/acquiring stakes in numerous foreign companies.However, following the restrictions by the RBI, coupled with the global economic crisis, investments have dropped. According to the RBI data on Outward Foreign Direct Investment, investment for the month of February 2022 (USD 753.61 Million) has dropped by 68% compared to February 2021 (USD 2284.61 Million).*RBI said the data is provisional and is subject to change based on reporting by banks.An increase in ODI can also be seen as a sign of a country's investment competitiveness, higher growth prospects in foreign markets, and a maturing domestic economy.The Covid-19 pandemic has been widely cited as one of the reasons for not utilizing the money sent through the ODI route. Several deals didn't get through due to the second wave of Covid and people didn't want to lose interest in the money, hence have invested in products like liquid funds abroad. And maybe awaiting the right business opportunity to invest the money.In conclusion, for ODI-related investment opportunities, we recommend consulting with a tax advisor. To keep yourself abreast with the latest guidelines pertaining to ODI, the Reserve Bank of India has issued detailed guidelines vide Notification No. FEMA 120/RB-2004 dated July 7, 2004, as amended from time to time, which can be accessed at RBI's website.A Master Direction that has consolidated instructions on rules and regulations framed by the Reserve Bank under various Acts including banking issues and foreign exchange transactions and is available at the 'Notification' Section on RBI's website.