The Reserve Bank of India's move to permit Indian agents under the money transfer service scheme (MTSS) to increase the number of remittances to be received by a single individual beneficiary in a calendar year from 12 to 30 will benefit expatriates who want to remit more money to India through agencies other than banks.
The move is also expected to contribute to the strengthening of the rupee, which has been falling in recent weeks. The cap on a single transaction is $2,500. It would mean that the annual remittances could go up from $30,000 to $75,000.
K. P. Padmakumar, Executive Director of Muthoot Finance Limited, and former chairman of Federal Bank, told The Hindu that the RBI move was a positive measure for the non-resident Keralites. “It is bound to boost the remittances and contribute to the improvement of the value of rupee. The measure will enhance dollar inflow as the transaction involves dollar purchase by the banks or the designated dealer involved in the deal,” he said.
“Ever since the value of the rupee started declining, rupee remittance has become an attractive proposition. The RBI has been under pressure to raise the remittance limit,” he said.
The agencies involved in the transaction business had been complying with the know your customer (KYC) norms as stipulated by the authorities with a view to curbing money laundering activities. Their compliance with the norms had justified the demand to raise the remittance level, he pointed out.
V. George Antony, Country head-India, UAE Exchange, an agency approved by RBI for money transfer, however, did not visualise a significant change.
“The move is unlikely to make significant changes in the remittances as the measure pertains to the cash-to-cash transfer handled by money transfer agencies. Only 30 per cent of the transactions take place in this mode while 70 per cent is handled by banks through demand draft or other means,” he said.
Nevertheless, he admitted that a nominal increase in remittances was to be expected.
His firm handles a daily transaction of Rs.20 crore through over 300 branches across the country. About 35 per cent of the remittances reach Kerala. It would mean that the daily remittance to Kerala would go up by at least Rs.5 crore through a single agency.