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How Much Money Can You Send Overseas

Overview

It’s been only a year that Sahil went to the US for higher studies. During the fall vacations, his friends suddenly planned for a camping trip. But Sahil didn’t have funds for the trip as he’d bought an expensive laptop last month. So, he asked his father in India to send him money immediately. Back in India, his father was completely clueless about how much money he could transfer to Sahil’s account.

With more and more Indians settling abroad, there has been an increase in the rate of both outward and inward remittance. There are multiple channels that allow inward remittance in India. Compared to this, the scope of outward remittance or sending money to an overseas bank account is limited.

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The transaction of foreign exchanges in India is governed by the Foreign Exchange Management Act (1999) or FEMA. To send money overseas, you need to be a resident of India, having a bank account that allows transaction rights. This account needs to be maintained for at least a period of one year before you can make any outward remittance.

Recently, the Reserve Bank of India (RBI) has taken steps in simplifying the process of sending money overseas. In February 2004, the RBI had announced its Liberalised Remittance Scheme that regulates the limitation of money that you could send overseas. Earlier, in 2007, RBI had fixed the maximum limit of sending money to an overseas bank account to USD 2,00,000 per year. After the rupee weakened, RBI reduced this limit in 2013 to USD 75,000 per year. With a stronger value of rupee, RBI has now increased the maximum limit to USD 2, 50,000 (as of May 26, 2015).

Indian citizens can now send a maximum of USD 2,50,000 to overseas bank accounts. This scheme is not available for trusts, corporate, partnership firms, and HUFs.

The RBI allows transfer of funds overseas only for the following purposes:

  • For education, and medical treatments
  • Emigration fees
  • Private visit abroad
  • Employment abroad
  • For maintenance of family
  • For acquiring debt instruments in both listed and unlisted companies, shares , and assets (immovable or movable property outside India)
  • For investment purpose (mutual funds, promissory notes, unrated debt securities, venture funds etc.)
  • As gift or donation
  • For acquiring Employee Stock Ownership Plan or ESOP in foreign companies
  • Repayment of loans that were taken when the individual was an NRI
  • For maintenance of foreign currency accounts with banks in foreign
  • countries.

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