The government has advised banks to review the charges levied on remittances which crossed $17 billion in the first three months of the current financial year.
“Banks have been advised to review their existing scale of charges, both at the foreign and domestic end, to minimise the current cost of remittances,” Overseas Indian Affairs Minister Vayalar Ravi told Lok Sabha, replying to a question.
However, the banks are required to have sound risk management systems and regular monitoring of funds to avoid concealed overdrafts, he said.
The minister said India received a total of $17.45 billion (approx Rs 94,683 crore) in remittances between April and June this year. The country received $66.13 billion (approx Rs 3.5 lakh crore) in remittances in 2011-12 as compared to $55.62 billion in the year before.
The remittances to the country through private transfer of funds have been on the rise in the last few years.
Listing initiatives to simplify remittances to India, he said banks have been encouraged to bring improvements in infrastructure and extending the scope of electronic payment mechanism for inter-city settlements between the banks in India so as to reduce the cost of NRI remittances.
Ravi said government has advised the banks to examine the feasibility of setting up centralised remittance receiving centres for efficiency and better customer service.
“Further they may identify remittances as an independent business segment and resort to latest technology for handling large volume at lower cost and explore tie-ups with more correspondent banks at existing and new centres,” he added.
Ravi said Exchange Houses under Rupee Drawing Arrangement have been permitted to open Liason Offices (Los) in India and these LOs may issue demand drafts in favour of beneficiaries in a cost effective manner.
“The period for collateral requirement under Non Demand Deposit account has been reduced from 30 days to 10 days which can be kept either in the form of cash deposit or a bank guarantee from an international bank of repute,” he said.
The requirement of collateral under speed remittance arrangement has been reduced from three days to one day remittances.