NRI Remittance

NRI remittances touched the magic figure of USD 24.1 billion in
2005-2006, making India the largest recipient of personal money
transfers in the world. Remittances and flow of funds from migrant
workers to India is a key resource in its emerging economy. These
remittances from NRIs and the deposits maintained by them form
a generous component (about 23%) of our external reserves.

A working report by the RBI on the cost of NRI remittances in
May 2006 found that money flows are determined by the economic
health in the host country. The dollars poured in from the Middle
East workers in the 1980s, but the source of remittances has now
shifted to the West, mainly the USA. This shift in source, says
the study, has also meant that growth potential for remittance
flows has now moved to traditionally high cost economies which
will affect cost of NRI remittances.

Currently, the Middle East contributes to 35% of total inward
remittances, followed by 30 to 35% from North America, 20% from
Europe, and 10% from other regions. The global remittance market
is estimated at $110 billion, including India-bound remittances
of almost $11 billion.

Recommendations by the RBI on Remittances