Remittance flow to India on the rise: Sudesh Giriyan

Q&A with Head of Xpress Money shares recent trends in remittance flows

The remittance flow to India is on the rise for the last one year as weak rupee coupled with high interest rates on bank deposits have encouraged non-resident Indians (NRI) to send money home. In an interview with Somasroy Chakraborty, Sudesh Giriyan, head of Xpress Money, shares the recent trends in remittance flows. Edited excerpts:

Q. How much money is expected to be remitted to India this calendar year?

A. Earlier this year the Reserve Bank of India (RBI) increased the limit of inward remittance to 30 per year from the earlier slab of 12 remittances per year. This along with the falling rupee has definitely impacted our business positively and we have witnessed a surge of 25% since June, 2012. The move has been very well received by the NRI community, as it works in their favour. This is a positive move from RBI as it will help in combating the use of informal channels of remittances like hawala, which are risky and help remittances to India become more organised. There are around 27 million Indians living abroad and the migration trends showing no signs of ebbing. India should continue being a global leader in inward remittances. As per industry estimates, India is expected to receive $75 billion this year as compared to $64 billion in 2011. The quantum leap in remittance volumes in India during the last few years is an indication of the trend being in favour of the formal channels of remittance.

Q. Apart from the countries in West Asia and North America are there any new regions that are emerging as major contributors to inward remittances to India?

A. US, UK and the Gulf Co-operation Council countries have been major contributors for inward remittances to India, traditionally. Over the past decade, with the boom in oil exploration and infrastructure sector the GCC region has attracted huge number of migrant workers from the Indian sub-continent. UK and US have seen more of skilled workers migrating – be it businessmen, IT professionals or management and finance professionals. With rising employment opportunities, these regions have emerged as a significant remitter to India. Having said that, there are a lot of other markets which are coming up as high potential remittance markets; countries such as Australia, Malaysia, and Hong Kong are coming up in a big way for India. In India, apart from major remittance receiving states like Kerala, Tamil Nadu and Punjab, we are also witnessing a surge in inward remittances to emerging remittance pockets such as Rajasthan, Uttar Pradesh and Bihar.

Q. Do you think the euphoria over high non-resident deposit rates have peaked?

A. The recent change in the interest rates coupled with a strengthening rupee seems to have contributed towards the non-resident deposits slowing down. So yes, in answer to your questions the current period is more of a plateau than a peak.

Q. What are Xpress Money's growth plans in India?

A. Xpress Money is committed to increasing the brand visibility and awareness for the brand across India. We are focused on making our service available to a wider range of Indian consumers and hence we are expanding aggressively across India. Currently, we have over 40,000 payout locations in India and have tied-up with major banks, non-banking finance companies and individual agent locations to provide our service to the customers. We expect to take this number to over 50,000 locations by mid next year. We are planning to double our footprint in Punjab, Uttar Pradesh, Rajasthan and Bihar. Our priority is to have adequate presence in high remittance receiving pockets from where the Indian diaspora has migrated, and also to come closer to our customer. On the business front, besides cash-to-cash (currently our core offering in India), we aim to introduce other channels of money transfer that will expand our product portfolio of services and also help create new customer segments.

Q. What is your fee structure? Has there been any revision in your fees recently?

A. At Xpress Money it has been our endeavor to provide a simple, fast, safe means of money transfer by making the service available to a wide variety of customers. We have recently announced a flat rate of AED 15 for transferring money from United Arab Emirates to India, which is the lowest in the market for our customers. Besides this, there are no immediate plans of any fee revisions. By combining our effective management of exchange rates with an affordable transfer fee, we are able to offer the best rates to our customers.

Q. What is your outlook on remittance outflows from India?

A. India is primarily a 'receive country' at this juncture and this helps in a major way to tide over the balance of payment challenges. RBI has so far allowed outward remittances from India only for specific purposes like payment of tuition fees at foreign universities, overseas travel, medical, etc. Remittances for other requirements are not permitted. It remains to be seen how the situation unfolds in the future as it is up to RBI to expand the horizon for outbound remittances from India.