MUMBAI: This is an explicit endorsement of India’s entry into the elite club of capital givers. A quarter of a century after Western Union (WU) began inward remittance services in the country, the US cash-transfer major is now offering users an option to do just the reverse, reaffirming the average Indian’s ascent up the ladder of economic mobility.
“We have got this outbound licence to send money out of India. With the Indian economy growing stronger, people want to send money abroad to relatives, to invest in businesses and to students overseas. You can pay me in rupees and I can pay in any currency,” WU chief executive Hikmet Ersek said in an interview.
India was one of the few countries that did not allow full-fledged money changers like WU to transfer money abroad. However, the central bank changed the rules last year, issuing this separate licence for companies like WU.
Ersek expects India to now become a source of remittances abroad in line with other emerging markets that have gone through this phase. He cites the examples of Turkey, Mexico, Russia and the Philippines.
Outbound remittances almost doubled to $8.17 billion in FY17, up from $4.64 billion a year earlier. In the first nine months of FY18, already $8.20 billion has been transferred out of India by people to their relatives for needs as diverse as education, tourism, investments and medical treatment, central bank data show.
The Reserve Bank of India’s (RBI) so-called liberalised remittance scheme allows resident individuals to transfer $250,000 abroad each financial year.
“Turkey has a 15 to 20 million diaspora from Germany and other European countries. We started the outbound business around 2010 when Turkey was growing fast and it’s now 60% outbound and 40% inbound, with people coming in and trade picking up. The same was the case with Russia which saw a rise in outbound remittances after oil prices rose and so did the Philippines and Mexico, which were both 100% inbound countries not too long ago,” said Ersek, who is half Turkish himself.
The Colorado-based company, which made $5.5 billion in revenues in 2017, moves money to 200 countries and pays out in 131 currencies through mobile, accounts, wallet, and retail shops at 31 transactions per second. The transactions are checked and settled real time.
Ersek said though the outbound market is in the nascent stage and very small compared to the $65 billion inbound remittances, it is likely to grow as the country’s economy expands. “It is a sign of a more developed economy. We have seen this in many markets. We are still in the building phase on the journey in India even in our 25th year. This is still a ‘receive’ market, but outbound will grow from here,” he said.
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