Cost of transferring money may be cut

Taking into consideration the concerns of India and other developing countries, the G20 on Sunday vowed to take “strong practical” measures to reduce the global average cost of transferring remittances to 5 per cent.

India, the world’s largest recipient of remittances, with $71 billion sent last year, pushed for a reduction in remittance costs of non-residents at the G20 summit that ended on Sunday, asking it to work on steps to reduce costs in sending money home, which are as high as 10 per cent in some countries.

“We commit to take strong practical measures to reduce the global average cost of transferring remittances to 5 per cent, and enhance financial inclusion as a priority,” said the three-page communique released by leaders of G20's major and leading emerging economies.

Railways Minister Suresh Prabhu, Modi’s “sherpa” at the deliberations, said: “Indians send the maximum money back to their country. NRIs remit close to $70 billion, more than the Filipinos or the Chinese.” Ahead of the summit, he said, “It’s an ethical, logical and economic issue. We are pushing for some understanding in the G20 that the cost should not be more than 5 per cent.”

India has been able to convince Saudi Arabia to reduce it to 3.5 per cent, he added.
In a separate G20 plan to facilitate remittance flows annexed to the communique, the grouping described the RBI’s move, to facilitate the receipt of foreign inward remittances directly into the bank accounts of beneficiaries under the Money Transfer Service Scheme, as an innovative step with the potential to reduce the cost of remittance transfers.

It also recognised the value of remittance flows in helping drive strong, sustainable and balanced growth. The plan said remittances to and from G20 countries account for almost 80 per cent of the global remittance flows.