MUMBAI: India remains the most cost-effective destination for remittances, yet recipients still lose around 5% of the money sent by relatives abroad in transfer costs.
According to a Reserve Bank of India (RBI) study, the global average cost of sending $200 has fallen (from nearly 9.7% in 2009 to around 6.7% in Q2 2024) but remains above the G20’s 5% target and the UN’s 3% Sustainable Development Goal (SDG). These costs include fees and exchange-rate markups.
India has, however, met the G20 target. Remittance costs were 4.9% in 2023, and just over 5% in the first half of 2024 – below the global average. India is the top recipient, followed by Mexico, China, the Philippines, France, Pakistan, and Bangladesh.
Digital remittances, which were 30% of transactions in Q2 2024, are cheaper. India’s digital transfers averaged 4%, a percentage point below the national average, “reflecting the rising role of digitalisation in optimising remittance costs”.
Smaller transfers are pricier. Remittances under $200 averaged 4.6%, while $200-$500 transfers were 2.4%. Fintech firms and money-transfer operators (MTOs) offer the lowest costs, increasing competition.
Advanced economies (AEs) now account for over half of India’s $118 billion in FY24 remittances, while Gulf states make up 38%.