Global money remittance agencies have decried RBI’s biased policy of allowing only domestic NBFCs and financial agencies to float domestic money transfer gateways despite a large market which is lying almost untapped.
Agencies like Xoom which has a tieup with PNB and Xpress Money which has recently entered India as online remittances agencies hold that the traditional high remittances receiving states like Kerala, Tamil Nadu, Punjab, Andhra Pradesh as well as others like Uttar Pradesh, Bihar, Rajasthan, and Karnataka have a vast potential of domestic inter-state remittances due to large migration of labour and wage earners. This has particularly come about in recent years as the economic activity has spread beyond States’ borders in in sectors like real estate, infrastructure, financial institutions, hospitality and healthcare.
These States together make up for almost 80-85 per cent of the total remittances. “Remittances to India is expected to grow by 7-8 per cent in 2014. India has been the largest recipient in the world with an 8 per cent year-on-year growth in remittance in the last five years, “ Xpress Money’s Vice President Sudhesh Giriyan told The Pioneer.
But besides handling the cross border cash and non-cash remittances Giriyan holds that it is capable of handling onshore or domestic remittances as it already has the expertise and infrastructure. Even after cross border remittances, he says there is a large untapped market for the redistribution of these remittances across various corners of the country.
However, the RBI has permitted very few operators in the intra-country locations which are largely PSBs or through payment gateways which is governed by the National Payments Corporation of India - which is the final authority on allowing such operators. Not only is the mode of remittances determined by the body - say in direct account transfer or cash in hand mode but most of the operators need to have a strong network but also need to tie-up with a public sector financial institution.
US based Xoom has tied up with leading public sector lender PNB to provide realtime online remittance service in India. It, however, uses the PNB gateway to further make make remittances in other locations through a related PSU bank branch.
Xpress Money currently has about 10 per cent share in the cash remittance market in India. It has, however, aims to increase it to about 15 per cent in the next five years given the growth of the inward remittances by as much 8 per cent per annum in the coming months. Of the total remittance market in India, about $15 billion is for cash facility, while the rest accounts for non-cash remittances.
Remittances to India surged to $71 billion during 2013 compared to $69.3 billion in 2012. By the end of this year, the company will also launch its services in account transfer remittances, he said, for which regulatory approvals in the process.