The process of exchanging foreign currency in India is pretty straightforward. The exchange of foreign currency happens when you either decide to buy it or sell it. You will most likely buy when you have a foreign trip scheduled and when you come back, you decide to sell the leftover amount.
Exchanging foreign currency in India
You can exchange foreign currency via the AD Category – I Banks, ADs Category – II, and FFMC (Full Fledged Money Changers) which hold the license given by the Reserve Bank of India. The aim of the three types of these approved money changers is to allow locals and visitors to access foreign exchange facilities in a broader way. The goal is also to ensure that clients receive the quickest and most efficient service, with greater competition. Now, online foreign exchange platforms have come up which give a tight competition to other services.
- Foreign currency exchange via banks: Visit your bank where you own an account with the foreign currency in hand. For instance, you can exchange foreign currency in HDFC Bank if you are a holder of an HDFC bank account. The process is actually quite complicated and not every branch of a bank has currency exchange services.
You need to keep in mind that the swap would be difficult to carry out in a bank where you do not hold an account. It’s easier if you are an account holder in the bank that you are visiting.
Ask for the international currency exchange rate in favour of the rupee and the service charge provided by your bank.If you’re happy and content with the rate you can undertake your bank’s money exchange itself. Now you need to show a few documents, however, you must realise that you won’t get the best rates via banks as they focus more on the domestic currency. For the best rates, you can go and try foreign exchange platforms.
- Foreign currency exchange via RBI approved AD-II and FFMCs: The major benefit of doing foreign currency exchange, in this case, is that a customer doesn’t need to have an account with them to buy or sell foreign currency when compared to banks where you need to have an account. You are expected to get more competitive rates than the banks. They offer competitive exchange rates for consumer capturing.
All major towns and cities have such money exchangers approved by the RBI but you should beware and do your research about the exchanger where you go for foreign currency exchange.
- Foreign currency exchange at airports: This is easily the most expensive option out of the ones we just discussed. There are currency exchange counters at the airports and they know since you are in urgent need, they will charge like crazy for the currency exchange.
It is also extremely important to be aware of the Foreign Exchange Management Act (FEMA) set out by the Reserve Bank of India. A resident individual can transfer money abroad to the limit of USD 2,50,000 per financial year. It comes under the Liberalized Remittance Scheme (LRS) which is set up by the RBI. This limit can be used in a one-time transaction or through multiple transactions.
It is mandatory to produce the PAN card whenever you send money abroad from India to abroad regardless of the amount being transferred. This is to make sure that an individual does not cross the Liberalized Remittance Scheme (LRS) limit of USD 2,50,000 in a single financial year.
You also have to mention the purpose of remittance. Some of the purposes mentioned under LRS scheme are Overseas Education, Living expense of student studying abroad, Maintenance of Close Relative Abroad, Gift Remittance, Emigration, Tour Remittance, Medical Treatment Abroad, Participation in Global Conference / Training, Business Travel Abroad and Private Visit Abroad.
Why you must try online foreign exchange marketplaces?
Online foreign exchange platforms allow you to do foreign exchange by sitting at home. Unlike conventional money-changers like banks or local currency exchange dealers offering foreign exchange at a fixed rate, such online forex platforms allow their customers to buy foreign currency at live and clear rates.
You get to book forex on those platforms at live rates without any delay. Most money changers in India have a physical-level institutional structure that includes different types of fixed costs such as rent, wages and other operational expenses.
The basic principle of accounting teaches us that the consumer eventually absorbs all of these costs in the form of higher costs and purchase price.
The technologically connected systems, in the shape of the best foreign currency exchange rates on the market, save the expense and transfer which ultimately benefits the clients.
Online forex platforms then assess the exchange rate among offers given by lot of currency exchangers close to your area and then provide the perfect exchange rates for you. The process is hassle-free and it is a win-win situation for the customers. Online forex marketplaces have stepped up in the market and completely revolutionized the way we exchange foreign currency or transfer the money abroad to relatives or friends.