Mumbai: India pays almost Rs 9,700 Crore in the form of hidden costs in an increasing exchange rate while making remittances in 2020.
It is more than a third (36%) of the total cost of the 26,300 crore rs paid to send money to their country borders.
The cost reflects a lack of transparency and high costs applied by the bank on shipping money.
The bank has reduced costs on foreign money delivery and their income below this head down from RS 15,017 Crore in 2016 to Rs 12,142 Crore in 2019.
However, they have protected themselves by recovering Rs 4,422 Crore through the Exchange mark-up in 2020 , which rose from Rs 2,505 Crore in 2016.
These numbers come from independent research conducted by the capital economy in August 2021, which aims to estimate the scale of foreign exchange transaction costs in India.
This study was released by Wise, a technology company established with the aim of reducing cross-border shipping costs.
Overseas workers send money to India also lost money.
Over the past five years, the missing money for the exchange rate margin on the remittance has grown from Rs 4,200 Crore to Rs 7,900 Crore.
Meanwhile, the costs paid for transaction costs have grown from Rs 10,200 Crore in 2016 to Rs 14,000 Crore in 2020.
“Most of these costs paid on money transfer to India come from people in Gulf countries in Which is mostly employed in a blue-collared job supporting their families at home in India, “a statement issued by Wise.
From the share of the total costs paid on remittances to India in 2020, Saudi Arabia was ranked first at 24%, followed by the US (18%), England (15%), Qatar (8%), Canada (6%), Oman (5%), UAE (5%), Kuwait (5%), and Australia (4%).
“While technology and the internet have relieved several problems related to the comfort and transfer of foreign fund transfers, practices hiding with exchange rates in exchange rate results on too much expenditure at hidden foreign currency costs – money that should remain in their pocket, “Wise Indian State Manager Rashmi Satpute.
Indian consumers who spend abroad pay Rs 1,441 Crore as a transaction fee, which RS 1,303 crore is hidden in the form of exchange mark-up.