What is foreign remittance?

Answer 1

Foreign remittance can be defined as 'the purchase and sale of freely convertible foreign currencies as admissible under Exchange Control Regulations of the country'.

A looser translation is the sending of money home while working in a foreign country. Thousands of people are currently working and living in a country that is not their home, and sending funds regularly back to their families in their home country.

There are two type of remittances:

1. Foreign Outward Remittance: The sending country, where the wage earner is located. The sender uses a bank or foreign exchange company to send money to foreign country. Many of the receiving banks have established remittance relationships with currency houses and banks in other countries to better facilitate the flow of remittances into the country.

2. Foreign Inward Remittance: The receiving country, where the beneficiary resides. The bank receives the money that has been sent from the sending person in the country in which the money has been earned.

Answer 2

Foreign Remittances are payments sent home by migrant workers. When migrant workers who are working in a host country, send money back home via money transfer (i.e. cross border money transfer), for the purposes of family maintenance, these remittances are deemed foreign remittances. Remittances by definition are foreign, however, domestic remittances also do exist, where workers in one city, send money back home to their family in another city.