KOCHI: Due to the open market architecture in the remittance sector in India, entry of many players into the segment and innovative remittance channels, Kerala, the biggest receiver of ‘Money Order’ from overseas, enjoys reduction in cost for sending money back home over the years, especially from the GCC countries.
The average cost of sending money from Saudi Arabia, UAE and Qatar to Kerala has come down to Rs 129 now from Rs 196 a year ago for sending Rs 30,500 ($500) by a person. At present, approximately 28 lakh Keralites are working abroad with over three lakh transactions per annum.
The average amount remitted to Kerala in 2013 was Rs 43,080 ($718) per transaction. A significant 10–15 per cent increase is expected in remittances to the state in this year. In 2013, Kerala received a remittance of Rs 75,000 crore.
The average cost of sending $500 now to Kerala from Saudi Arabia is $1.62, UAE-$1.70 and Qatar $3.01, against $2.94, $2.55 and $4.17 respectively a year ago.
“Increased competition among service providers and the key role played by technology was the major reason behind the reduction in cost of remittance,” said Sudhesh Giriyan, Vice president and Business Head, Xpress Money.
“Services like mobile money transfers and payment cards have huge potential to bring down the fees with further. Increased competition can play a major role in moving down the cost of remittances,” Giriyan said.
“The Indian government has recently flagged off various initiatives like ‘Make in India’ and ‘Deen Dayal Upadhyay-Grameen Kaushalya Yojana (DDU-GKY)’ to ensure skilled migration, to meet specific demands in countries like the US, Japan, Russia, Germany and Middle East countries. This will result in escalating remittance to the country as a butterfly effect the cost will also come down in the near future,” said V K Vijayakumar, a financial expert, who tracks remittance to Kerala.
Remittance is sufficient to bring down 60 per cent of the state’s public debt as Keralites also send remittances for investment/commercial purposes through banks or other financial institutions, Sudhesh Giriyan pointed out.