How does remittance work? How does it differ from direct money transfer?
"The Option 2 in your answer is how most of the money is moved cross border. It is called International Transfer, most of it carried out using the SWIFT network. This is expensive, at a minimum it costs in the range of USD 30 to USD 50. This becomes a expensive mechanism to transfer small sums of money that individuals are typically looking at.   Over a period of years, the low value payments by individuals between certain pair of countries is quite high, example US-India, US-China, Middle-East-India, US-Mexico etc ... With the intention to reduce cost, Banks have built a different work-flow, this is the Option 1. This essentially works on getting money from multiple individuals in EUR. The aggregated sum is converted into INR, then transferred to partner Bank in India via Single SWIFT. Alongside the partner bank is also sent a file of instructions having the credit account. The Partner Bank in India will use the local clearing network [these days NEFT] to credit the funds to the Indian account.   Option 3: Other methods include you writing a check in EUR and sending it over to a friend/relative in India to deposit this into Indian Account. Typically very nominal costs. Typically one month of timelines. Option 4: Another method would be to visit an Indian Bank and ask them to issue a ""Rupee Draft/Bankers Check"" payable in India. The charges for this would be higher than Option 3, less than Option 1. Mail this to friend/relative in India to deposit this into Indian Account. Typically couple of days timelines for transfer to happen." If you are a citizen of India and working in Germany, then you are most likely an NRI (NonResident Indian). If so, you are not entitled to hold an ordinary Indian bank account, and all such existing accounts must be converted to NRO (NonResident Ordinary) accounts. If your Indian bank knows about NRO accounts, then  it will be eager to assist you in the process of converting your existing accounts to NRO accounts most likely it also offers a money remittance scheme (names like Remit2India or Money2India) which will take Euros from your EU bank account and deposit INR into your NRO account.  Or, you can create an NRE (NonResident External) account to receive remittances from outside India.  The difference is that interest earned in an NRO account is taxable income to you in India (and subject to TDS, tax deduction at source) while interest earned in an NRE account is not taxable in India.  The remittance process takes a while to set up, but once in place, most remittances take 5 to 6 business days to complete.
Is the balance (in dollars, say) automatically converted to rupees when I try to: You can't transact on this account like you do on savings account. So there is NO ATM/Debit Card/Net Banking. You have to walk-in to the Branch and withdraw in local currency or in travel cards as required. Am I correct in understanding that a resident foreign currency account cannot have deposits made into it in rupees, say if someone wants to transfer money to me using IMPS? Deposits are restricted. See RBI circular A quick search shows that https://www.westernunion.com/de/en/send-money/start.html says they will transfer €5,000 for a cost of €2.90. Assuming you can do a transfer every week, that would be six weeks at a cost of €17.40. €17.40 is slightly less than €1,500.00. I'm sure there are more ways. "The applicants go through the same process as for any other loan.  The only difference is that the ""bank"" is people like me, perhaps 200 of us on a note.  We kick in $25 or so on each note and get the opportunity to ask the applicant questions.  The investors pay a small percentage as fees to have professionals rate the notes.  The worse the credit, the higher the interest rates the note holder recieves.  Of course if the person stops paying, we receive nothing.  Calculated risk.    I invest in high risk notes sometimes depending on what it's for and have several in my portfolio.  It's literally microlending.  I can afford to lose $25 on a risky loan or two for a 19% profit because the rest of my portfolio is diversified into hundreds of 9-11% notes.  It works surprisingly well." Is it true that my father and I get better exchange rate if he uses citibank than his local bank and my local bank? No. The rates vary from Bank to Bank and some days some bank may give a better rate and there is no Golden rule that One Bank will always give better rate. For the amount specified, your father needs to walk into his Bank, preferably the branch that deals with Forex or the Main Branch in the city. A better rate would be given. So any leading Bank like HDFC, ICICI, SBI, SBH, Axis will be similar. Please note a CA certificate is required to make such remittance outside of India.  having my father send me money in USD in India and I get USD here. In that case, my father would have to pay exchange fees Yes this is the only option. You have to convert INR to USD in India. having my father send me money in INR in India and I exchange INR to USD in the US. In this case, exchange fees would be on me INR cannot be sent to US electronically. It will automatically get converted to USD. There is no bank in US that holds an INR account for you to convert amount into USD. Can I Send the money back to my personal account of my mother/father in India? Why not? A huge number of Indians working in US are sending money to their parents. There may be multiple reasons like paying a mortgage/loan or sister's wedding or any personal reasons. Usually, there may be a reason column when you send money through any Remittance company.  Do I need to pay any tax here in US or my parents back in India? Parents are direct dependents in India. So you can share your money with your dependents. Your parents have to pay tax for whatever they are earning in India based on the tax slab and age they fit in. So you can even give them the power of Attorney to control your properties in India. Transferwise is a new peer-to-peer service that's setup to lower fees for international money transfers: https://transferwise.com "Perhaps it's the terminology ""fee"" that makes it a little confusing. I'm not sure whether it's due legislation or if it's tradition but banks and money changers in my country don't charge ""fees"". Instead they advertise separate prices for buying and selling money. For example they'd normally advertise: USD, we buy: 4.50, we sell: 4.65. It's a business. Just like selling cars or lemonade selling money only makes sense if you sell it at a higher price than what you bought it for. Regardless of what you call it it's the profit margin for the seller." It is not ! Of course you can transfer your monies to your account in another country.  Its a different story if you were doing it for someone else and if the the money was not legitimate - then it would shade off into money laundering. Like for example I use transferwise to send $x to my dad's account in India, would it show my name as the depositor ? That would depend from bank to bank, it may or may not show your name. Would it be considered as income for my dad ? Assuming your parents are Indian Residents for tax purposes. No. It would be considered as Gift. Gifts between father and son are tax free in India and there is no limit. Any special care/precaution to take before using such services ? Not really. Just to be safe, keep a copy of the transfer instruction / details of debit to you account etc, so that if there is enquiry you have all the data handy. Edit: Clarifying the comment, if you are Resident Alien in US for tax purposes, you would be liable to Gift Tax [Not your parents as they are Indian Residents and would follow Indian tax rules]. As per IRS the liability of Gift tax is on Donor subject to limit of $14000 per year per Donee. So you and your wife can gift your father and mother $14000 each. i.e. $56000 each year. Anything more will be taxable or can be reduced from the overall estate limit. "At this point, a great deal of the world's wealth exists only in electronic form, and just as you can write a check or pay by debit card and trust the banks will handle it, banks can conduct wire transfers"" through higher-level banking networks. In the US, when there is a need to convert physical money to electronic or vice versa, it is typically handled by armored car and armed guard transfer between a bank and the local Federal Reserve Bank office. Physical money is moved around only when necessary, and for as short a distance as possible, to the most secure facilities possible, to minimize risk. I can't vouch for how it's managed elsewhere in the world, where the networks and repository banks may not be as available. I would presume (I would hope!) that the same general concepts and approaches are followed." I ended up just trying. I gave A the IBAN of B's account, which I calculated online based on the bank code and account number (because B claimed IBAN won't work, so didn't give it to me), and B's name. A was able to transfer the money apparently without extra difficulties, and it appeared on B's account on the same day. Contrary to some other posts here, IBAN has nothing to do with the Euro zone, nor is it a European system. It started in Europe, but it has been adopted as an ISO standard (link). As usual of course some countries don't see the urgency to follow an international standard :) XE.com has a list of all IBAN countries; quite a few are non-European. Here is even the list formatted specially for the European-or-not discussion: link. Generally in International transfers there are 4 Banks involved. Customer's Bank [Customer who initiating the payment], also called Sender Bank. There is Sender's Correspondent Bank. Then there is Beneficiary Bank also called Receiver Bank [Bank where Beneficiary holds account]. There is Receiver's Correspondent Bank. So Person A-> A's Bank -> A's Correspondent bank -> B's Correspondent Bank -> B's Bank -> Person B. Depending on the currency, at times there is only one correspondent Bank. The Chain of Correspondent Bank is common knowledge and quite often if you don't provide all the details; your Bank or other Bank will fill in default details and processes the payments. However it all depends on which bank and whether they are inclined to do so. Some bank specifically insist to use a preferred correspondent bank so if you don't specify any they may return / reject it. I can only imagine the regulatory difficulty you're going through, and for that I empathize. First, bankers everywhere mostly do not know if a bank policy is due to regulation or internal rules.  Other banks may be more flexible, but only the most reputable should be used. Re Paypal, they first deposit 1 USD and then withdraw it, but things may be different in Cyprus.  Also, Paypal now has debit cards, so if Paypal is permitted to issue cards in Russia then it could presumably be used in Cyprus.  Again, local regulation notwithstanding.  Paypal now has phone support at the very back of their site, so I suggest a call to them. In countries that permit, Western Union can be used to wire money into an account from cash. The Bitcoin route should be used as a last resort.  You could wake up tomorrow losting 25% easy.  The regulations are a distant second compared to this problem. With all of the above methods, there will be varying delays from days to weeks. So your dollar never leaves America until it leaves for an investment - which would be FDI. If you sent the dollar home to Mexico, that’s a remittance current account flow. Then later, you want to use that dollar for a housing investment in Mexico, it’s just domestic investment. If you move to the US, I believe that’s another remittance flow (though it might even be a service flow because the bank is the one moving the dollar!). Then to invest in Mexico you need to go through an FDI channel. Most definitely all wire transfer above a significant amount would be flagged as a suspicious transaction. Nevertheless, as long you provide the Final beneficiary information (name and account number), the bank will process the remittance.