How to transfer money from overseas to a NRE account?

John sent in the following email yesterday, and I thought this was a good topic for a post.

Hi Manshu,

I have opened NRE account but still not clear on transfer of money to NRE. If i want to transfer money to NRE account from overseas, will it transfer in foreign currency or it first gets converted into INR and then transferred to NRE account.

What is best, transferring money from local overseas bank or transferring through eRemit or Western Union.

Also is it good idea to transfer the local currency into USD and then transfer into NRE or can we transfer the local currency directly in USD into NRE account.


This is a common question because there is in fact no link between an international bank, say a Bank of America and a NRE account opened with an Indian bank, and once you open a NRE account, it isn’t intuitive what the next step should be. The two accounts you now own are two distinct entities with no link to each other, and you need to use a third service to link the two and fund your NRE account.

A lot of Indian banks have their own money transfer service, and you can use that to fund your NRE account or use a third party service like Xoom.

What is the best way to transfer money to India?

I would imagine that the answer to this question depends on which country you are transferring money from, and while I don’t know about other countries, I can speak with some confidence as far as the US is concerned. Using Western Union or any other wire exchange service usually costs a lot more than a money transfer service like ICICI’s Money2India or Xoom. I have used Money2India for a very long time myself till I discovered Xoom, which is perhaps the best money transfer service (for India) that exists today. It is quick, has low fees, gives you a good exchange rate, and is transparent with the exchange rate you will get as well as what status your transfer is in.

If Xoom operates in your country then I suggest you give it a try, if not, then try one of the other services that

If you are overseas then transferring money from your resident country to your NRE account is the best bet.

A little background on the NRE account now. One of the key features of the NRE account is that the money in the NRE account is freely repatriable which means that it can be sent out of the country any time and there is no upper limit on it. This is different from other accounts like the NRO account which has a clearly defined limit, and in general the tendency of the government and RBI is to keep a close watch on foreign exchange going out of the country, and don’t allow it so easily.

The second important thing about this type of account is that the interest is completely tax free, and this is also different from any other account type.

In this light, it is easy to see that the ways you can fund your NRE account is limited. You need to use foreign currency to fund this account, and the easiest way to do that is to remit the money from your host country to India. If you are already in India and have foreign currency with you then you can also use that to fund your NRE account.

You can’t deposit INR in a NRE account fund it so the option to convert foreign currency to INR doesn’t really exist, and if your foreign currency is not one that is freely convertible then you need to first convert it in a freely convertible currency, and then deposit that in your NRE account.

Please ask any questions that I may have missed addressing in the post in the comments, and I’ll answer them.

Weekend Links December 13 2014

I have been the busiest I’ve ever been in the past four or five months, and as a result I haven’t been able to blog at all. Now that my schedule is a little less hectic, I will resume blogging. The weekend links post is the easiest to begin with so I’m starting with that.

The first link is on Uber, and while a lot of attention has been paid to the company, enough hasn’t been written about the drivers who use the company to make their living. This is a short piece which is worth a read.

The next link is a very interesting piece about how Facebook can know even when its ads influenced an offline purchase. I suppose it was only a matter of time before a company figured out a way to do this, and I feel this is the direction other online ad companies will take as well.

The Economist has a good piece on oil prices, although I feel one needs to look at China’s markets as well in order to get a more comprehensive picture on oil.

A very interesting article on how Google Maps data is refined.

The RBI governor provides some interesting commentary on the Make in India mantra. I think the headline doesn’t do justice to what the governor is saying so it will serve you well to ignore the headline and read his words.

I loved this post about a couple who write about what they learned from their rabbits.

Finally, I enjoyed reading this guide to India’s tiger reserves, and hope to visit one in the near future.

Enjoy your weekend!

SAIL Offer for Sale @ Rs. 83 – December 2014

This post is written by Shiv Kukreja, who is a Certified Financial Planner and runs a financial planning firm, Ojas Capital in Delhi/NCR. He can be reached at

With its first divestment candidate this financial year, the government today fixed Rs. 83 as the base floor price for SAIL offer for sale (OFS) which is scheduled to be carried out on the stock exchanges tomorrow. Targeting Rs. 43,425 crore in divestment proceeds this fiscal year, the government has decided to sell its 5% stake in the company i.e. 20.65 crore shares.

At Rs. 83 a share, it seems that the government will be able to raise a minimum of Rs. 1,714 crore from this sale. Currently, the government holds about 80% stake in the company.

Before we consider the factors to decide whether we should invest in this OFS or not, lets first check the basic details of this offer.

Shares on Sale – The government will be selling 20,65,26,264 shares in the offer for sale, out of which 10% shares i.e. 2,06,52,626 shares have been reserved for the retail investors.

Offer Price – Share price of SAIL closed at Rs. 85.25 on the NSE today. The government has fixed Rs. 83 as the floor price in the OFS, which is a discount of 2.64% to its closing price. The floor price of Rs. 83 was disclosed by the government after market hours today. So, the market will react to this price in the trading hours tomorrow.

5% Discount for the Retail Investors – The company has decided to offer a discount of 5% to the retail investors. This discount will be offered on the price at which the company allots its shares to the retail investors.

Time Period – SAIL OFS will remain open for a single day only and that too, during the trading hours of the stock exchanges. You’ll get to know the status of your bids by 6 p.m. and if successful, you’ll get the shares allotted by the designated stock exchange on T+1 basis.

Once bidding starts, you can check the bidding status on the National Stock Exchange as well as on the Bombay Stock Exchange.

How does an OFS process work?

If you are investing in an OFS for the first time and want to know more about the process, here is the link to check the details about it. If you have any query regarding the process, please share it here, I’ll try to respond to it as soon as possible.

How to invest?

You need to contact your broker to know how it is facilitating the bidding process. I think most of the broking firms must be providing the investment facility through their online platforms. If you don’t have access to the online platform, you should contact the customer care department of your broker and get the bid placed through telephonic confirmation.

Should you invest in SAIL OFS?

I think it is not the best of the times for a company like SAIL to hit the capital markets. On one hand, global commodity prices including steel are on a steady decline as a result of falling demand and on the other hand, the pace of supply is expected to steadily go up in the next few years. So, these companies will continue to face pricing pressure in the absence of a demand pick-up.

As far as the financials are concerned, I think for a public sector company like SAIL, it doesn’t make sense to deeply study its financials and try to gauge its value based on certain financial ratios like price-equity ratio etc. I am saying this as firstly it is a government controlled company and secondly, it is into a cyclical industry.

The fortunes of companies like SAIL depend on various factors like economic health of the country, pace of industrial activity, global commodity prices and how well it is managed by the government and its officers.

In March 2013, the government sold its 5% stake in SAIL at a price of Rs. 63.07 per share. At Rs. 83 a share, the current government is seeking 32% premium to the last OFS price. I think the current price of Rs. 83 is fair and I expect around 35-40% returns from my investment in SAIL in the next 18-24 months. However, with positive economic environment, returns could also surprise on a positive side.