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Money transfer costs NRIs over $10 bn every year
 
Carte Blanche
Posted online: Tuesday, April 26, 2005 at 1508 hours IST Updated: Tuesday, April 26, 2005 at 1512 hours IST
Money transfer companies in Britain and US are virtually stealing some $12 billion from those people, especially from India and the third world, who want to send small sums back home to families and friends.
To bring some kind of a regulation to these practices, the DFID has set up a new website, send money home.org, with details of the main remittance firms and information about fees, exchange rates, security and risks to help people transferring cash to relatives or friends in developing countries to find the best deals.
According to the IHT, "Despite scarce data on a phenomenon far more scrutinised in the Americas than Europe, the annual remittances flow from the UK in 2001 was around £2.3bn, 0.24% of Britain's gross domestic product, equivalent to 78% of the UK's overseas aid budget.
The DFID study compared around 18 firms, such as money transfer services and banks, sending typically small remittance amounts, of £100 or £500, to Bangladesh, China, Ghana, India, Kenya and Nigeria, which are, along with the Caribbean countries, the main destinations for remittances from the UK.
IHT said the cost of sending £100 varied from £2.50 to £40, 2.5%-40% of the sum, while fees for transferring £500 ranged from £4 to £40, 0.8%-8%, thus penalising people only able to afford to send small amounts. Transfer times using different systems varied from 10 minutes to 10 days.
America is the largest source of remittances. Researchers involved in US efforts to cut transfer costs suggest charges average 12.5%, suggesting at least $12bn a year is extracted from mainly low-wage migrants sending already taxed income to their families overseas.
The World Bank's Global Development Finance Report 2004 says transfer system fees need not be so high, since bank-to-bank "Swift" transactions cost around eight pence.
However, till law is not enacted to be applicable on the international level, Indians and poor people living in foreign countries will be paying usurious charges to feed their families back home.
 
 
 
 
 
 
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