What to Know Before Sending Money from the USA to India

Key takeaways

• Transfers from the US to India incur costs that include upfront wire fees, FX margins and possible incoming wire fees. The amount can vary by banks, always check with yours.
• Bank regulations and the type of Indian bank account involved (i.e., NRE or NRO account) may determine the international money transfer limits when sending from the US.
• Transfers can settle anywhere from the same day to several business days. Using digital remittances like Instarem offers one of the fastest ways to send money to India.

Sending money from the US to India has become a common practice. Whether it’s supporting family, building wealth through investment or paying for purchases back home, many people need to make international transfers regularly.

While the process may seem straightforward for frequent senders, those less familiar with it often have questions in mind. Typically, uncertainty arises from a lack of clarity around the costs involved, how much one can send, and how long it takes for the funds to reach the destination.

This article will help you understand the process, including the associated fees, limits and settlement times. You’ll also learn the best way to send money to India from the US, based on cost efficiency, reliability and transfer speed.

How traditional international money transfer work

Money transfers from the US to India are traditionally processed through international routing systems such as the SWIFT network. These systems facilitate wire transfers between bank accounts across countries that use different currencies.

What happens after you initiate a transfer

After initiating a wire transfer to India from your US bank account, here’s what happens next:

• Authorisation and funding: Your US bank account verifies the transaction and debits the funds from your balance.
• International routing: Once authorised, your transfer is sent through an international routing, typically the SWIFT network.
• Intermediary bank processing: One or more intermediary or correspondent banks process the transfer before it reaches the recipient’s bank in India. Currency conversion may occur at this stage.
• Settlement and credit: The Indian bank account receives the funds and credits them to the recipient’s account.

The time it takes for the funds to settle can vary depending on several factors. Bank cut-off times, operating hours, and weekends can all affect settlement timelines, and initiating a transfer close to these cut-offs may result in delays.

Time zone differences should also be considered. What falls within US banking hours may be outside of operating hours in India, which can further impact processing and settlement times.

Why does the process involve intermediary banks?

Wire transfers to India involve intermediary, or correspondent, banks due to limited direct relationships between many US and Indian banks. One or more correspondent banks are involved to relay payment instructions and settle the funds on behalf of the sending bank.

The process works like a courier relay, where a package is handed from one logistics hub to another until it reaches its final destination. In cases of international wires, each intermediary bank passes the transaction instruction along the chain until it reaches the recipient’s bank.

How much do banks charge for international wires?

The fees for international wires from the US to India can vary between banks. They can be as high as $30 to $60 per transaction, though some banks charge lower for initiating cross-border transfers.

However, this upfront charge isn’t the only cost involved. You’re still subject to the extra fees, which come from the correspondent banks, foreign exchange (FX) margins and other charges applied on top of the initial wire fees.

Understanding the true cost of overseas transfers

The true cost of overseas transfers goes beyond the initial wire fees. It also includes processing fees from the correspondent banks, FX margins and other indirect costs. 

To estimate your US to India transfer fees, here are the key factors you should include in your calculations:

Direct transfer fees

Direct transfer fees are the money you pay upfront when initiating a transfer. Banks may charge a flat or percentage-based fee, each with its own advantages, depending on your transfer value and frequency.

• Flat fee: It’s a fixed amount charged for each transfer, regardless of the value. For example, a bank may charge $30 per transaction, whether you’re sending a small or large amount. This option is more cost-effective when sending larger transfers.
• Percentage-based fee: It’s calculated as a percentage of the transfer amount, such as 2% per transaction. This option is more suitable when sending smaller amounts, as the fee scales with the transfer value.

These fees are typically disclosed at the point of transfer. Make sure to check with your bank or transfer provider upfront so you understand exactly how much you’ll be paying before confirming the transaction.

Foreign exchange (FX) margins

Financial institutions, including the sending bank and correspondent banks, apply foreign exchange (FX) margins to generate revenue from currency conversions. They charge a spread between the interbank rate and the rate offered to you as the customer.

Unlike the upfront fee you pay when initiating your transfers, FX margins are less transparent. It can be difficult to know exactly how much of these extra costs are applied on top of the transfer fees.

These costs can compound when multiple correspondent banks are involved—as margins may be applied on top of the interbank USD to INR exchange rate at different points in the processing chain.

Other charges

On top of direct transfer fees and FX margins, there are other charges that may be applied to your wire transfer to India. These additional costs aren’t always predictable and can drive up the total transfer cost even further without you realising it, which include:

• Currency fluctuations: Exchange rates can change between the time a transfer is initiated and when the funds are settled. In some cases, unfavourable movements can reduce the final amount received in INR.
• Incoming wire fees: Some Indian banks charge an incoming wire fee, which is deducted by the receiving bank before the funds are credited to the recipient’s account.

Transfer limits from the US to India

Sending funds from the US to India is subject to international money transfer limits. The amount you can send may vary depending on the transfer provider, regulatory requirements and the type of Indian bank account receiving the funds.

Limits set by the US providers

The transfer provider from the sending country, in this case the United States, may impose limits to manage risk and meet regulatory requirements. These limits can take different forms, such as:

• Per-transaction limit: This determines the maximum amount you can send in a single transfer. The limit can vary by provider and account type.
• Daily, monthly, and annual caps: These caps restrict the total amount that can be sent over a given period, which helps providers monitor transfer activity over time.

These limits exist because international transactions carry higher risks of fraud, money laundering, and capital flight. Banks and transfer providers are required to protect the financial system and comply with legal regulations by limiting the maximum amounts that can be transferred.

Limits according to Indian banking regulations

On the receiving side, transfer limits are governed by Indian banking regulations under the Reserve Bank of India (RBI) and the Foreign Exchange Management Act (FEMA). 

These regulations set the framework for how much money can be received, credited or repatriated, depending on the purpose of the transfer. High transfer value may require additional documentation to ensure they comply with regulatory and tax requirements.

Limits by Indian account types

Indian bank accounts are primarily categorised into two types: Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts. Each type of account is subject to different transfer and repatriation limits.

• Non-Resident External (NRE) accounts: These accounts are designed to hold income earned outside India. You can transfer money to an NRE without upper limits, given that the source of funds is legitimate. However, when moving money from an NRO account to an NRE account, the amount is capped at USD 1 million per financial year.
• Non-Resident Ordinary (NRO) accounts: These accounts are used for income earned within India, such as rent or dividends. You can transfer money to an NRO account from abroad without restrictions on inbound transfers. However, repatriation from an NRO account is capped at USD 1 million per financial year.

How long does it take to transfer money to India?

The time it takes to send money from the US to India can vary widely. In some cases, transfers can be completed on the same day or by the next business day. In others, especially when using traditional bank wires, the process may take several business days.

Several factors can influence settlement times, including:

• Bank cut-off times: Transfers initiated after cut-off hours may not be processed until the next business day.
• Weekends and public holidays: Transfers made on non-business days may be delayed until banks resume operations.
• Transfer value: Larger transfers may trigger additional compliance or verification checks, which can extend processing times.
  

If speed is a priority, traditional bank wires may not always be the most efficient option. For those looking for the fastest way to send money to India from the US, digital remittance services often provide quicker and more predictable settlement times.

The shift toward digital remittance services

Conventional banks have long been the default option for international money transfers. They are familiar and well-established. However, bank wire transfers are often expensive and slow, which can be inconvenient for everyday personal transfers.

While banks offer security for high-value transactions, they’re not always ideal for frequent or time-sensitive payments. Costs tend to add up, and settlement times can be longer than expected.

This is where digital remittance services come in. Instead of relying on lengthy correspondent banking chains, many remittance providers operate using local networks in India. Most maintain local bank accounts, allowing funds sent from overseas to be credited domestically.

Benefits of remittance services

Switching to remittances offers several benefits over conventional banks for your cross-border transfers from the US to India. These include:

• Lower overall costs: 

Remittance services typically involve fewer intermediaries, which helps reduce processing fees and limits hidden FX margins. 

Instead of paying high wire fees, such as $30 per transfer and additional intermediary charges, remittance platforms usually charge lower and disclose their service fees combined with competitive exchange rates.

• Faster settlement times: 

With the use of local payout networks and pre-funded accounts, remittance transfers are often completed within the same day or by the next business day. 

This is significantly faster compared to traditional bank wires, which can take three to five business days, or longer if compliance checks are required.

• Greater transparency and predictability: 

Exchange rates are typically locked in upfront, allowing you to see the exact amount the recipient will receive in INR before confirming the transfer. This reduces uncertainty around FX margins and settlement timing, giving both you and the recipient clearer expectations.

Final thoughts

Sending money from the US to India doesn’t have to be complicated, but the method you choose can make a difference. As discussed, international transfers can involve fees, varying limits, and unpredictable settlement times, especially when using traditional banks.

If you’re looking for a reliable way to send money to India from the US, consider switching to remittance services like Instarem. Cross-border transfers sent through Instarem are faster than banks—often within minutes, with exchange rates closer to the mid-market rates.

For personal transactions, such as supporting family, building wealth through investment or paying for purchases, choosing a more affordable and faster transfer method helps you keep more of your money while ensuring quick delivery to your recipient in India.

Experience the convenience for yourself. Register with Instarem and start sending money to India!

FAQs

What is the best way to send money to India from the US?

The best way to send money to India from the US depends on your priorities, such as cost, speed, and transparency. But for most personal transfers, digital remittance services are generally more cost-effective, faster, and more predictable.

What is the cheapest way to send money from the US to India?

Digital remittance services are one of the cheapest transfer methods. Instarem, in this case, offers better value through more competitive exchange rates, transparent pricing and lower overall costs.

Is it better to send USD or INR to an Indian bank account?

This depends on your transfer purpose. Sending in INR offers greater predictability, as you’ll know exactly how much will be received. On the other hand, sending in USD may be more suitable for certain purposes, such as investments or business transactions.