A remittance is money that is sent from one party to another. Broadly speaking, any payment of an invoice or a bill can be called a remittance. However, the term is most often used nowadays to describe a sum of money sent by someone working abroad to their family back home.
There are two types of remittances in banking. Outward remittance: When a parent sends money to their child studying overseas, it is an outward remittance. Simply put: Sending money abroad is outward remittance. Inward remittance: When a family in India receives funds from an NRI abroad, it's an inward remittance
When executing a remittance, funds of the remittance amount must be present in the sender's bank account. After the transaction has been issued, the funds will be transmitted to the recipient's bank for processing. Once the money is at the bank, a foreign exchange rate and banking fee are applied.
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