Growing Influence of the Indian Market
Money transfer companies plan to increase their network in India in order to cash in on the growing remittance market in the country, which is hailed as the largest remittance receiving nation in the world.
According to a World Bank study, India accounts for around 10% of the $240-250 billion person to person international remittances. This amounts to $22-23 billion every year.
As per Reserve Bank of India’s report 2006, the maximum remittances came into India from North America and the Gulf, in which the former accounted for 44 % of the remittances and the latter 24%.
“The growth of Indian’s remittance market is based not only on increasing number of Indians working abroad, but also on the growing number of people who begin to use formal channels of remittance instead of informal ones.” said Lady Olga Maitland, CEO of International Association of Money Transfer Networks.
According to the IOM research, 70% of remittances to India, Bangladesh and Sri Lanka are informal, so high percentage is caused by historically entrenched network of businesses operating in that context. “Educating customers is the key challenge for us in India. People have to be made aware of other money transfer mediums to avoid practices like Hawala and similar. This would grow the market for all.” said Harsh Lambah, MoneyGram’s country manager.
The remittances market is growing by 20% every year. About 20 to 25 million Indians are working across 130 countries. With migration of Indians to newer geographies, the country is going to receive 30 billion dollars worth of remittances by the end of this year.
These numbers indeed make India a very important market for money transfer companies like Western Union, MoneyGram and others.
“India is on top of our focus list and we are talking to like-minded partners. We are increasing our network through alliances, partners and sub-agent”, MoneyGram’s Country Manager for India Harsh Lambah told media. While the company has been offering its services in India since the past eight years, it opened its first office in Mumbai only last year. Last month, the firm opened an office in Delhi as well. “This comes with India becoming a key focus market for MoneyGram’s global expansion strategy.” said Harsh Lambah. The company already has eight principle agents in India, including Thomas Cook, Trade Wings, UAE Exchange, Indusind Bank among others and operates through many other sub-agents like South Indian Bank, IDBI, etc.
On 20th of February Western Union confirmed a new agreement with its principal agent, Weizmann Forex Limited. The company had already been operating as a Western Union Agent, but has it is said in the press-release, “this new agreement broadens the relationship between Western Union and Weizmann Forex and reaffirms Western Union’s commitment to India as a growth market.”
On 15th of February Western Union announced that Reliance Capital Ltd is now one of Western Union’s principal agents in India. (This relationship has come into effect after Reliance Capital acquired a 100 percent stake in Kuoni Group’s foreign exchange unit Travelmate Services (India) Pvt Ltd in November 2006. Travelmate has been Western Union’s principal agent for more than 10 years.) The 36,000 strong Western Union Agent location network comprises more than 3,000 Travelmate locations.
ICICI Bank has introduced its global remittance service “Money to Home”. This service will be currently available for customers in the United Kingdom and Canada through ICICI Bank subsidiaries in these two countries. Customers will be able to remit money to various international destinations such as China, Bangladesh, Sri Lanka, Philippines and Nepal. Customers can opt for multiple channels, including ICICI Bank branches to remit money. They can also avail the convenience of direct credits to the beneficiary’s bank accounts as well as paper-based instruments delivered directly to the beneficiary’s bank or to the beneficiary’s home, through extensive delivery networks. Money to Home can also be shortly availed through on-line channels.
India is both the world’s fastest growing mobile services market and the biggest recipient of overseas remittances in the world, accounting for around 10% of the world market. Mobile services in India have now percolated down to the lowest income groups. In fact, a recent survey showed that 19.4 per cent of mobile users in India do not even own a bicycle. This opens great perspective for mobile money transfer business in this region.
“The world is changing and the growth is coming from emerging markets. We have been gradually moving our business to where the growth is and India represents a fantastic opportunity. We’re going to bring low-cost handsets and mobile-banking and money-transfer services.” said Vodafone Group Chief Executive Arun.
IATMN — International Association of Money Transfer Networks was founded in 2006 to improve collaboration amongst all money transfer networks and banks to ensure a cohesive approach is taken by the industry in response to changing legislation and the need to promote greater transparency in ways that are effective, yet non discriminatory. Honorary President of the association is Lord Norman Lamont of Lerwick, former Chancellor of Exchequer, chairman is Gagik Zakarian, CEO: Lady Olga Maitland.
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