The Hindu Business Line : ‘Expats remit $26.5 b, higher than combined FII, FDI flows’

While exchange rate fluctuations cannot possibly alter the basic need to send money to your loved ones. — Mr Anil Kapur, MD, Western Union, South Asia

Mr Anil Kapur, MD, Western Union, South Asia

D. Murali
N.S. Vageesh

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Mr Anil Kapur, Managing Director of Western Union operations in South Asia, has been with Western Union for over six years now. Under his leadership, the business in India has grown significantly, with Western Union becoming a visible player in the remittance business .

Mr Kapur commenced his career over 16 years ago when he joined ANZ Grindlays bank and spent the next 8 years with them in different parts of the retail banking business in India. In his last assignment, he was heading the Non Resident Indian business for the bank in UAE and Oman.

Mr Kapur also spent two years with Mashreq Bank, a Dubai bank where he was heading their retail loans portfolio. Mr Kapur is an alumni of the Doon School, Dehradun and graduated from Hansraj College, University of Delhi with a B. Com (Honors) degree.

He completed his MBA in Finance and Marketing from the University of Connecticut, US. Mr Kapur is married with two daughters and currently settled in Mumbai. He enjoys playing squash and golf.

What are the migration trends that have seen the remittance business grow in India?

Migration patterns significantly account for the remarkable increase in workers’ remittances. In the 1990s, migration to Australia, Canada, and the US increased significantly, particularly among information technology (IT) workers on temporary work permits.

According to RBI, remittance inflows from overseas Indians reached $29 billion in 2006-07 from $2.1 billion in 1990-91 as the second wave of migrant workers started in the mid-1990s towards information technology sectors in America. Thus, the migration pattern changed from unskilled/semi-skilled to highly skilled workers to America.

How has the remittance business changed over the past five years? There have been significant developments over the past few years. These can be viewed in terms of the amount of remittances that India has received over the years as well as the sources of remittances to India.

We estimate that almost 7,50,000 Indians are migrating overseas every year in search of jobs and this has impacted the increase in remittance inflows. India’s share of remittances is estimated to have nearly doubled from a modest $13 billion in 2000-2001 to $26.5 billion (Rs 1,04,900 crore) in 2005-06, which is larger than the combined FDI and FII at $14.5 billion.

How much of Western Union’s remittance happens through India Post, banks and other agents?

Western Union has over 50,000 agent locations in India across over 5,000 cities and towns. India Post is the biggest agent of Western Union, with over 8,500 post offices agent locations. Western Union works with over 30 leading banks and our services are available in over 20,000 bank branches. This gives an indication of our geographic reach in India and the growth of our business in the country.

What would be Western Union’s figures for remittances into India? Your market share?

We cannot disclose India-specific information.

You mentioned 60 per cent of the remittance goes into rural areas. Which areas/States have these remittances gone to?

Over the past few years we have observed a positive correlation between remittances and migration. The larger the number of migrants working abroad, the more active is the remittance market for that region. In India, these markets would include States such as Kerala, Punjab, Tamil Nadu, Andhra Pradesh, Uttar Pradesh and Gujarat. All of these States contribute significantly to India’s migrant population and consequently to the remittance market. As a matter of fact, the total remittances to Kerala from abroad in 2007 stood at a staggering Rs 24,525 crore, according to a study conducted by the Thiruvananthapuram-based Centre for Development Studies.

How much has the fluctuation in exchange rates affected remittances? What is the average remittance now?

Remittance services such as ours help migrant workforce send home money regularly and reliably, almost all of which is more often than not used for maintenance, education and upkeep of their families. These remittances are the lifeline for their families and relatives in India. The nature of remittances sent home is pretty much independent of market fundamentals. While exchange rate fluctuations do affect the value of transaction ,it cannot possibly alter the basic need to send money to your loved ones.

What are the rates/fees that you charge for different corridors/destinations in India (From US/ Gulf/ Australia/ China/ Europe)? How have these changed over the last five years?

Needless to say, improvements in technology and our endeavour to be as inclusive as possible to our end-consumer have definitely made our services far more cost-competitive as compared to, say, five years back. As an example, we levy a fee of $15 for every $1,000 remitted from the US, which was $39 until a few years back. From West Asia, Western Union can charge as low as $15 AED for any transfer up to $2,500 from UAE, a significant reduction from the previous years.

Does the regulatory cap of $2,500 per remittance limit higher growth in volumes for you? Would you seek a higher limit?

The regulatory cap is decided on the basis of research and scrutiny of various factors affecting the local environment that financial services such as ours operate in. Western Union and its agents comply and abide by the regulatory norms in more than 200 countries and territories — including India. Western Union money transfer system is fully equipped to transfer larger transaction volumes, however, we completely understand and trust the regulators on such policy matters and look forward to their guidance with regards to a higher remittance limit.

What is the kind of monitoring done by your agents? What do they have to do to get more business? Or is that responsibility only yours?

In India, Western Union operates through 11 Principal Agents. The appointment of a principal agent is a highly scrutinised process and requires the approval of the regulator. Since India is a purely receiving country, business is usually generated in the sender country. Our marketing activities in India are tailored towards raising awareness about Western Union’s facilities. With our ever-expanding agent location, and a marketing campaign that has suitably built awareness about our services, we have noticed receivers in India now positively influencing the sender’s decision to use Western Union. This, combined with the various marketing activities conducted for the Indian diaspora globally, helps us channelise business towards India.

How do you view competition from online remittance portals?

Our money transfer service provides cash-to-cash transfer facility within minutes anywhere across India, without the need for any Internet connection or bank account. We offer one of the fastest, easiest and reliable transaction service and have a large distribution network spread across 200 countries and territories, besides an easily recognisable brand in this business. The combination of all these sets us apart from other online remittance portals.