Why Foreign Remittance is Important for Banks

Foreign remittance means remittance of foreign currencies from one place and persons to another place and person. In broad sense, foreign remittance includes all sale and purchase of foreign currencies on account of Import, Export, Travel and other purposes. However, specifically foreign remittance means sale & purchase of foreign currencies for the purposes other than export and import. As such, this chapter will not cover purchase & sale of foreign currencies on account of Import & Export of goods. Foreign exchange department of commercial banks are responsible to deal with outward and inward remittance other export and import only when remittance are in foreign currency.

Activities of Foreign Remittance Department of Commercial Banks

• Overall supervision of foreign remittance flow
•   Foreign Telephonic Transfer payments and Purchase of foreign drafts, preparations of foreign bill purchased 
•   Issuance of outward Telephonic Transfer payments and foreign demand drafts 
•   Issuance of proceed responding certificate (PRC)
•   Foreign collection, interbank clearing check collection, which comes from various branches
•   Withdrawal from foreign currency account on behalf of its clients 
•   Preparation of related statements including convertible local currency accounts
•   Preparation of balancing of collection and other special assignment as desired by department in charge
•   Balancing of account statements
•   Compliance of audit and inspection
•   Statement of all related works submitted to Central Bank.

All foreign remittance transactions are grouped into two broad categories of remittance for example, Outward remittance and Inward remittance. Foreign remittance department of commercial banks maintains the overall duties and responsibilities of foreign remittance flow for a bank.