How to Make Payments with Foreign Currency Bank Drafts?

The world is shrinking. This is especially true for the globe trotting Indian. We love to travel to places which could not be imagined earlier. Similarly buying and selling goods online is quite a hit with us, Indians.

Within India, normally cheques and drafts are the popular way of making non-cash payments. To make payments abroad, foreign currency drafts can be issued.

A foreign currency draft is a type of demand draft issued in a currency other than Indian Rupees. Say if you want to make payment in U.S, it would be in US dollars.

In the earlier times there was a limit to the cash available for issuing drafts to a resident Indian. However now the limit has increased significantly and it is governed by FEMA (Foreign Exchange Management Act). More information about the amount allowed and the transactions are available at the website of the Reserve Bank of India.

Most of the private sector banks issue foreign currency drafts for any individual. The working of a few of the banks is mentioned below.

HDFC Bank

The charges for making foreign currency demand drafts are Rs 200 for an account holder and Rs300 for non account holder. This has come into effect from May 1st, 2006. The sender has to fill a form and the draft is usually available in about 5 hours. In case the sender wants to cancel the draft he can do so by making a payment of Rs50. This fee is applicable for all Foreign Currency Demand Drafts in USD, GBP, CAD, Euro and miscellaneous currencies.

Canara Bank

The procedure to make a draft is same as that mentioned above. But the time taken for the issue of draft is roughly 4 days as it is issued by the head office. Actually the bank recommends that the draft be collected from the head office.

ICICI Bank

ICICI Bank also offers foreign currency demand drafts for Rs.200 per draft. The recipients have to deposit the draft to his/her account to collect the money.

ICICI Bank offers the Foreign Currency Demand Draft in the following currencies: USD, GBP, SGD, EURO, CAD, AUD.

Co-operative Banks

Smaller co-operative banks do not have a foreign currency department and hence they don’t handle a foreign currency draft.

Recently, RBI has given permission to larger co-operative banks to handle foreign currency exchanges. Now some of these banks can issue foreign currency drafts.

Once the draft is prepared, it is delivered to the recipient through courier. This is very expensive. And this is the main drawback of foreign currency drafts.

Amidst being expensive, foreign currency draft is chosen by many as an easy option for making foreign currency payments.