A large part of India's population remains without access to formal financial services. This is also true for up-to 100 million circular domestic migrant workers, who mostly come from low-income households, leaving their home searching for income opportunities elsewhere, and who are confronted by the problem: how to send the hard-earned income – often over long distances – back home to their families where the money is needed. Bringing remittances into the mainstream of the financial system can act as an important gateway for the financial inclusion of domestic migrants. The average annual remittance amount is about Rs 20,000, and even the poorest of the migrants are sending money home. Informal remittance channels are pervasive, and attractive due to the multiple functions they can serve. Within Maharashtra and from Gujarat to Rajasthan around 90% of the respondents carry cash themselves or send it through others. Although access to banking services in urban areas is generally good, most migrants do not have a bank account at the urban destination point where they are working. The migrants value the security and speed of money transfers highest. They see these attributes best met by banks, but they continue to mainly use informal transfer methods. This may be due to factors such as inconveniences related to banking services (e.g., travelling and waiting time), Know-YourCustomer principles and other banking requirements, and a low degree of financial literacy and capability.
However, a common sight now is that of a migrant worker transferring money to his family using domestic money transfer agents of prepaid cards or bank BCs.At present, migrant labours prefer to send money through instant money transfer products compared to the bank route, NEFT (National Electronic Funds Transfer), because of the efficiency and convenience the products offer. Through these channels, a migrant labour can make transactions at his convenience at an agent located near his home. Construction worker Suresh Mishra says, “My brothers and me migrated to Mumbai three years ago to work at a construction site near Kalyan. Initially, I used to transfer money through banks, a complicated and time-consuming process. As a result, I would miss out on my working hours. A co-worker of mine suggested me this new method of money transfer. Now, I can conveniently walk into any agent location, closer to my place at any time, nd send money easily to my family in Gopalganj district in Bihar.”
Recent studies have shown that about 70 per cent of un-banked masses in India need domestic money transfer services, and about 70 per cent remitters send up to Rs.5,000 a month. The domestic remittance market is growing at a faster pace with the help of organised money transfer channels, mobile money transfer and business correspondents (BCs) of banks. Nearly 100 million migrants have travelled to Tier-I cities in search of jobs. This results in the overall domestic remittance market growing at an average rate of 10.3 per cent during 2007-13. Remittances from migrant workers contribute more than 50 per cent to the overall domestic remittances market.
The instant fund transfer enables people transfer money across the country at such a pace that it has become a favoured mode of money transfer service among the populace, and is catching up with amazing acceptance.