NEW DELHI - India will press the Group of 20 economies to set a two-year deadline to reduce the cost of international money transfers, two government sources said, potentially saving more than US$20 billion for developing countries.
The world's largest recipient of remittances - of about US$70 billion a year - won the backing of G20 leaders last month in Brisbane to take "strong practical measures" to cut the average cost of sending money home to 5 per cent.
Despite that pledge, big banks are pulling out of handling remittances over rising compliance costs. In one case, 20 remittance firms sued Australia's Westpac Banking Corp (WBC.AX: Quote, Profile, Research) to stop it quitting the business.
"We will demand a deadline of two years at the next G20 meeting," one of the sources, with direct knowledge of the matter, told Reuters.
The official is part of an Indian delegation that plans to attend a meeting of G20 deputy central bank governors in Istanbul on Dec. 11-12. Turkey has just taken over the annual presidency of the G20, an intergovernmental forum.
In 2011, G20 members agreed to bring down the global average cost of remittances to 5 per cent by 2014, but that deadline has been missed.
The cost of remittances from G20 countries has fallen to 8.3 per cent from 9.1 per cent in 2011, the World Bank estimates. That has saved nearly $30 billion for migrant families since 2010, it said in a report to the G20.
Prime Minister Narendra Modi, who attended last month's G20 summit, is pushing for Indians to save about $3 billion a year, partly helping bridge its current account deficit, the official said.
"The money belongs to poor families of developing countries and cannot be taken away in the name of transaction fees," said another official.
Several Indian banks have brought down costs by up to 30 per cent by offering services that allow Indian migrants in the United States and Britain to send money directly from their bank account or credit card to recipients in India.
Saudi Arabia has reduced remittance costs to near 3 per cent, and India is hopeful that other G20 countries would agree to set a deadline to reduce the costs.
The government estimates that about 22 million Indians live abroad, with large communities in the Middle East, the United States and Britain.