The country's second largest private sector lender, HDFC Bank, today inked an agreement with Wells Fargo, the largest US bank by market value, to offer remittance services between the two countries.
"The services will be free of cost to begin with," Wells Fargo global remittance services executive vice-president Daniel Ayala told reporters here, after singing a non-exclusive pact with the city-based HDFC Bank.
Currently, Wells Fargo charges USD 7 per transaction from customers, which will be waived as a promotional measure. But the banks will have a commercial cost and profit sharing agreement, he added.
The US bank has a similar arrangement with ICICI Bank which will continue, Ayala said, but did not say whether charge waiver will be extended to ICICI customers too.
HDFC Bank executive director Harish Engineer said the agreement came about as the bank does not have a physical presence in the US. "The new service will significantly enhance remittance
opportunities to the country given that Wells Fargo has one of the largest number of branches (6,000) among the American banks and HDFC Bank has nearly 2,600 branches," Engineer said.
"While we're a major player in the Gulf-India remittance market, this will help us consolidate in the US-India sector."
Ayala said, "India has the highest remittance volume in the world as per the World Bank data. This is evident by the high customer demand as well. We are glad we can make payout locations even more convenient now by working with HDFC Bank."
In 2011, India became the largest recipient of remittances with the volume touching around USD 55 billion, driven by a massive drop in the rupee against the US currency.
After the Middle East, the US, with around 35 percent of the volume share, is the largest point of origin for remittances into the India, Ayala said.
HDFC Bank is one of the
preferred remittance channels for NRIs in the Gulf and is a market leader.
Wells Fargo area head and executive vice-president for global financial institutions, Dilek Mutus, ruled out seeking branch banking licence in the country.
"We consider this market to be very important and will be a part of our global expansion. But having said that let me reiterate that there is no firm plan in the immediate future to seek a branch banking licence here," Mutus said.