India to USA: an outward remittance (MT103, INR to USD)
A resident individual in India sends dollars to a friend's US account — Form A2, FEMA/LRS compliance, currency conversion, and a serial MT103 through one US correspondent.
Your notes
The remitter asks Ganga Bank to send dollars to a friend in the US
Remitter (India) → Ganga Bank (Indian AD Category-I bank)
The remitter — a resident individual — asks Ganga Bank to remit INR 3,34,000 as USD to a friend's account in the US, and completes Form A2, the FEMA declaration naming the purpose of the transfer (here, a gift to a friend) and confirming the funds are the remitter's own.
Checks
- KYC on the remitter
- Form A2 purpose code present
Step 1 of 9: The remitter asks Ganga Bank to send dollars to a friend in the US
- 02ProcessingGanga Bank checks the declaration before touching the moneyGanga Bank (Indian AD Category-I bank)
- 03PostingGanga Bank converts the rupees to dollarsGanga Bank (Indian AD Category-I bank)
- 05ProcessingLiberty Union validates and screens in the middleLiberty Union Bank (US correspondent)
- 06SettlementMoney moves across the books of Liberty UnionLiberty Union Bank (US correspondent)
- 08ProcessingCascade Bank validates the incoming paymentCascade Bank (beneficiary's US bank)
- 09PostingThe beneficiary is creditedCascade Bank (beneficiary's US bank)
Full step-by-step text (works without JavaScript)
- 02ProcessingGanga Bank checks the declaration before touching the moneyGanga Bank (Indian AD Category-I bank)
As the Authorized Dealer, Ganga Bank is responsible for the declaration it accepts: it checks the purpose code is valid and permitted, confirms the remittance (with the remitter's other transfers this financial year) stays within the Liberalised Remittance Scheme's annual per-person limit, and screens the remitter and beneficiary before any conversion happens.
Screening checkpoint: Outbound remittance screening — Remitter and beneficiary names are screened before Ganga Bank converts or sends anything — the cheapest point to stop a problem.
- 03PostingGanga Bank converts the rupees to dollarsGanga Bank (Indian AD Category-I bank)
Ganga Bank debits the remitter's INR account and converts the proceeds to USD at its own card rate — the rate it offers retail customers, which includes its margin over the interbank rate. The converted USD amount is what actually gets remitted; the INR amount debited is what the remitter pays for it.
- DR Remitter's savings account at Ganga Bank — INR 3,34,000.00
- 05ProcessingLiberty Union validates and screens in the middleLiberty Union Bank (US correspondent)
Every bank in the chain screens independently. Liberty Union also checks that Ganga Bank's nostro account has cover for the debit.
- 06SettlementMoney moves across the books of Liberty UnionLiberty Union Bank (US correspondent)
Both Ganga Bank and Cascade Bank hold USD accounts at Liberty Union. Settlement here is a book transfer in commercial bank money — Liberty Union debits one vostro account it holds and credits the other.
No clearing house is involved — the correspondent's ledger is the settlement venue, in commercial bank money, not central bank money.
- DR Ganga Bank's USD account at Liberty Union (vostro) — USD 4,000.00
- CR Cascade Bank's USD account at Liberty Union (vostro) — USD 4,000.00
- 08ProcessingCascade Bank validates the incoming paymentCascade Bank (beneficiary's US bank)
Account checks and inbound OFAC screening on every incoming international wire. Only when the account is confirmed and checks pass is the beneficiary credited.
- 09PostingThe beneficiary is creditedCascade Bank (beneficiary's US bank)
Cascade Bank credits its customer. The remitter's friend now has USD 4,000.00 — converted from INR 3,34,000.00 at Ganga Bank, minus whatever margin and fees applied along the way.
- CR Beneficiary's account at Cascade Bank — USD 4,000.00
What this simplifies: A single USD correspondent and a single compliance hold scenario. Real cross-border retail remittances may add intermediary banks, TCS withholding, and beneficiary-bank fees not shown here.
Sources for this flow4
- Official requirement
Swift Standards MT (annual standards releases) ↗ — Swift · MT103 field 32A/33B/36 usage
Full field-level specifications live in the Swift Knowledge Centre User Handbook behind a swift.com login; content here relies on public summaries. Swift ended MT-to-ISO 20022 coexistence for in-scope cross-border payment instructions (for example MT103 and MT202) in November 2025; MT statement messages are being phased out on a separate timeline.
- Official requirement
Liberalised Remittance Scheme (LRS) — FAQs ↗ — Reserve Bank of India
The annual limit is non-cumulative and does not carry forward; remittances beyond it require prior RBI approval. Tax-collection-at-source thresholds and the exact declaration format are set separately and change more often than the scheme's core limit — check the RBI page for current detail.
- Market practice
Correspondent banking (final report) ↗ — CPMI, Bank for International Settlements
Published in July 2016; its statistics cover 2011-2015 and are dated, but the definitions and arrangement types remain widely used.
- Simplified educational illustration
Payments Signal editorial teaching models — Payments Signal
What this simplifies: One correspondent handles the USD leg; real corridors may route through more than one. Tax collected at source (TCS) on the remittance and the exact Form A2/LRS declaration workflow are omitted — see the RBI source for current detail. Names, amounts, and the exchange rate are fictional.
Used wherever diagrams, scenarios, figures, or example values are didactic constructions rather than sourced facts; every such use carries a simplifications disclosure. All people, companies, banks, and list entries in examples are fictional.