A foreign draft is an effective alternative to foreign currency when you want to transfer money abroad. Financial institutions, like banks, issue drafts with a service fee depending on the type of account you hold. The money would then be sent to the financial institution in the country where it’s needed. Let us understand how they work.

How Do Foreign Drafts Work?
A foreign draft, or a bill of exchange, is drawn in the home country and made payable in another country. These are popular in international trade and make the payee liable to pay to another party at a fixed date. The bank guarantees the responsibility for the payment after they review sufficient funds is available in the payee’s account. All you need to do is provide the necessary documents, deposit the money, and the service charges. The check issued by the bank will have a bank as the entity that is making the payment, but there will be a note about the remitter’s name.

What Are The Benefits Of Foreign Drafts
A foreign draft is an ideal choice if obtaining foreign currency is expensive or tough. You can establish a credit account in the country with the local currency, which can be used for payment. Based on the exchange rates and the bank’s service charges, you can pay the draft amount to the bank. Thus, foreign drafts are ideal for use on-demand or predetermined rate.

What Is The Remittance Limit
The limit for the draft amount depends on the limit set by the Foreign Exchange Management Act (FEMA). The limit is USD 250,000 for each financial year for different scenarios. Some of these include education abroad, employment abroad, emigration, maintenance of close relatives abroad, etc.

Bottom Line
Foreign drafts are ideal to overcome issues related to the fluctuating exchange rates and bank delays. They are a cheaper alternative to sending the currency directly. The receiver will also get the money in quick time. You also need less information as compared to wire transfers. Orient Exchange can help you get foreign currency demand drafts at best rates. To know more about services, contact us today.

Author's Bio: 

Orient Exchange is a top-rated Foreign Exchange dealing with Currency Exchange, Forex Cards, Outward Remittances and travel insurance. For more information, kindly visit our website www.orientexchange.in