Remittance

The term remittance derives from the verb remit, meaning “to send back.” It refers to the transfer of funds by individuals or organizations—often across national borders—for personal, commercial, or financial purposes. In personal terms, remittances typically involve money sent by migrant workers to their families in their home countries, serving as a vital source of income and financial support. In business contexts, remittances denote payments made for goods, services, or intercompany settlements between entities located in different regions or countries. Example: An Indian employee working in the United States remits $500 monthly to his family in India. This transfer constitutes a personal remittance and contributes to the nation’s foreign exchange reserves. On a broader scale, remittances are a key component of global financial flows, enhancing household welfare, stimulating consumption, and fostering economic growth in many developing economies.