India-Specific Challenges and Regulatory Requirements
Sending money to India, in particular, can involve additional hurdles compared to many other destinations. India is sometimes considered a “semi-exotic” corridor in payments because of strict local regulations and data requirements. Here are key India-specific factors that can cause delays:
RBI Oversight, Foreign Exchange Controls, and FCRA Rules
India has strict controls on foreign funds entering the country, overseen by the Reserve Bank of India (RBI) under FEMA (Foreign Exchange Management Act). International transfers to India often require extra approvals or checks. In fact, studies show SWIFT payments to India average around 3 days to complete, whereas the global average is under 1 day. This gap exists because RBI and Indian banks impose additional verification before crediting foreign money. Often, an RBI approval or compliance check is needed for certain inflows, which adds time.
For charitable or NGO payments, the regulations are even tighter. Under India’s Foreign Contribution Regulation Act (FCRA), non-profit organizations must be registered and follow special rules to receive foreign donations. Recent regulatory changes (as of 2020–2023) require all FCRA-eligible foreign contributions to route into a designated branch (SBI New Delhi Main Branch) and include detailed donor information. If a donor sends money to an Indian charity without including required details (donor name, address, country, amount, currency, and purpose), the payment may not be credited and could be sent back by the bank. In early 2023, the RBI explicitly instructed banks to capture donor details on all such transfers and report them to the government daily. Some banks were initially slow to update their systems for this, resulting in many foreign donations being returned unprocessed. The bottom line: if you are sending money to an Indian NGO or charity, ensure the organization has an FCRA-designated account and provide all information requested (donor’s full details and the purpose of remittance). Otherwise, the funds might get held up or returned after considerable delay. (As a workaround, experts advised sending via direct SWIFT transfer to the SBI FCRA branch, rather than via intermediary local banks, until all banks complied with the new rules.)
Business payments to India can also face compliance gates. Banks in India are required to verify the purpose of every incoming foreign payment and make sure it’s an allowed transaction type. Certain types of remittances (for example, buying real estate or certain investments) might be restricted or require pre-approval. If the nature of the payment isn’t clear, Indian banks may hold the funds until they get clarification or documentation. For instance, Indian banks routinely pause foreign transfers if the amount is large, the beneficiary is new, or the stated purpose is vague, and will only credit the money after their internal compliance team signs off. This is a normal precaution in India. Similarly, if a business payment is coming into a personal bank account, it can raise red flags – banks will check if the transaction aligns with the account type. It’s not uncommon for a payment meant for a business to be flagged if it’s sent to an individual’s savings account, potentially delaying or even reversing the credit. Always match the payment to the correct beneficiary type (company payments into business accounts, personal remittances into personal accounts) to avoid these snags.
Purpose of Payment Codes and Reference Data Requirements
India mandates a unique detail that often surprises foreign senders: a Purpose Code for each cross-border transaction. The RBI assigns specific alphanumeric purpose codes to categorize why money is coming into India (e.g. software services payment, salary, gift, charity donation, etc.). When an inward remittance arrives, Indian banks will ask the recipient to confirm or select the correct purpose code before crediting the funds. This code is used for regulatory reporting and ensuring the transaction is permitted. If the payment isn’t tagged with the proper purpose, it can be delayed, challenged, or even refused by the bank. In practice, an Indian bank might hold the incoming funds and reach out to the recipient for clarification of purpose. Until a valid code is provided that matches the nature of the payment, the money sits in limbo. Using the wrong code (or no code) effectively triggers a manual check.
It’s crucial to get the purpose of payment right. An incorrect purpose code can lead to confusion, compliance questions, or the money being “held in limbo” until resolved. One immediate consequence of a wrong code is payment delays for days as banks seek clarification. In some cases, if the misclassification makes the transfer appear as a regulatory violation, the payment might even be reversed back to the sender. This is obviously something to avoid. For example, if you are paying an Indian freelancer for IT services, the transfer should be coded appropriately (such as a software services export code). If you accidentally marked it as a personal gift, the bank may hold it since a random personal inflow to a freelancer’s account could look suspicious or be taxed differently. Likewise, charities receiving foreign donations should use the specific donation/grant code (e.g. code P1403 for personal donations to NGOs). The purpose code essentially tells RBI “what this money is for” – if it doesn’t match the actual transaction, the bank has to investigate.
In addition to the purpose code, ensure any other reference data required by India is provided accurately. This includes the IFSC (Indian sort code) of the recipient’s bank branch, full beneficiary address if requested, and any supporting info for the transfer. Since 2023, as noted, donor details for charitable contributions must be included. If you’re sending to a business, sometimes invoice numbers or import/export code references can be added in the payment details to help the Indian beneficiary reconcile and satisfy any inquiries. Essentially, the more complete and accurate the payment instruction data, the smoother it will clear. Indian banks appreciate when the remittance message clearly states what it’s for (e.g. “Payment for Invoice 123, consulting services, Purpose Code P0805”) because it means less guesswork and quicker compliance approval.
Best Practices to Avoid Delays in Your Payments
While some factors are out of your control, there are several best practices you can follow to minimize the risk of delays or payment returns:
Double-Check All Payment Details: Ensure the recipient’s name, account number, and bank identifiers (SWIFT/BIC and local routing codes) are 100% correct. Even one digit off can cause a rejection. If sending to India, confirm the IFSC code for the recipient’s bank branch is included and accurate – this helps route the payment internally. Incorrect details almost guarantee a delay or return, as banks will need to investigate and correct the information. Verifying details with your beneficiary before sending is well worth the time.
Provide the Purpose of Payment (and Required Codes): Always include a clear description of the payment’s purpose in the transfer reference, and use official purpose codes where required. In India, be sure to select the proper RBI purpose code (the beneficiary’s bank will usually ask for this). A correct purpose code keeps your payment compliant and speeds up processing, whereas a wrong or missing code can freeze the funds until clarified. If you’re unsure which code to use, ask the beneficiary or their bank in advance. For large business payments, attach relevant invoice numbers or contract references if possible – this transparency can help satisfy bank compliance checks.
Anticipate Compliance Checks (KYC/AML): If your payment is large or going to a new recipient, expect that it might be flagged for review. Provide any additional information promptly if your bank asks for it. For instance, the bank might request identification documents or the reason for payment in writing. If you’re sending to India, be aware that banks may hold foreign transfers until the recipient provides any needed KYC or documentation. It can help to forewarn your beneficiary of this possibility so they can respond quickly to their bank. In the case of charitable donations, ensure the NGO has its FCRA paperwork in order and that you include all donor details in the wire form to satisfy RBI rules from the start.
Plan Around Weekends and Holidays: To avoid sitting in a queue, initiate your transfers early in the week and not right before weekends. Also check for public holidays in the destination country (and any major intermediary hub countries) – avoid sending right before those if timing is critical. For example, if you need a payment in India by a certain date, try not to send it on the eve of Diwali or long holiday weekends, when banks in India will be closed. Sending a few days in advance can save you from an unnecessary wait while banks are closed.
Use Trusted and Direct Payment Routes: Whenever possible, use well-established banking routes or reputable payment partners for exotic corridors. Larger international banks and services often have direct connections that bypass some intermediary steps, which can reduce delays. Some modern fintech solutions can route transfers through local payment networks (so your transfer becomes a domestic transfer in the target country) – this can avoid the typical SWIFT slowdowns and is much faster. For example, services that clear payments within India’s domestic systems (like IMPS/NEFT/RTGS or UPI) after receiving your funds abroad can credit your recipient very quickly. If speed is crucial, consider whether a specialized remittance service or a currency transfer fintech might be more efficient than a traditional bank wire for that corridor.
Stay Informed and Keep Track: After you send the payment, keep an eye on its status. Ask your bank for a SWIFT confirmation or tracking number (MT103). If there’s a delay, having this reference can help your bank trace the payment. Many banks now offer real-time tracking for international wires – use that if available, so you can see if the payment is stuck at an intermediary. If a delay does occur, contact your bank to initiate an investigation. Knowing where the holdup is (e.g. at the receiving bank’s compliance department) can sometimes allow you or the beneficiary to intervene, such as providing missing info. Patience is key, but proactive communication can sometimes shorten a weeks-long return process to days.
In summary, cross-border payments involve a complex chain of players and rules, so delays are not uncommon – especially for destinations with stricter regulations like India. The biggest causes of delay are incomplete information and compliance checks. By ensuring your payment instructions are accurate and comprehensive, and by being mindful of India’s specific requirements (like purpose codes and FCRA regulations), you can dramatically improve the chances of a smooth, swift transfer. If a delay does happen, rest assured that the funds are usually just temporarily held and will be released or returned once the issues are resolved. Following the best practices above will help you avoid the most common pitfalls and get your money where it needs to go as quickly as possible. Good luck, and safe transferring!
Sources
The evolving landscape of cross-border payments - PwC India
as well as multiple layers. The most common reasons for delay are incomplete remittance information and anti-money laundering and fraud checks. Institutions have different processes to mitigate risks. Digitalisation and standardisation information sharing across borders can help in faster payment processing.
9 Reasons Why Your Bank Transfers Take So Long | Statrys
match at L229 In most cases, if incorrect payment details are entered, the payment is sent back. Otherwise, banks need extra time to identify and correct the error. This often involves contacting the sender or recipient for clarification or verification, which can stretch out the overall process and delay the transfer
9 Reasons Why Your Bank Transfers Take So Long | Statrys
In most cases, if incorrect payment details are entered, the payment is sent back. Otherwise, banks need extra time to identify and correct the error. This often involves contacting the sender or recipient for clarification or verification, which can stretch out the overall process and delay the transfer
How Long Does an International Wire Transfer Take in 2025? Time, Delays & Realities
2. The Intermediary (Correspondent) Bank(s) Process the Funds
2. Bank holidays, even those in other countries
Why Is My Bank Transfer Delayed? 6 Potential Reasons | Airwallex EU
unique rules, regulations, and required documentation.
Closing the case on payment investigations | Swift
Investigating these queries can take days or even weeks. The beneficiary bank must first contact its counterparty to know whether the payment has been initiated. If it has, the initiating bank must then send an enquiry up the chain of correspondent banks to locate the payment and find out why it has not been sent to the beneficiary. The information then comes back down the chain to the initiating bank who communicates it to the beneficiary bank so they can provide an answer back to the end customer.
How Long Do SWIFT Payments Take? Insights From 2,000 Payments [3rd Edition] | Statrys
Some countries have extra rules for international transfers, which can cause delays. For example, SWIFT payments to India take about 3 days on average, compared to the overall average of 18 hours. This is because India has strict controls on foreign funds entering the country. Often, the Reserve Bank of India needs to approve these transfers, adding extra time to the process.
Why are some ‘foreign contributions’ not getting credited at SBI NDMB - Centre For Advancement of Philanthropy
Unfortunately some banks have not upgraded their software and hence SBI NDMB returns payments if donor details such as donor’s name, address, country of origin, amount, currency, and purpose of remittance is not included.
How Long Does an International Wire Transfer Take in 2025? Time, Delays & Realities
Incorrect or mismatched payment details
What are RBI Purpose Codes for Inward Remittance? (2025)
Purpose codes are unique alphanumeric identifiers the Reserve Bank of India (RBI) assigns. They explain the reason behind a foreign transaction, such as whether the money is for freelance services, software exports, or business consulting. Every international payment in India must be tagged with the correct purpose code to comply with government regulations.