When a client in Boston or Berlin pays your invoice, the money rarely moves straight from their bank to yours. A foreign inward remittance usually passes through one or more correspondent banks, settles in your Indian bank's nostro account abroad, and is then credited to you in rupees (or in an EEFC account) once your bank knows what the payment is for. Each hop can add time and deductions, which is why the amount you receive often differs from the amount you invoiced.
Key takeaways
- Your client's bank sends a payment message, typically over SWIFT, to your bank, often via an intermediary.
- The foreign currency lands in your bank's nostro account overseas; your Indian account is credited after conversion or into EEFC.
- Charges can be deducted by the sending bank, intermediaries and your own bank, depending on the charge instruction on the payment.
- Your bank needs a purpose code to process and report the credit. Agree it with your bank before invoices go out.
- The FIRA or FIRC is your evidence of the remittance and feeds into EDF closure, eBRC and GST paperwork.
The journey of one payment
Think of it as a relay. Each runner hands the baton to the next, and each may take a small fee for carrying it.
| Step | Who acts | What happens |
|---|---|---|
| 1 | Your client | Instructs their bank to pay your invoice, using your account number, SWIFT code and bank details |
| 2 | Client's bank | Debits the client and sends a payment message, commonly an MT103, towards your bank |
| 3 | Intermediary or correspondent bank | Passes funds along where the two banks have no direct relationship |
| 4 | Your bank's nostro account abroad | Receives the foreign currency on your bank's behalf |
| 5 | Your Indian bank | Matches the message to your account, asks for a purpose code if missing, converts to INR or credits EEFC |
| 6 | You | See the credit, collect the FIRA or bank advice, and match it to the invoice |
The key piece many exporters never hear about is the nostro account. "Nostro" means "ours": it is an account your Indian bank holds with a bank abroad in that foreign currency. Dollars paid to you do not physically come to India. They land in your bank's US dollar nostro account, and your bank credits you the rupee equivalent at its rate. Our glossary has a short entry on nostro accounts and on correspondent banks.
Why the amount shrinks on the way
You invoiced USD 5,000 and received the equivalent of USD 4,955. Where did the USD 45 go? There are three usual suspects:
- Sending bank fees. Some banks deduct their charge from the transfer itself.
- Intermediary fees. Each correspondent bank in the chain may take a handling fee.
- Receiving bank charges. Your own bank may charge for processing the inward remittance, plus a conversion margin.
The payment's charge code decides who bears what. Under "OUR", the sender pays all charges; under "SHA", charges are shared, so intermediaries can deduct from the principal; under "BEN", the beneficiary bears everything. Many clients default to shared charges without thinking about it. If you want the full invoice amount to arrive, say so in your contract and on your invoice.
We are not quoting specific fees here because they vary by bank, currency and route. Ask your bank for its schedule of charges on inward remittances and its conversion approach.
Why it matters for the EDF
Part 2B of the EDF asks for both the invoice amount and the net realisable value (NRV) for each invoice. When the money arrives short because of bank charges, your records and the bank's EDPMS matching need to line up. Keep the FIRA or bank advice that shows the gross amount, deductions and net credit.
How long it takes
There is no fixed timeline. Speed depends on whether the banks have a direct relationship, how many intermediaries sit in between, time zones, cut-off times, holidays in either country, and whether your bank needs anything from you before crediting the money.
That last point causes most avoidable delays. A remittance that arrives without a clear purpose, or with a beneficiary name that does not quite match your account, can sit with the bank until you respond. From 1 October 2026, your bank may also hold an inward credit until you give it the EDF for the related invoices.
Purpose codes: tell your bank what the money is for
Every inward remittance is reported under an RBI purpose code. For service exporters, common ones include P0802 (software consultancy and implementation), P0807 (off-site software exports), P1006 (business and management consultancy and PR), P1007 (advertising, trade fair and market research) and P1009 (architectural, engineering and other technical services).
A wrong code can complicate GST refunds and eBRC matching later. Use our purpose code finder to shortlist the right one, then confirm with your bank. If the bank has already used the wrong code, a written correction request is the usual route.
A worked example
Tulsi Creative Studio LLP in Ahmedabad invoiced a Sydney client AUD 8,200 on 3 November 2026. The client paid on 1 December with shared charges.
- The Australian bank sent the payment through a correspondent.
- An intermediary deducted a handling fee, so AUD 8,170 reached Tulsi's bank's nostro account.
- Tulsi's bank asked by email for the purpose code. The partners replied with P1007 for advertising services, confirmed earlier with the branch.
- The bank converted the funds and credited ₹4,48,000 (illustrative figure) to the current account, then issued a FIRA showing the gross amount, deduction and purpose code.
Tulsi had already filed its November EDF listing the invoice. Because the invoice was under ₹10 lakh, the bank could close the EDPMS entry on a periodic realisation declaration.
Paperwork to collect for every remittance
| Document | Why you need it |
|---|---|
| Bank credit advice | Shows the date and INR amount credited |
| FIRA or FIRC | Proof of inward remittance with purpose code |
| SWIFT message copy (if available) | Shows sender, charges and references |
| Your invoice | Links the money to a specific export |
If your bank does not issue FIRAs automatically, send a short FIRC request letter. Collect them monthly rather than at year end, when hundreds of credits need matching at once.
This article is general information, not legal or tax advice.
Frequently asked questions
What is a foreign inward remittance?
It is money sent from outside India to an account in India. For service exporters, it is usually a client paying an invoice. It travels through the banking system, often via SWIFT, and is credited after your bank identifies its purpose.
What is a nostro account and why does it matter to me?
A nostro account is an account your Indian bank holds abroad in a foreign currency. When a client pays you in dollars, the dollars land there, and your bank credits you in rupees or in your EEFC account. You never see the nostro account, but its existence explains why the route and timing vary.
Why did I receive less than I invoiced?
Usually because the sending bank, an intermediary or your own bank deducted charges, or because of the conversion rate applied. The charge instruction on the payment decides who bears costs. Ask clients to send with all charges paid by the sender if you want the full amount.
Does my bank need a purpose code for every inward payment?
Yes. Every inward remittance is reported under an RBI purpose code, and the bank may hold the credit until it has one. Agree the right code with your bank in advance and tell your clients to reference your invoice number.
Is a FIRA the same as an eBRC?
No. A FIRA or FIRC is your bank's proof that foreign money came in. An eBRC is issued after realisation is matched in EDPMS and DGFT systems. You usually need the FIRA first.
Bottom line
A foreign inward remittance is a relay through correspondent banks and your bank's nostro account, and each step can cost time and money. Agree charges and purpose codes up front, collect your FIRAs monthly, and match each one to its invoice and EDF. Start by checking your code with the free purpose code finder.
This guide is general information for Indian businesses, not legal or tax advice. Rules and bank processes change — confirm specifics with your AD bank or chartered accountant.