Pound and rupee glossary

Glossary

The words used around exchange rates, in alphabetical order, each with a short definition. Print it if you like.

Terms: 35

A

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AML: AML stands for anti-money laundering, the rules designed to stop criminal funds moving through the financial system. They are the reason a provider may ask you about the source of your money or the purpose of a transfer, and why larger or unusual payments can trigger extra questions or documents. Answer accurately, because a purpose that does not match reality can cause delays or a returned payment. Keeping transfer confirmations and statements makes any later question easier to answer. See also: KYC, remittance, and the guide How to Read a Money Transfer Quote.

C

Correspondent bank: A correspondent bank is a bank that provides services to another bank in a different country, such as holding accounts and helping settle payments across borders. A bank without its own presence abroad relies on correspondents to reach foreign accounts. Several of them can sit in the chain for one transfer, and each may add time or a charge. This is one reason delivery times are estimates rather than promises and why the final credited amount can differ from the quote. See also: intermediary bank, SWIFT, remittance, and the guide Sending Money from the UK to India.

E

Exchange rate: An exchange rate is the price of one currency expressed in another, for example how many Indian rupees one British pound buys. It moves continuously as banks, companies and investors buy and sell, so a figure is only a snapshot of one moment. The rate shown on a search page is usually a wholesale reference, while the rate on a transfer quote includes the provider's margin and can be a little weaker. When you compare options, look at the rupees the recipient would receive rather than the rate alone. See also: mid-market rate, spot rate, margin, and the guide How Exchange Rates Work.

F

FCA: The FCA, or Financial Conduct Authority, is the body that regulates the conduct of financial services firms in the UK. It keeps a public Financial Services Register, which records firms and individuals that are or have been authorised, and also lists unauthorised firms and known clone firms. Looking up a provider by name on the register, and checking that the details match the website you are using, takes a few minutes. Authorisation does not guarantee a good outcome, but its absence is a reason to pause. See also: safeguarding, KYC, and the guide How to Compare Money Transfer Providers.
FCNR account: An FCNR account is a foreign currency non-resident deposit account, held in a foreign currency rather than in rupees. That makes it a different structure from an NRE or NRO account, because the balance is not converted into rupees. Its terms, including how long money must stay in it, vary by bank and by regulation, so read the bank's current product page and ask how it works in practice. This glossary only defines the term and does not suggest that any account suits you. See also: NRE account, NRO account, NRI, and the guide NRI Bank Accounts Explained.
Forward contract: A forward contract is an agreement to exchange a set amount of currency at a rate fixed today, on a date in the future. It gives certainty about the rate, which is why businesses use it to plan around a known bill, but it also creates an obligation: you cannot benefit if the market later moves in your favour, and cancelling may cost money. Terms, deposits and fees differ between firms, so ask the provider to explain every condition in writing before you agree. See also: spot rate, rate lock, and the guide Using a Rate Tool and Rate Alerts Wisely.

G

GBP: GBP is the international three-letter code for the pound sterling, the currency of the United Kingdom. It is the currency you pay in when you send money from a UK bank account, and it is the first half of the pair written GBP/INR. The code appears on quotes, statements and converters so that there is no doubt which currency is meant. Prices in pounds are converted into rupees at the rate on your quote, not at the figure shown on a news or search page. See also: INR, exchange rate, remittance, and the guide Sending Money from the UK to India.

H

HMRC: HMRC, or His Majesty's Revenue and Customs, is the UK tax authority. It publishes guidance on how income, gifts, interest and gains may be taxed for UK taxpayers, including foreign income. Moving money to India does not by itself answer a tax question, because the answer depends on the nature of the money and on your residence status, and it can involve both countries. For anything substantial, a qualified tax adviser who understands both systems is worth consulting. See also: NRI, NRO account, and the guide Sending Money from the UK to India.

I

IBAN: An IBAN, or International Bank Account Number, is a standard account format used in the UK and in many other countries to identify an account in cross-border payments. India does not generally use IBANs, so a recipient in India is identified by account number and IFSC code, and a provider that asks for an IBAN for an Indian account is worth questioning. UK customers will see an IBAN on their own bank statements and app. If you are unsure which identifiers apply, ask the provider before you send. See also: sort code, IFSC code, SWIFT/BIC code.
IFSC code: An IFSC code is an alphanumeric code that identifies a specific bank branch in India for electronic transfers. You normally need the recipient's IFSC code together with their full account number and the name exactly as it appears on the account. It is made of eleven characters, with the first four letters standing for the bank. A single wrong character can delay or misdirect a payment, so copy it from a trusted source such as the recipient's bank statement and not from a message. See also: SWIFT/BIC code, UPI, and the guide Transfer Checklist and Common Mistakes.
INR: INR is the international three-letter code for the Indian rupee, the currency of India. It is the currency your recipient normally receives when you send pounds to an Indian bank account, and it is the second half of the pair written GBP/INR. When a quote says the recipient gets a certain amount in INR, check whether that amount is guaranteed or an estimate, because intermediary or receiving banks can sometimes deduct charges. See also: GBP, exchange rate, IFSC code, NRE account, and the guide How to Read a Money Transfer Quote.
Interbank rate: The interbank rate is the rate at which banks trade currencies with each other in the wholesale market. It is closely related to the mid-market rate, and people often use the two terms for the same idea. Ordinary customers are not usually offered it directly, because banks and providers add a margin for their own costs and revenue. It is still useful as a yardstick: if the rate on your quote is far from the interbank level, that gap is a cost you are paying through the rate. See also: mid-market rate, margin, markup, and the guide Mid-Market Rate vs the Rate You Get.
Intermediary bank: An intermediary bank is a bank that sits between the sending bank and the receiving bank on some international payments, passing the instruction along the chain. It may deduct a charge, so the amount credited to the recipient can be lower than the amount quoted unless the provider guarantees the received amount. You usually cannot see these charges in advance, which is why a quote that states the recipient gets exactly a given amount is worth more than one that only gives an estimate. See also: correspondent bank, SWIFT, and the guide How to Read a Money Transfer Quote.

K

KYC: KYC, short for know your customer, refers to the identity checks that banks and payment firms must carry out before they handle your money. You may be asked for identification, proof of address and sometimes more for larger or first-time transfers. The checks can add time, which is why a first transfer may be slower than later ones, and why a deadline payment should be started early. They are part of the same compliance framework as anti-money laundering rules. See also: AML, FCA, remittance, and the guide Transfer Checklist and Common Mistakes.

M

Margin: The margin is the difference between the mid-market rate and the rate a provider offers you, and it is a real cost even when no separate fee is shown. Because it is built into the exchange rate, it never appears as a line on your receipt, which is how a transfer advertised as free of fees can still cost money. You can estimate it by dividing the gap between the two rates by the mid-market rate. See also: spread, markup, transfer fee, and the guide Mid-Market Rate vs the Rate You Get.
Markup: A markup is an amount a provider adds to the wholesale exchange rate, which makes the rate it offers customers less favourable. It is one of the ways a firm earns revenue on a currency conversion, alongside any visible fee. Because it sits inside the rate, you only see it by comparing the offered rate with a neutral mid-market figure taken at the same time. A small markup on a large transfer can still add up to a noticeable sum in rupees. See also: margin, spread, transfer fee, and the guide Mid-Market Rate vs the Rate You Get.
Mid-market rate: The mid-market rate is the midpoint between the wholesale buying and selling prices of a currency pair, before any provider adds a margin. It is the fairest neutral benchmark because it contains no markup, but most customers cannot transact exactly at it. Different data sources can show slightly different mid-market figures at the same moment, so treat any single figure as a snapshot. A useful habit is to note it when you take a quote and see how far the offered rate sits from it. See also: interbank rate, margin, spread, and the guide Mid-Market Rate vs the Rate You Get.

N

NRE account: An NRE account, short for non-resident external account, is a type of Indian bank account for non-residents, generally used to hold money brought in from abroad and held in rupees. People often choose it for foreign earnings because of how funds can usually be moved back abroad, subject to the rules. The exact conditions, including how interest is taxed, are set by regulation and by each bank and can change, so confirm the current terms before relying on it. See also: NRO account, FCNR account, NRI, repatriation, and the guide NRI Bank Accounts Explained.
NRI: NRI stands for non-resident Indian, a term commonly used for an Indian citizen who lives outside India, such as someone working in the UK. The word is used loosely in everyday speech, while banking, foreign exchange law and income tax law can each define residence differently, and a person may be treated differently for different purposes. The label matters because it affects which Indian bank accounts are suitable and what paperwork may apply. Confirm your position with your bank and official sources. See also: NRE account, NRO account, FCNR account, and the guide NRI Bank Accounts Explained.
NRO account: An NRO account, short for non-resident ordinary account, is a type of Indian bank account generally used by a non-resident to manage income that arises in India, such as rent, dividends or a pension. Moving money out of it is subject to conditions, limits and documentation, which come from regulation and from the bank and can change. Sending pounds to a family member's NRO account is a different situation from sending to your own NRE account, so tell your provider which type applies. See also: NRE account, FCNR account, repatriation, and the guide NRI Bank Accounts Explained.

R

Rate alert: A rate alert is a notification sent when an exchange rate reaches a level you choose. Some banks and transfer providers offer them in their own apps; this site does not send alerts. An alert helps you watch the market without checking constantly, but it does not predict where the rate will go, and it knows nothing about your deadline. If the alert is based on a mid-market rate, the rate you are offered will usually be a little lower, so check the real quote when it fires. See also: rate lock, mid-market rate, and the guide Using a Rate Tool and Rate Alerts Wisely.
Rate lock: A rate lock is a feature that holds an exchange rate for a set period or for a specific transfer, so the rate does not change while you complete the payment. It can give certainty if you have a fixed budget, but it also means you cannot benefit if the market moves in your favour. Check how long the lock lasts, what happens if your payment arrives late, and whether there is a fee or deposit. A quote that does not say whether the rate is locked is worth asking about. See also: forward contract, spot rate, and the guide How to Read a Money Transfer Quote.
RBI: The RBI, or Reserve Bank of India, is the central bank of India. Among its functions it formulates and monitors monetary policy and administers the Foreign Exchange Management Act, 1999, whose stated objective is to facilitate external trade and payment and promote orderly development and maintenance of the foreign exchange market in India. For senders, that means the rules on remittances and non-resident accounts come from the RBI framework. Check its pages for official guidance. See also: NRE account, repatriation, and the guide Sending Money from the UK to India.
Recurring transfer: A recurring transfer is a payment that repeats automatically on a schedule, such as a monthly allowance to family in India. It saves effort and avoids missing a date, but the exchange rate on each payment may differ unless the provider offers a fixed arrangement, and each transfer may carry its own fee. Check how to change or cancel the schedule, and what happens if a payment fails. Review the arrangement from time to time, because your needs and the provider's terms can change. See also: transfer fee, rate lock, and the guide Using a Rate Tool and Rate Alerts Wisely.
Remittance: A remittance is a transfer of money from one person or place to another, especially money sent to family or to accounts in another country. The word is widely used for international transfers such as sending pounds from the UK to a relative in India. A remittance involves your funds, a currency conversion, a delivery route and compliance checks, and the cost is spread across the exchange rate, any fee and any charges on the way. See also: transfer fee, repatriation, KYC, and the guide Sending Money from the UK to India.
Repatriation: Repatriation means moving money back to your country of residence from another country. In an India context it usually refers to sending funds out of India, which is subject to rules, conditions and documentation. Whether and how much can be repatriated depends on the type of account and the nature of the funds, and the rules are set by regulation and applied by banks. Ask your Indian bank early, and keep records that explain the source and purpose of the money. See also: NRE account, NRO account, RBI, and the guide NRI Bank Accounts Explained.

S

Safeguarding: Safeguarding is the set of arrangements a payment firm uses to protect customer money, such as keeping it separate from the firm's own funds. How it works differs from firm to firm and from the protection that applies to a bank deposit, so read each provider's own explanation of what happens to your money while a transfer is in progress. It is a reason to check authorisation on the FCA register and to read the terms before sending a large amount, instead of assuming every firm protects funds in the same way. See also: FCA, KYC, and the guide Bank or Specialist Provider?
Sort code: A sort code is a six-digit code used in the UK to identify a bank branch, and it appears with an account number when you pay into a UK bank account. It plays the same role for UK accounts that an IFSC code plays for Indian ones. When you send pounds to India you will not normally enter a sort code for the recipient; you will use their account number and IFSC code. You may need your own sort code to fund the transfer from your UK account. See also: IFSC code, IBAN, and the guide Transfer Checklist and Common Mistakes.
Spot rate: The spot rate is the exchange rate for converting currency now, or within a very short settlement period, usually a couple of working days. Most ordinary transfers are priced at a spot rate plus the provider's margin. It contrasts with a forward rate, which is agreed today for an exchange on a future date. Because the spot rate changes through the day, a quote is only comparable with another quote taken at the same moment for the same amount. See also: forward contract, exchange rate, rate lock, and the guide How Exchange Rates Work.
Spread: The spread is the gap between the price at which a dealer will buy a currency and the price at which it will sell it. In the wholesale market the spread is very small, but in consumer transfers the word is often used loosely to mean the provider's margin on the rate. A wider spread means a weaker rate for you, whichever direction you are converting. Spreads can differ by provider, payment method, amount and time of day, including weekends. See also: margin, markup, mid-market rate, and the guide How to Compare Money Transfer Providers.
SWIFT: SWIFT is a messaging network that banks use to send secure payment instructions to each other internationally. It does not hold money itself; it carries the instructions that tell banks what to pay and to whom. A transfer sent this way may pass through several banks, each of which can take a little time or a small charge. Many people meet the word through the SWIFT/BIC code that identifies a bank, which some quotes ask for alongside the account details. See also: SWIFT/BIC code, correspondent bank, IFSC code, and the guide How to Read a Money Transfer Quote.
SWIFT/BIC code: A SWIFT/BIC code, short for Business Identifier Code, is a code that identifies a bank in international payments. Some transfers ask for it in addition to, or instead of, the domestic identifiers used inside a country. For payments into India the recipient is normally identified by account number and IFSC code, and the provider will say whether a BIC is also needed. Never type a code from an unverified message; take it from the bank's own website or a statement. See also: SWIFT, IFSC code, IBAN, and the guide How to Read a Money Transfer Quote.

T

Transfer fee: A transfer fee is a visible charge for sending money, which may be a flat amount, a percentage of the amount sent, or zero. It is only part of the total cost, because the exchange rate margin also takes a share and some payment methods, such as credit cards, add their own charges. A low fee beside a weak rate can cost more than a higher fee beside a strong rate. The reliable test is the amount the recipient receives. See also: margin, markup, intermediary bank, and the guide How to Compare Money Transfer Providers.

U

UPI: UPI, or Unified Payments Interface, is a payment system widely used in India for instant account-to-account payments using a payment address instead of full bank details. It works inside India, so you should not assume you can pay a UPI address directly from the UK. Whether a provider can send to one depends on the provider, and it will say so on its own pages. Recipients often use UPI to spend or move money onward once your transfer has landed in their Indian bank account. See also: IFSC code, NRE account, and the guide Mid-Market Rate vs the Rate You Get.