Reserve Bank of India says no prior approval needed for non-bank entities in outward remittances
The Reserve Bank of India (RBI) has said that it eliminated the prior approval requirement for non-bank entities to form tie-up arrangements for facilitating outward remittance services through banks in India. An operating framework has been released by the RBI for non-bank entities to facilitate outward remittance services through Authorised Dealer (Category I) banks in India.
It stated ‘On a review, it has been decided to dispense with the process of granting of the approvals by the RBI for such tie-ups and instead Authorised Dealers are advised to comply with instructions...while facilitating cross-border outward remittance of funds for non-trade current account transactions using a third-party entity in online mode.’ Online mode includes a website, online platform, software application, and mobile application.
According to a 2016 direction, non-bank entities had to obtain specific approval from the RBI for tie-up arrangements to facilitate outward remittance services through Authorised Dealer (AD) Category-I banks in India, subject to certain conditions. According to the revised framework, AD banks will be solely responsible for ensuring compliance of the transactions with FEMA and undertaking Know Your Customer (KYC).
It also mandates certain information to be displayed prominently to the customer remitting funds via a website/ online platform/ software application/ mobile application/ any other interface of the third party. They are required to notify the customer of the AD’s quoted exchange rate, the time and duration for which it is valid, and the overall estimated cost of the transaction. Customers will be notified of both the exact foreign exchange amount credited and the longest time it may take for the beneficiary’s account to be credited.
