- RBI removed prior approval for non-bank tie-ups for outward remittance services through banks
- Authorised Dealer banks must comply with RBI instructions for cross-border outward remittance
- Non-bank entities no longer need RBI approval for tie-ups under the revised framework
The Reserve Bank on Wednesday removed the prior approval requirement for non-bank entities to form tie-up arrangements for facilitating outward remittance services through banks in India.
The central bank has issued an operating framework for facilitating outward remittance services by non-bank entities through Authorised Dealer (Category I) banks in India.
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"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...," the central bank said.
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 Reserve Bank for tie-up arrangements to facilitate outward remittance services through Authorised Dealer (AD) Category-I banks in India, subject to certain conditions.
As per 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 through a website/ online platform/ software application/ mobile application/ any other interface of the third party.
They will have to inform the customer about the forex rate quoted by the AD, along with the timestamp and period of validity of the rate for the transaction, and the total estimated cost of the transaction.
The exact amount credited in foreign exchange, along with the maximum time taken for crediting the beneficiary's account, will be informed to customers.
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