The Reserve Bank of India (RBI) on Wednesday eliminated the requirement for non-bank entities to obtain prior approval for tie-up arrangements to facilitate outward remittance services through banks in India, as reported by PTI.
Revised Framework for Outward Remittances
The central bank also issued a revised operating framework for facilitating outward remittance services by non-bank entities through Authorised Dealer (AD) Category-I banks. Under the new guidelines, AD banks will now be solely responsible for ensuring compliance with the Foreign Exchange Management Act (FEMA) regulations and Know Your Customer (KYC) requirements.
“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 RBI stated.
Key Changes in the Framework
Online mode includes websites, online platforms, software applications, and mobile applications. Under the earlier 2016 framework, non-bank entities were required to obtain specific RBI approval before entering into tie-up arrangements with authorised dealer banks for outward remittance services.
The revised norms mandate that customers using third-party online platforms for remittances must be clearly informed about:
- The foreign exchange rate quoted by the AD bank
- The validity period of the rate
- The total estimated transaction cost
- The exact foreign exchange amount to be credited
- The maximum time required for the beneficiary account to receive the funds
This move is expected to streamline the process of outward remittances and reduce bureaucratic hurdles for non-bank entities, while ensuring that customer protection and regulatory compliance remain robust.
