RBI eases outward remittance norms, removes prior approval requirement for non-bank entities

The Reserve Bank of India (RBI) on Wednesday removed the requirement for non-bank entities to obtain prior approval for tie-up arrangements to facilitate outward remittance services through banks in India, PTI reported.

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.

“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 said.

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.

Under the revised norms, AD banks will now be solely responsible for ensuring compliance with FEMA regulations and Know Your Customer (KYC) requirements.

The framework also mandates 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, and the total estimated transaction cost.

Customers will also have to be informed about the exact foreign exchange amount to be credited and the maximum time required for the beneficiary account to receive the funds.

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