Whalesbook
Regulatory Shift in Remittances
The Reserve Bank of India has officially done away with the need for prior approval for non-bank entities seeking tie-ups to facilitate outward remittance services through Indian banks. This significant regulatory adjustment is designed to foster a more efficient environment for cross-border financial flows. The central bank has issued an operating framework outlining the new process.
New Operating Framework for AD Banks
Under the revised guidelines, Authorised Dealer (Category I) banks are now directly responsible for compliance with the Foreign Exchange Management Act (FEMA) and undertaking Know Your Customer (KYC) procedures. Previously, non-bank entities had to secure specific approval from the RBI for such arrangements, a process governed by a 2016 directive and subject to certain conditions. This dispensation aims to reduce regulatory burden and expedite service delivery.
Enhanced Customer Transparency Mandated
The new framework emphasizes transparency for customers. Third-party entities facilitating remittances through online channels—including websites, platforms, and mobile applications—must prominently display crucial transaction details. Customers will be informed of the forex rate, its timestamp and validity period, the total estimated cost, the exact amount credited in foreign exchange, and the maximum time for beneficiary credit.