- The Reserve Bank of India has introduced a simplified framework for online outward remittances, shifting compliance responsibility to authorised banks while enhancing transparency for customers.
- Under revised RBI rules, authorised dealer banks will oversee FEMA and KYC compliance for outward remittance transactions facilitated through third-party online platforms.
The Reserve Bank of India (RBI) on Wednesday removed the requirement for non-bank entities to obtain prior approval before partnering with banks in India to offer outward remittance services.
The central bank introduced a new operational framework allowing non-bank platforms to facilitate overseas money transfers through Authorised Dealer (AD) Category-I banks without seeking direct RBI approval beforehand.
Under the revised system, banks will now be responsible for ensuring that all transactions comply with the Foreign Exchange Management Act (FEMA) regulations and Know Your Customer (KYC) requirements.
The RBI said Authorised Dealers must follow the updated guidelines while enabling online cross-border outward remittance services for non-trade current account transactions through third-party entities.
The term “online mode” includes websites, online platforms, software applications, and mobile apps used for remittance services.
Previously, under a 2016 directive, non-bank entities were required to obtain specific RBI approval before entering into tie-up arrangements with AD Category-I banks for outward remittance services.
The updated framework also requires greater transparency for customers using online remittance platforms.
Banks and third-party entities must clearly display important transaction details, including the foreign exchange rate offered by the bank, the timestamp and validity period of the rate, and the total estimated transaction cost.
Customers must also be informed about the exact amount that will be credited in foreign currency and the maximum time expected for the beneficiary to receive the funds.
