The Hindu : RBI's new norms on money transfer

Online edition of India's National Newspaper
Thursday, Jun 05, 2003

Business

Business

RBI's new norms on money transfer

MUMBAI JUNE 4. The Reserve Bank of India today issued general guidelines for authorised agents, approved moneychangers, travel agents and non-banking finance companies (NBFCs), seeking permission for Money Transfer Service Scheme (MTSS).

Under the scheme, collateral equivalent to three days' average drawings or $50,000, whichever is higher, may be kept by the overseas principal with the designated bank in India. This minimum amount will be kept as a foreign currency deposit while the balance amount may be kept in the form of a bank guarantee. The adequacy of collateral amounts should be reviewed half yearly on the basis of remittances received during the past six months, said the RBI circular.

Money Transfer Service Scheme (MTSS) is a quick and easy way of transferring personal remittances from abroad to beneficiaries in India. Only personal remittances such as remittances towards family maintenance and remittances favouring foreign tourists visiting India are permissible.

The system envisages a tie-up between reputed money transfer companies abroad and agents in India who would disburse the funds to the beneficiaries at ongoing exchange rates. The system does not envisage the repatriation of such inward remittances. The India agent is also not allowed to remit any amount on account of exchange loss to the overseas principal.

The apex bank said the Indian agent who has to be an authorised dealer, full-fledged moneychanger or registered NBFC or an IATA approved travel agent (having minimum net worth of Rs. 25 lakhs) required RBI approval to enter into such an arrangement.

The agent is allowed to open a special rupee account with an AD through which all the remittances disbursed under the scheme, are to be routed. The Indian agent pays the beneficiaries first, on instructions from the overseas principal and is reimbursed the amount and his commission, by the overseas principal, within a day or two through normal banking channels.

Under the various criteria for selection of the overseas principal, the statement said the latter should be a registered entity licensed by the central bank or government or any other regulatory authority for carrying on money transfer activities or where money transfer is an unlicensed activity, the principal should be licensed or supervised by any other regulatory/supervisory body in the host country.

The principal should be registered with any trade or industry body and should have a good rating from one of the reputed credit rating agencies. It should also submit confidential reports from two banks along with a report certified by independent chartered accountant, regarding steps taken to comply with anti-money laundering norms in the host country.

— UNI

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