RBI Eases Approval Requirements for Remittance Services

The Reserve Bank of India has removed the need for prior approvals for non-bank entities forming tie-up arrangements with banks for outward remittance services. The revised framework places compliance responsibility on Authorised Dealer banks, ensuring adherence to regulations and transparency in exchange rates and remittance costs for customers.

The Reserve Bank of India has streamlined the process for non-bank entities seeking to facilitate outward remittance services. In a significant policy shift, the central bank no longer requires these entities to obtain prior approval for tie-up arrangements with banks.

This change is part of an updated operating framework aimed at enhancing the efficiency of such services through Authorised Dealer (Category I) banks. By dispensing with the approval process, the RBI has placed the onus squarely on the banks to ensure regulatory compliance.

The new guidelines mandate that Authorised Dealer banks adhere to the Foreign Exchange Management Act (FEMA) and perform due diligence through Know Your Customer (KYC) protocols. Additionally, banks must provide customers transparent information concerning exchange rates and remittance costs via various online channels, such as websites and mobile applications.