What changed
RBI issued a circular to all Primary Urban Co-operative Banks, reiterating that remittances for lottery or money circulation schemes are illegal under FEMA. It references a December 2007 press release and directs banks to alert customers about such fraudulent offers.
What it means for you
Banks must ensure customers are aware that sending money abroad for lottery or prize schemes is prohibited. This protects customers from fraud and helps banks avoid regulatory penalties for facilitating such transactions. Non-compliance could lead to FEMA violations.
What you must do
- Bring the contents of the RBI press release to the notice of customers.
Who it affects
Primary Urban Co-operative Banks, Customers of urban co-op banks
What types of schemes are covered by this prohibition?
The circular covers lottery schemes, money circulation schemes, and any scheme under different names that involves remittances for securing prize money or awards, as these are prohibited under FEMA.
What should a bank do if a customer insists on sending money for such a scheme?
The bank should explain the legal prohibition under FEMA and refuse the remittance. Staff should be trained to handle such requests and advise customers about the fraudulent nature of these offers.
Is this a new regulation?
No, this circular from August 2008 reiterates existing FEMA provisions and references a December 2007 press release. It serves as a reminder for banks to remain vigilant.