What changed
RBI revised the Memorandum of Instructions for Rupee/Foreign Currency Vostro Accounts of non-resident exchange houses, making agreement registration optional instead of mandatory. Collateral cover for exchange houses operating less than three years was reduced from one month's projected drawings to 7 days' projected drawings.
What it means for you
Banks now have more flexibility in structuring Rupee Drawing Arrangements without mandatory registration, reducing paperwork and legal costs. Lower collateral requirements free up capital for both banks and exchange houses, potentially encouraging more cross-border remittance partnerships.
What you must do
- Update internal policies to reflect optional agreement registration for exchange house arrangements.
- Adjust collateral requirements for exchange houses under 3 years to 7 days' projected drawings.
- Ensure comprehensive legal documentation remains in place even if registration is optional.
- Review existing agreements and collateral arrangements to align with revised instructions.
Who it affects
AD Category-I banks handling Rupee Drawing Arrangements, Non-resident exchange houses with Vostro accounts, Compliance and legal teams managing cross-border remittance partnerships
Is registration of the agreement with exchange houses still mandatory?
No, registration is now optional. However, comprehensive legal documentation and all necessary legal requirements must still be fulfilled.
What is the new collateral requirement for exchange houses under 3 years?
Collateral cover has been reduced from one month's projected drawings to 7 days' projected drawings for exchange houses that have not completed three years of operation.