What changed
Earlier, issuers could refund unutilized foreign exchange on travel cards only after 10 days from the last transaction. Now, RBI directs immediate redemption upon request, with limited exceptions for authorized but unsettled amounts and a small buffer of up to USD 100 for pipeline transactions.
What it means for you
Banks and authorized persons must update their refund processes to eliminate the 10-day waiting period for unused travel card balances. This aligns card usage with cash/travellers cheques, improving customer experience. However, issuers can still hold amounts for pending acquirer settlements and charge transaction fees/service tax in rupees.
What you must do
- Update internal systems and user guides to allow immediate refund of unutilized travel card balances upon customer request.
- Retain only authorized but unsettled acquirer amounts and a maximum of USD 100 for pipeline transactions until settlement.
- Communicate the revised refund policy to all branches and customer-facing staff.
- Ensure compliance with FEMA current account transaction limits and other unchanged instructions from the June 2005 circular.
Who it affects
All authorized persons issuing foreign currency prepaid cards, Resident Indians traveling abroad using international debit/store value/charge/smart cards, Banks and forex dealers handling travel card refunds
Can we still charge a fee for refunding the unused balance?
Yes, transaction fees and service tax payable in India in rupees can be deducted from the refund amount, as per the circular.
What if there are pending transactions that haven't settled yet?
You can hold the amount for authorized but unsettled acquirer transactions until the settlement cycle completes, plus up to USD 100 for pipeline transactions.
Does this circular change the types of transactions allowed on these cards?
No. The underlying limit on permissible current account transactions under FEMA rules remains unchanged.