What changed
RBI issued a clarification on payment modes for foreign exchange sales under money changing activities. For single drawals exceeding Rs.50,000, payment must be by crossed cheque, bank draft, or card. For multiple drawals within 30 days for the same journey, if total payments exceed Rs.50,000, second and subsequent payments also require these non-cash instruments.
What it means for you
Banks and authorised persons must enforce stricter payment verification for larger forex transactions to curb money laundering. This aligns with PMLA obligations and reduces cash usage in forex sales. Lenders need to update their internal processes to ensure compliance with these payment thresholds.
What you must do
- Update your forex transaction systems to flag any single drawal or cumulative drawals within 30 days exceeding Rs.50,000 for mandatory non-cash payment.
- Train staff to accept only crossed cheque, bank draft, pay order, demand draft, debit/credit/prepaid card for such transactions.
- Review and amend your internal KYC/AML policies for money changing activities to reflect this circular.
- Communicate these payment rules to all branches and forex counters handling foreign exchange sales.
Who it affects
Authorised Persons (banks, forex dealers, money changers), Customers purchasing foreign exchange for travel or business visits, Compliance and AML teams at banks and financial institutions
Does this rule apply to all forex sales or only those above Rs.50,000?
It applies only when the rupee payment for a single drawal exceeds Rs.50,000, or when cumulative payments for multiple drawals within 30 days for the same journey exceed Rs.50,000.
Can a customer still pay in cash if the amount is below Rs.50,000?
Yes, the circular does not restrict cash payments for amounts up to Rs.50,000. The restriction applies only above that threshold.
What payment methods are acceptable for amounts above Rs.50,000?
Only crossed cheque drawn on the applicant's firm/company account, banker's cheque, pay order, demand draft, debit card, credit card, or prepaid card are acceptable.