What changed
Earlier, only AD Category-I banks with internet banking could let customers submit Form A2 online. Now, AD Category-II entities have also been allowed to offer this facility, subject to framing their own board-approved guidelines within the regulatory framework.
What it means for you
This expands digital convenience for customers of AD Category-II entities, such as money changers and other authorized forex dealers. Banks and lenders must ensure that their online Form A2 processes remain compliant with FEMA, KYC Master Direction, and the terms of the 2016 circular. It also signals RBI's continued push for digitization in forex reporting.
What you must do
- Update internal policies to allow online Form A2 submission if you are an AD Category-II entity, with board approval.
- Ensure compliance with FEMA 1999, KYC Master Direction 2016, and the terms of A.P. (DIR Series) Circular No. 50 dated February 11, 2016.
- Communicate the new facility to customers and train staff on the updated process.
- Review and align your internet banking or digital platform with the regulatory requirements for online Form A2.
Who it affects
AD Category-II entities (e.g., money changers, forex dealers), AD Category-I banks (reminder of existing obligations), Customers using AD Category-II services for forex remittances
What is Form A2 used for?
Form A2 is used for reporting foreign exchange remittances by individuals and entities under FEMA. It captures details of the remitter, beneficiary, purpose, and amount.
Do AD Category-I banks need to do anything new?
No, the circular primarily extends the online submission facility to AD Category-II entities. AD Category-I banks must continue to comply with the existing terms from the 2016 circular.
What guidelines must AD Category-II entities follow for online Form A2?
They must frame their own guidelines with board approval, within the existing statutory and regulatory framework, and comply with FEMA 1999 and the KYC Master Direction 2016.