What changed
RBI observed some Authorised Persons were levying fees/charges on forex prepaid cards, store value cards, and travel cards in foreign currency. The circular clarifies that any such charges payable in India must be denominated and settled in Rupees only.
What it means for you
Banks and authorised dealers can no longer charge customers in foreign currency for fees like issuance, reload, or maintenance on forex prepaid/travel cards. All such domestic charges must be in INR, ensuring transparency and avoiding hidden forex markups for customers. This may impact fee income for some lenders but aligns with FEMA provisions.
What you must do
- Review all fee schedules for forex prepaid cards, store value cards, and travel cards to ensure charges payable in India are in Rupees.
- Update system configurations and product documentation to reflect INR-only pricing for domestic fees.
- Communicate the change to relevant business and compliance teams, and ensure customer-facing materials are corrected.
- Monitor any existing foreign currency fee arrangements and transition them to Rupee denomination immediately.
Who it affects
Authorised Dealers (banks and forex dealers), Customers using forex prepaid cards, store value cards, or travel cards, Compliance and product teams handling forex instruments
Does this circular apply to fees charged abroad on these cards?
No, the circular only applies to fees/charges payable in India. Charges incurred outside India are not covered by this instruction.
What happens if we continue charging in foreign currency?
Continuing to charge in foreign currency would violate FEMA provisions under sections 10(4) and 11(1) of FEMA, 1999, and may invite regulatory action.
Are there any exemptions for specific types of cards?
The circular does not mention any exemptions. It applies to all forex prepaid cards, store value cards, travel cards, and similar instruments.