What changed
RBI has deleted paragraph 10 of the Master Direction - Miscellaneous (January 1, 2016), which required non-bank entities to obtain specific RBI approval for tie-ups with AD Category-I banks for outward remittance services. Instead, ADs are now directly responsible for facilitating such services through third-party online platforms, subject to new instructions in the Annex.
What it means for you
Banks can now onboard non-bank entities for outward remittance services without waiting for RBI's prior nod, speeding up partnerships. However, ADs bear full compliance and KYC responsibility under FEMA, increasing operational risk. The new framework mandates transparent disclosure of exchange rates, charges, and grievance redressal to customers.
What you must do
- Update internal policies to reflect the deletion of para 10 and adopt the new framework for non-bank entity tie-ups.
- Ensure all third-party platforms display AD name, FX rate with timestamp, total cost breakdown, and grievance contact details as per Annex instructions.
- Generate and issue invoices for each transaction with clear break-up of exchange rate, charges, and beneficiary credit time.
- Strengthen KYC processes to comply with A.P. DIR Series Circular No. 16 dated November 28, 2025, and FEMA requirements.
- Review and update your website homepage to display information about these arrangements as specified.
Who it affects
Authorised Dealer Category-I banks, Non-bank entities offering outward remittance services, Customers using online remittance platforms
Do non-bank entities still need RBI approval for outward remittance tie-ups?
No, RBI has dispensed with the approval process. AD Category-I banks can now directly facilitate these services under the new framework, but they remain fully responsible for compliance.
What key information must be displayed to customers on third-party platforms?
The AD's name, roles, FX rate with timestamp and validity, total cost with break-up (interbank rate and mark-up), exact foreign currency credit amount, maximum credit time, and grievance redressal contact details.
What is the AD's liability under the new framework?
The AD is solely responsible for ensuring FEMA compliance and KYC adherence for all transactions facilitated through third-party entities, as per the updated instructions.