RBI proposes framework to rationalise money changers authorisation
In order to lessen the regulatory burden & magnify the ease of doing business, it is proposed to renew an existing authorization as an AD Category-II on a perpetual basis.
The Reserve Bank of India (RBI) on Tuesday present draft norms aimed at rationalising the authorization of money changers in view of the wide spread accessibility of banking services to the public & to explore alternative models for ease foreign exchange-related services.
authorisation norms The permission framework under the Foreign Exchange Management Act (FEMA) was last reviewed in March 2006.
“The RBI has reviewed the present authorisation framework under FEMA with an objective to Far improve the ease with which foreign exchange transactions can be undertaken by users, & at the same time, build up the regulatory oversight/framework governing authorised persons (APs),” the draft norms stated.
This is in view of the accelerated universal reach of financial services due to financial addition initiatives, increasing integration of the Indian economy with the global economy, rbi latest news digitisation of payment systems, evolving institutional structure, etc., over the past two decades, the norms stated.
Feedback on the draft norms has been invited by January 31, 2024.
The standard proposed a new category of money changers who may conduct money changing business through an agency model by becoming forex correspondents (FxCs) of category-I & category-II approve dealers.
Authorised dealers category-II are those who can issue forex pre-paid cards to residents travelling on private/business visits abroad, subject to compliance to KYC/AML/CFT requirements. But, settlement in respect of forex pre-paid cards has to be effected through AD Category-I banks.
It has also been proposed that an existing full-fledged money changer (FFMC) may approach the regulator for an upgrade of permission as AD Category-II, or an existing AD Category-II may approach the Reserve Bank for permanent authorisation two months prior to the date of expiry of the existing authorisation, subject to its meeting the revised eligibility criteria.
rbi news updates “If the entity approaches the Reserve Bank for renewal of its existing authorisation, such renewal will be considered only up to a date not beyond two years from the date when the new framework comes into force,” the RBI said.
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