The Reserve Bank of India has withdrawn the requirement for its specific approval for tie-up arrangements between authorised dealer banks and non-bank entities that facilitate online outward remittances for non-trade current account transactions. Instead, authorised dealers must follow a new operating framework when using third-party websites, platforms, software or mobile applications, with immediate effect. As part of the change, paragraph 10 of the Master Direction on Miscellaneous has been deleted. Under the new framework, the authorised dealer remains solely responsible for compliance with the Foreign Exchange Management Act and know your customer requirements, and is fully liable for the acts and omissions of the third party. The rules require prominent disclosure to remitters of the authorised dealer involved, the foreign exchange rate and its validity, the total estimated transaction cost with a breakdown of exchange rate and charges, the exact foreign currency amount to be credited, the maximum credit timeline, and grievance redress contacts. Banks must ensure invoices are issued for each transaction, publish on their own websites the third parties they work with and related roles, maintain policies on customer data storage, and put in place agreements covering responsibilities, data handling, privacy, audit rights, dispute resolution, refund policy, internal controls, and risk mitigation including operational resilience and concentration risk. The framework also requires end-to-end settlement within the disclosed timeline, ringfencing of customer funds from insolvency risk, prohibits remitter funds from passing through the third party's account in India, limits flows to bank-account-to-bank-account transfers, and requires non-resident third parties to be licensed in the destination jurisdiction where applicable. Enhanced due diligence must be applied for transactions involving countries identified through Financial Action Task Force-related risk statements circulated by RBI. Similar transparency, grievance and customer protection requirements apply where a third party is used for doorstep delivery of forex cards or foreign currency notes.
Reserve Bank of India 2026-05-13
Reserve Bank of India removes prior approval for bank tie ups with non bank outward remittance platforms and sets operating rules
The Reserve Bank of India has removed the requirement for prior approval of tie-up arrangements between authorised dealer banks and non-bank entities facilitating online outward remittances for non-trade current account transactions, and introduced a new operating framework. Authorised dealers remain fully responsible and liable for regulatory and know your customer compliance, must provide detailed disclosures on pricing, timelines and grievance mechanisms, and ensure robust contractual, data, risk management and customer protection safeguards, including ringfencing of customer funds and enhanced due diligence for higher-risk jurisdictions.