The Reserve Bank of India has relaxed the regulatory framework governing outward remittance services by permitting non-bank entities to partner with Authorised Dealer (AD) Category-I banks without seeking prior approval from the central bank. The move is aimed at streamlining cross-border remittance transactions conducted through digital platforms and enhancing ease of doing business in the fintech-driven remittance ecosystem.
In a fresh operating framework issued on Wednesday, the central bank announced that AD Category-I banks may now independently enter into arrangements with third-party non-bank entities for facilitating outward remittance transactions for non-trade current account purposes. Earlier, such arrangements required specific approval from the RBI under the framework introduced in 2016.
The revised framework significantly changes the compliance architecture by shifting the primary responsibility onto Authorised Dealer banks. The RBI clarified that AD banks will now be fully accountable for ensuring adherence to the provisions of the Foreign Exchange Management Act (FEMA) and for carrying out customer due diligence and Know Your Customer (KYC) obligations in respect of remittance transactions facilitated through third-party digital platforms.
The central bank stated that the approval mechanism has been dispensed with following a regulatory review. Instead of seeking case-by-case permission from the RBI, AD banks have been advised to comply with the prescribed operational and compliance conditions while facilitating outward remittances through online interfaces operated by third-party entities.
The RBI clarified that “online mode” for the purpose of the framework includes websites, online portals, software applications, mobile applications, and similar digital interfaces used to facilitate remittance transactions.
The revised norms are expected to provide a major boost to fintech companies and digital remittance platforms operating in India. By removing the requirement of prior regulatory approval, the RBI has effectively reduced procedural hurdles and accelerated the onboarding process for partnerships between banks and non-bank technology platforms offering outward remittance solutions.
At the same time, the central bank has introduced stringent transparency requirements aimed at safeguarding customer interests. Under the framework, customers initiating outward remittance transactions through third-party digital platforms must be provided with key transaction-related disclosures in a clear and prominent manner.
The framework mandates that customers must be informed about the foreign exchange rate quoted by the Authorised Dealer bank, along with the exact timestamp and the validity period of the quoted rate. In addition, the total estimated cost associated with the remittance transaction must also be disclosed upfront.
Further, customers are required to be informed about the exact foreign exchange amount that will ultimately be credited to the beneficiary account overseas. The platform must also disclose the maximum expected timeline for crediting the beneficiary’s account.
The RBI’s decision is being viewed as part of its broader effort to modernise India’s foreign exchange and remittance ecosystem while balancing innovation with regulatory oversight. The move is likely to benefit digital payment intermediaries, fintech operators, education remittance facilitators, and travel-related remittance platforms that rely on banking partnerships for processing outward foreign exchange transactions.
