WHAT IS MONEY TRANSFER SERVICE SCHEME (MTSS)?
Money Transfer Service Scheme (MTSS) is a way of transferring personal remittances from abroad to beneficiaries in India. Only inward personal remittances into India such as remittances towards family maintenance and remittances favouring foreign tourists visiting India are permissible. Under the scheme there is a tie-up between reputed money transfer companies abroad known as Overseas Principals and agents in India known as Indian Agents who would disburse funds to beneficiaries in India at ongoing exchange rates.
WHO IS AN OVERSEAS PRINCIPAL?
The Overseas Principal should be a registered entity, licenced by the Central Bank / Government or financial regulatory authority of the country concerned for carrying on Money Transfer Activities. The country of registration of the Overseas Principal should be AML compliant. The Overseas Principal should obtain necessary authorisation from the Department of Payment and Settlement Systems, Reserve Bank of India under the provisions of the Payment and Settlement Systems Act (PSS Act), 2007 to commence/ operate a payment system.
WHO IS AN INDIAN AGENT?
To become an Indian Agent, the applicant should be an Authorised Dealer Category-I bank or an Authorised Dealer Category-II or a Full-Fledged Money Changer (FFMC) or the Department of Posts. Further, the Indian agents can also appoint sub-agents which can be retail outlets, commercial entities having a place of business, and whose bonafides are acceptable to the Indian Agent.
WHAT ARE THE TYPES OF REMITTANCES WHICH CAN BE RECEIVED UNDER THE MTSS?
Only cross-border personal remittances, such as, remittances towards family maintenance and remittances favouring foreign tourists visiting India are allowed under this arrangement. Donations/contributions to charitable institutions/trusts, trade related remittances, remittance towards purchase of property, investments or credit to NRE Accounts are not allowed through this arrangement.
APPROVAL OF RESERVE BANK OF INDIA
in terms of the powers granted under Section 10(1) of the Foreign Exchange Management Act (FEMA), 1999, the Reserve Bank of India may accord necessary permission (authorization) to any person to act as an Indian Agent under the Money Transfer Service Scheme. No person can handle the business of cross-border money transfer to India in any capacity unless specifically permitted to do so by the Reserve Bank.
ELIGIBILITY NORMS AND OTHER CONDITIONS AND PROCEDURE IN BRIEF FOR GETTING RBI APPROVAL
PROCEDURE FOR MAKING APPLICATIONS TO THE RESERVE BANK
Application for necessary permission to act as an Indian Agent may be made to the respective regional office of the Foreign Exchange Department of the Reserve Bank of India, under whose jurisdiction the registered office of the applicant falls and should be accompanied by the documents pertaining to its proposed Overseas Principal, as detailed below:
Apart from the above-mentioned documents and compliances there are other conditions also which the applicant has to be complied with in order to get the authorisation for Money changing service scheme.
CRITERIA FOR RBI DECISIONS
THERE ARE CERTAIN GUIDELINES APPLICABLE ON OVERSEAS PRINCIPLES
Indian Agents entering into arrangements with Money Transfer Operators overseas, known as Overseas Principals, may note that Overseas Principals with adequate volume of business, track record and outreach will only be considered under the scheme. Further, since the primary objective of permitting the business of money transfer business in the country is to facilitate cheaper and more efficient means of receipt of remittances, operators with limited outreach in terms of branch network in the country and localized operations overseas will not be entertained.
APPLICANT INDIAN AGENTS SHOULD SUBMIT THE FOLLOWING DOCUMENTS/ COMPLY WITH THE FOLLOWING REQUIREMENTS, IN RESPECT OF THEIR OVERSEAS PRINCIPALS:
APPOINTMENT OF SUB AGENTS BY INDIAN AGENTS
Under the Scheme, Indian Agents can enter into Sub Agency agreements with entities, fulfilling certain conditions, for the purpose of undertaking money transfer business.
A Sub Agent should have a place of business, and whose bonafides are acceptable to the Indian Agent. Indian Agents are free to decide on the tenor of the arrangement as also the commission or fee through mutual agreement with the Sub Agent. The audit and on-site inspection of premises and records of the Sub Agents by the Indian Agent to be conducted at least once in a month and in a year respectively.
PROCEDURE FOR SUBMISSION OF INFORMATION IN RESPECT OF SUB AGENTS BY INDIAN AGENTS.
Indian Agents should submit on a quarterly basis necessary information in the prescribed format in soft copy form pertaining to their Sub Agents appointed during a quarter within 15 days from the end of the quarter, to the respective regional offices of the Foreign Exchange Department of the Reserve Bank under whose jurisdiction the registered office of the Indian Agent falls for onward submission to the Ministry of Home Affairs (MHA), Govt. of India (GoI) through the Ministry of Finance (MoF), Govt. of India (GoI). In case of any objection by the MHA, the Sub Agency arrangement concerned should be terminated immediately.
Indian Agents should also furnish certificates that the Sub Agents appointed by them comply with the eligibility norms and also, they have done due diligence, wherever applicable, in respect of their Sub Agents.
Apart from this there are other regulatory and Contractual compliances and conditions are also there for the Sub Agents.