.png "RBI Removes Prior Approval Requirement for Banks’ Outward Remittance Tie-ups with Fintechs")
- The change removes the requirement for prior RBI approval for tie‑ups between Authorised Dealer (AD) Category‑I banks and non‑bank entities, including fintechs, to facilitate outward remittances.
- Policy Reform: AD Category‑I banks can now collaborate with fintechs and digital platforms for outward remittances without prior RBI approval.
- Earlier Framework: Under the 2016 rules, non‑bank entities required specific RBI approval for tie‑ups.
- Scope: Covers non‑trade current account transactions such as overseas education, medical treatment, travel, family maintenance, and investments via online platforms, apps, or software interfaces.
- Bank Accountability: Banks remain fully responsible for FEMA compliance, KYC norms, customer protection, grievance redressal, and cybersecurity.
- Safeguards: Customer funds cannot flow into third‑party accounts in India, ensuring protection against insolvency risks.
- Transparency: Mandatory pre‑transaction disclosures on forex rates, mark‑ups, charges, timelines, and beneficiary details, plus detailed invoices and public disclosure of partner entities.
- Data Protection: Compliance with India’s Digital Personal Data Protection Act is compulsory for banks and fintech partners.
- Impact: Streamlines cross‑border remittances, encourages fintech innovation, and strengthens India’s role as a digital financial hub.
Question:
Q.1 Which among the following is treated as a non-trade current account transaction under the RBI framework?a) Import of machinery
b) Export settlement
c) Overseas medical treatment
d) Customs duty payment
Answer: c) The framework includes outward remittances for education, healthcare, travel, investments, and family maintenance purposes.
