RBI Removes Prior Approval Requirement for Banks’ Outward Remittance Tie-ups with Fintechs

Current Context: On May 13, 2026, the Reserve Bank of India (RBI) announced a key regulatory reform through A.P. (DIR Series) Circular No. 10.

• 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.

Highlights

• 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.