The Hindu Business Line : Getting forex made easier

GETTING foreign exchange for a holiday or business trip, medical treatment or fees for an overseas competitive examination may become easier thanks to the recommendations of a group set up by the Reserve Bank of India.

In order to make foreign exchange easily accessible to the common man, RBI has proposed granting licences to certain entities to undertake non-trade related current account transactions. These entities can only convert one currency to another currency. They cannot undertake any open position risk, the group said in its recommendations. Such transactions may not require opening and maintaining foreign currency denominated (nostro) account with a bank outside India, RBI said.

As of now only authorised persons licensed by RBI are allowed to undertake foreign exchange transactions. These include commercial banks, money changers, any financial institution authorised for limited kind of transactions depending on their activity or any other entity authorised by the RBI.

As per the new classification, upgraded Full Fledged Money Changers (FFMC), select urban co-operative banks, regional rural banks and Thomas Cook India Ltd would be allowed specified non-trade related current account transactions. They would be classified under Restricted Authorised Dealers (RADs)-Category II.

Some transactions for which this category would be permitted to release foreign exchange include private overseas visits; business travel; remittance by tour operators to overseas agents or hotels; fee for participation in international events; film shooting; medical treatment abroad; disbursement of crew wages; overseas education; remittance towards fees for examinations held in India and abroad and additional score sheets for GRE, TOEFL, etc; employment and processing, assessment fees for overseas job applications; emigration and emigration consultancy fees; skills or credential assessment fees for intending migrants, visa fees, processing fees for registration of documents as required by the Portuguese or other governments and registration or subscription to international organisations.

RBI may grant RAD-Category II licence to existing, well functioning FFMCs with strong financials. The criteria for upgrading existing FFMCs to RAD-Category II may include net owned funds Rs 10 crore.

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