Introduction

The Foreign Exchange Department, Reserve Bank of India (“RBI”), on May 13, 2026, issued a circular titled ‘Operating framework for facilitating Outward Remittance services by non-bank entities through Authorized Dealer (Category I) Banks (“AD Banks”) in India’ (“Outward Remittance Circular”), which:

• issued standing guidelines to AD Banks, in relation to facilitating cross-border outward remittance of funds for non-trade current account transactions using third party entity in online mode (website/ online platform/ software application/ mobile application/ any other interface); and
• notified deletion of Paragraph 10 of the Master Direction – Miscellaneous, issued under the Foreign Exchange Management Act, 1999 (“FEMA”), dated January 1, 2026 (“FX MD”).

What was Paragraph 10, FX MD?

Paragraph 10, FX MD, provided a framework under which non-bank entities could obtain specific RBI approval for tie-up arrangements with AD Banks to facilitate outward remittances, as listed below:

• For current account transactions only in the nature of personal remittances[1], up to a limit of USD 5,000 per transaction, except for overseas education where the limit was USD 10,000 per transaction; and

• For trade transactions – as per the limits and other conditions prescribed for imports under the erstwhile Online Payment Gateway Service Providers (OPGSP) framework.

Overview of Operating Framework

1. Approval: Non-bank entities need not seek RBI approval for facilitating non-trade current account transactions in tandem with AD banks.
2. Compliance: The AD Bank remains solely responsible for FEMA compliance and Know Your Customer checks in accordance with applicable RBI directions.
3. Transparency: The following must be prominently displayed on the third party’s interface: (i) name, role, responsibilities, and authorization status (Category I/ II) of the Authorised Dealer , including the Authorised Dealer whose FX rate will be used; (ii) FX rate quoted by the Authorised Dealer with timestamp and validity period; (iii) total estimated cost with break-up of exchange rate (interbank rate and mark-up separately), service charges, and other charges; (iv) exact foreign exchange amount to be credited and maximum time for crediting the beneficiary’s account; and (v) contact details for customer grievance redressal with timelines for dispute resolution.
4. Invoice: The Authorised Dealer providing the exchange rate and foreign exchange must ensure that invoices are issued by the third party for every transaction, indicating the break-up of the final amount (exchange rate, service charges, and other charges), amount remitted and credited, maximum time for credit, and name of the Authorised Dealer quoting the FX rate.
5. Display on AD Bank’s website: AD Bank’s website homepage must be updated with the names of all third-party entities with whom it has online remittance arrangements, its role and responsibility in each, and contact details for grievance redressal. It must also prominently display its policy on storage of customer data (including type, purpose, and period of storage).
6. Agreement with third party: The AD Bank remains fully responsible for all acts and omissions of the third party and the agreement must not dilute or absolve the AD Bank of its statutory or regulatory obligations. The agreement between the AD Bank and the third party must explicitly include the clauses specified under the Outward Remittance Circular.[2] The third party must have a comprehensive, publicly accessible privacy policy, compliant with applicable laws and RBI guidelines.
7. Customer Protection: The AD Bank must have a formal grievance redressal framework, as per the RBI guidelines and an internal policy for such arrangements, focusing on customer service, protection, and transparency, covering: (i) upholding the remitter’s interests via timely and transparent execution; (ii) data privacy safeguards ensuring need-based data collection with prior explicit consent, with no sharing except under statutory or regulatory requirements; and (iii) ensuring compliance with technology standards and cybersecurity requirements by the third-party as stipulated by the RBI and other relevant agencies.
8. Fund Handling: The AD Bank must ensure that remittances reach the beneficiary’s bank account within the specified timeline and that there is a facility for the remitter to track the transaction status, including in case of any delay. It must also safeguard the remitter’s funds, ringfence them from insolvency risks, and ensure that such funds do not, at any stage, flow into the third party’s account in India. Remittances are permitted only from the remitter’s bank account to the beneficiary’s bank account.
9. Non-resident third party: A non-resident third-party must be duly licensed by the destination jurisdiction’s regulator (where required) to facilitate remittances. AD Banks must also apply enhanced due diligence to business relationships and transactions with natural and legal persons from countries identified as not or insufficiently applying FATF Recommendations.
10. Door-step delivery: In arrangements with a third party for door-step delivery of forex cards or foreign currency notes, the AD Bank must ensure compliance with provisions related to customer protection as mentioned under #6 above.

Implications

1. Given that only a handful of entities held approvals under the now deleted Para 10, FX MD (only 15 approvals were granted as of August 31, 2024, as per the list published by RBI[3]), the Outward Remittance Circular opens up opportunities for unregulated non-bank entities (including foreign entities) to provide outward remittance services to Indian residents through online mode, without having the need to obtain RBI’s approval.
2. Entities holding approvals under the now deleted Paragraph 10, FX MD, and the respective AD Banks will:
   • benefit from removal of per transaction limits, which were imposed earlier (refer #A.2(a) above);
   • need to re-structure their offerings and stop facilitating import related transactions, given that the Outward Remittance Circular only permits ‘non-trade current account transactions’; and
   • need to review and amend (if required) their contractual agreements to ensure that the agreements cover the provisions required in such agreements, as per the Outward Remittance Circular.
3. The requirement that remitter’s funds must not, at any stage, flow into the account of the third party in India, and that remittances must originate from the remitter’s bank account and end at the beneficiary’s bank account, will necessitate restructuring of fund flows by entities whose existing arrangements involve pooling or routing of funds through the third party’s accounts in India.
4. Non-resident third party entities must ensure that they hold requisite authorisations/ licences from the regulator of the destination jurisdiction (where such licensing is mandated), which may limit the jurisdictions in which such entities can operate under this framework.
5. This delegation to the AD bank is expected to ease the process of such remittances further.

[1] The following kinds of personal remittances were permitted: (a) private visits; (b) remittance by tour operators / travel agents to overseas agents / principals / hotels; (c) business travel; (d) fee for participation in global conferences and specialized training; (e) remittance for participation in international events / competitions (towards training, sponsorship and prize money); (f) film shooting; (g) medical treatment abroad; (h) disbursement of crew wages, (i) overseas education; (j) remittance under educational tie up arrangements with universities abroad; (k) remittance towards fees for examinations held in India and abroad and additional score sheets for GRE, TOEFL etc.; (l) Employment and processing, assessment fees for overseas job applications; (m) emigration and emigration consultancy fees; (n) skills/ credential assessment fees for intending migrants; (o) visa fees; (p) processing fees for registration of documents as required by the Portuguese/ other Governments; (q) registration/ subscription/ membership fees to international organizations.

[2] The agreement must explicitly specify, inter alia: (i) rights, obligations, and responsibilities of both parties; (ii) data handling, confidentiality, and privacy; (iii) dispute resolution; (iv) audit and information sharing rights; (v) compliance with applicable laws; (vi) quoting of exchange rate as quoted by the AD Bank; (vii) scope of engagement and permitted activities; (viii) risk mitigation frameworks; (ix) refund policy; and (x) internal controls for FEMA compliance.

[3] The list published by RBI of entities holding approvals under the now deleted Para 10, FX MD, is available here.