All about the Money Transfer Service Scheme
Narendra Kumar | Updated: Feb 14, 2018 | Category:
A speedy and stress-free mode used for transferring personal remittances from abroad to recipients (beneficiaries) in India is known as the Money Transfer Service Scheme. Only inward personal remittances into India For example remittances towards family maintenance and remittances favoring foreign tourists visiting India are allowed. No outward remittance from India is allowed under this scheme.
Remittances are one of the major sources of national income and also for the families. Remittances are similarly one of the largest sources of external financing. This is one of the sources where people in India called beneficiaries, can receive cross-border inward remittances through banking and postal channels. The common postal channel used for this is the International Financial System (IFS) platform of the Universal Post Union (UPU). Generally, banks have permission to enter into an agreement with other banks for conducting remittance business. Moreover, there are two more modes used in our country for receiving inward remittances, like Rupee Drawing Arrangement (RDA) and the Money Transfer Service Scheme (MTSS).
Who can be the Indian agent?
- The applicant to become an Indian Agent should be an Authorised Dealer Category-I bank or an Authorised Dealer Category-II or a Full Fledged Money Changer (FFMC), or a Scheduled Commercial Bank or the Department of Posts.
- The applicant should have minimum Net Owned Funds of `50 lakh.
Procedure for Making an Application
- TO WHOM- to the Reserve Bank of India (Foreign Exchange Department) under whose jurisdiction the registered office of the applicant falls.
- DOCUMENTS- following documents to be given
- Declaration- that no proceedings have been initiated or pending against the Applicant and its Director, before the Directorate of Enforcement/ Directorate of Revenue Intelligence or any other law enforcing authorities,
- that no criminal proceedings have been initiated or
- pending against the Applicant and its Change in Director,
- A declaration to the effect that proper policy framework in respect of KYC / AML / CFT, in accordance with the guidelines issued by Reserve Bank of India, and other instructions in this have complied.
- Name and address of the registered entity(Overseas Principal) with whom the Indian Agent will enter into an agreement.
- Complete particulars of the operation of the scheme by the Overseas Principal.
- List of branches in India and their addresses where MTSS money transfer will be conducted by the applicant.
- The estimated volume of business per month/year under the scheme.
- Audited Balance Sheet and Profit and Loss Account for the last two financial years of the applicant, if available or a copy of the latest audited accounts, with a certified copy of Net Owned Funds as on date of Application.
- Memorandum and Articles of Association of the applicant where either a provision exists for taking up money transfer business or an appropriate amendment thereto has been filed with the Company Law Board.
- Confidential Report from at least two of the applicant’s bankers in a sealed
- Details of sister/ associated concerns of the applicant functioning in the financial sector.
- A certified copy of the board resolution for undertaking money transfer business by the applicant.
- A letter from the proposed Overseas Principal, agreeing to enter into a tie-up with the applicant and also to provide necessary collateral.
- Along with these (Indian Agent), Applicant shall also submit the following documents/comply with the following requirements, in respect of their Overseas Principals:
- The registered entity called the Overseas Principal will obtain prior permission 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 operate a payment system. Prior to such approval, the Reserve Bank will authenticate the background and experiences of the Overseas Principal with the help of Govt. of India,
- The registered entity should be licensed by the Central Bank / Government or financial regulatory authority of the country concerned for carrying on Money Transfer Activities. It is most to state that the country of Company Registration of the Overseas Principal should be AML compliant at any cost irrespective of licensing authority.
- The minimum Net Worth of Registered entity should be at least US $ 1 million as per the latest audited balance sheet and should be maintained at all times.
- In continuation of Point No. (iii), The Apex Bank may consider relaxing the minimum Net Worth criterion subject to other regulation and required compliance are up to date and at the benchmark level.
- The Overseas Principal should be well established in the money transfer business with a track record of operations in well-regulated markets.
- The facility or arrangement with Overseas Principal should result in considerably increasing access/entry to formal (legal) money transfer facilities at both ends. It means both countries should be benefited from this kind of arrangement.
- The Overseas Principal should be registered with the overseas trade / Industry bodies.
- The Overseas Principal should have a good rating from one of the international credit rating agencies
- The Overseas Principal should submit confidential reports from at least two of its bankers.
- The Overseas Principal should submit a certified report by independent Chartered Accountants, on the subject of initiation to comply with anti-money laundering norms in the home/ host country
- The Overseas Principals will be fully responsible for the activities of their Agents and Sub Agents in India.
- Proper records of remitters as also beneficiaries pertaining to all pay-outs in India are to be maintained by the Overseas Principals
- All records must be made accessible on demand to the Reserve Bank or other agencies of the Government of India, Ministry of Finance, Ministry of Home Affairs, FIU-IND, etc. Full details of both the parties i.e. the remitters and the beneficiaries should be provided by the registered entity if called by the authorities.
After going through with the whole scheme of RBI on Remittances [Money Transfer Service Scheme (MTSS) it seems that the people should grab this opportunity and take the permission of the concerned authority to be an Indian Agent and disburse funds to beneficiaries in India at ongoing exchange rates.
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