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    Overview About The MTSs And Related FEMA Regulations

    In view of the NRI Inflows into India, playing pivotal role for India’s Foreign Exchange, an attempt is made to provide brief introduction about the MTSS Scheme through which such remittances are being received into the India.

     

    What is MTSS?

     

    Money Transfer Service Scheme (MTSS) is a quick and easy way of transferring personal remittances from abroad to beneficiaries in India. Under MTSS the remitters and the beneficiaries are individuals only. The MTSS is having statutory recognition under Payment and Settlement Systems Act, 2007 and rules made thereunder

     

    Permitted nature of remittances

     

    Only inward personal remittances into India such as remittances towards family maintenance and remittances favouring foreign tourists visiting India are permissible. No outward remittance from India is permissible under MTSS

     

    Donations/ contributions to charitable institutions/trusts, trade related remittances, remittance towards purchase of property, investments or credit to NRE Accounts shall not be made through this arrangement.

     

    Nature of Players Involved in the MTSS

     

    The system envisages a tie-up between reputed money transfer companies abroad known as Overseas Principals and agents in India known as Indian Agents who would disburse funds to beneficiaries in India at ongoing exchange rates. The Indian Agents can in turn also appoint sub-agents to expand their network.

     

    Prominent Overseas Principals under this scheme areWestern Union Financial Services Incorporated, USA (“Western Union or WU”), Wall Street Exchange Centre LLC, UAE (“Instant Cash”), UAE Exchange Centre LLC, UAE (“Xpress Money”), Royal Exchange (USA) Inc., USA, and MoneyGram Payment Systems Inc, USA(“MoneyGram or MoneyGram International”) etc. Many Indian Agents have tied up with these players for quick remittances of Foreign Currency into India.

     

    Entry Norms for Indian Agents

     

    The applicant, in order 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 and should have minimum Net Owned Funds of Rs.50 lakh.

    Guidelines for Overseas Principals

     

    Indian Agents entering into arrangements with Overseas Principals, need to have adequate volume of business, track record and outreach etc.

     

    Applicant Indian Agents should submit the following documents/ comply with the following requirements, in respect of their Overseas Principals:

     

    1. The Overseas Principal should obtain necessary authorisation 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 commence/ operate a payment system. Prior to such authorization, the RBI will verify the background and antecedents of the Overseas Principal with the help of Govt. of India,

     

    1. The Overseas Principal should be a registered entity, licenced by the Central Bank / Government or financial regulatory authority of the country concerned for carrying on Money Transfer Activities. The country of registration of the Overseas Principal should be AML compliant.

     

    1. The minimum net-worth of Overseas Principals should be at least USD 1 million as per the latest audited balance sheet, which should be maintained at all times. However, the Reserve Bank may consider relaxing the minimum Net Worth criterion in case of Overseas Principals incorporated in FATF member countries and are supervised by the concerned Central Bank/ Government or financial regulatory authority.

     

    1. The Overseas Principal should be well established in the money transfer business with a track record of operations in well regulated markets.

     

    1. The arrangement with Overseas Principal should result in considerably increasing access to formal money transfer facilities at both ends.

     

    1. The Overseas Principal should be registered with the overseas trade / Industry bodies.

     

    1. The Overseas Principal should have a good rating from one of the international credit rating agencies.

     

    1. The Overseas Principal should submit confidential reports from at least two of its bankers.

     

    1. The Overseas Principal should submit a report certified by independent Chartered Accountants, regarding steps taken to comply with anti-money laundering norms in the home/ host country.
    2. The Overseas Principals will be fully responsible for the activities of their Agents and Sub Agents in India.

     

    1. 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, viz., Ministry of Finance, Ministry of Home Affairs, FIU-IND, etc. Full details of the remitters and the beneficiaries should be provided by the Overseas Principals, if called for.

     

    Receipt of Cross Border Remittances by Indian Residents/ foreign tourists

     

    A cap of USD 2500 has been placed on individual remittance under the scheme. Amounts up to Rs.50,000/- may be paid in cash to a beneficiary in India. Any amount exceeding this limit shall be paid by means of account payee cheque/ demand draft/ payment order, etc., or credited directly to the beneficiary's bank account only.

    However, in exceptional circumstances, where the beneficiary is a foreign tourist, higher amounts may be disbursed in cash. Full details of such transactions should be kept on record for scrutiny by the auditors/ inspectors.

     

    Only 30 remittances can be received by a single individual beneficiary under the scheme during a calendar year.

     

    To facilitate receipt of foreign inward remittances directly into bank account of the beneficiary, the foreign inward remittances received under MTSS can be transferred to the KYC compliant beneficiary bank account through electronic mode, such as NEFT, IMPS etc.

     

    Foreign inward remittances received by the bank acting as Indian Agent under MTSS, may also be electronically credited directly to the account of the beneficiary, held with a bank other than the Indian Agent Bank

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