RBI/FED/2016-17/52
FED Master Direction No.1/2016-17
February 22, 2017
(
Updated as on November 28, 2025
)
(
Updated as on February 29, 2024
)
To
All Authorised Persons who are Indian Agents under the Money Transfer Service Scheme
Madam / Dear Sir,
Master Direction – Money Transfer Service Scheme (MTSS)
Money Transfer Service Scheme (MTSS) is a quick and easy way of transferring personal remittances from abroad to beneficiaries in India
-
Reserve Bank has the powers under Section 10(1) of the Foreign Exchange Management Act, 1999, to accord necessary permission (authorization) to any person to act as an Indian Agent under the Money Transfer Service Scheme.
-
The directions relating to Money Transfer Service Scheme are being issued in a consolidated form through the
Master Direction
enclosed. Reporting instructions can be found in the Master Direction on Reporting. It may be noted that whenever necessary, Reserve Bank shall issue directions to Authorised Persons who are Indian Agents under the MTSS through A.P. (DIR Series) Circulars in regard to any change in the rules, regulations, notifications, directions or orders or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/ constituents. The Master Direction issued herewith shall be simultaneously amended suitably.
Yours faithfully,
(
N Senthil Kumar
)
Chief General Manager
Master Direction on Money Transfer Service Scheme
- Introduction
1.1 Money Transfer Service Scheme (MTSS) is a quick and easy way of transferring personal remittances from abroad to beneficiaries in India. 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. 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. The Indian Agent is not allowed to remit any amount to the Overseas Principal. Under MTSS the remitters and the beneficiaries are individuals only. This document covers the details regarding the entry norms, authorization, renewal and various operating instructions pertaining to the entities involved in this scheme.
1.2 Statutory Basis
In terms of the powers granted under Section 10(1) of the Foreign Exchange Management Act (FEMA), 1999, the Reserve Bank of India may accord necessary permission (authorization) to any person to act as an Indian Agent under the Money Transfer Service Scheme. No person can handle the business of cross-border money transfer to India in any capacity unless specifically permitted to do so by the Reserve Bank.
- Definitions
2.1
‘Authorised Dealer’ (AD) means a person authorised as an authorised dealer under sub-section (1) of section 10 of FEMA.
2.2
‘Authorised Dealer (AD) Category II’ means (i) Upgraded FFMCs; (ii) Select RRBs; (iii) Select UCBs; and (iv)Other entities.
2.3
‘Full Fledged Money Changer (FFMC)’ is an authorized money changer authorised to purchase foreign exchange from non-residents visiting India and residents, and to sell foreign exchange for private and business travel purposes only.
2.4
‘Overseas Principal’ are reputed money transfer companies abroad entering into tie up with agents in India known as Indian agents who would disburse funds to beneficiaries in India at ongoing exchange rates.
- Guidelines for Indian Agents
3.1 Entry Norms
- (i) 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.
- (ii) The applicant should have minimum Net Owned Funds of Rs.50 lakh.
Note:-
- (i) Owned Funds :- (Paid-up Equity Capital + Free reserves + Credit balance in Profit & Loss A/c) minus (Accumulated balance of loss, Deferred revenue expenditure and Other intangible assets)
- (ii) Net Owned Funds:- Owned funds minus the amount of investments in shares of its subsidiaries, companies in the same group, all (other) non-banking financial companies as also the book value of debentures, bonds, outstanding loans and advances made to and deposits with its subsidiaries and companies in the same group in excess of 10 per cent of the Owned funds.
3.2 Procedure for making Applications to the Reserve Bank
Application for necessary permission to act as an Indian Agent may be made
1
(through the APConnect application (
https://apconnect.rbi.org.in/entity
) by non-bank AD Category -II and FFMCs)
to the respective regional office of the Foreign Exchange Department of the Reserve Bank of India, under whose jurisdiction the registered office of the applicant falls and should be accompanied by the documents pertaining to its proposed Overseas Principal, as detailed below:
- A declaration to the effect that no proceedings have been initiated by / are pending with the Directorate of Enforcement (DoE) / Directorate of Revenue Intelligence (DRI) or any other law enforcing authorities, against the applicant or its directors and that no criminal cases are initiated / pending against the applicant or its directors.
- A declaration to the effect that proper policy framework on Know Your Customer (KYC) norms
2
/ Anti-Money Laundering (AML) standards/ Combating the Financing of Terrorism (CFT), in accordance with the guidelines issued by Reserve Bank of India, applicable to Indian agents and their Sub-agents in place on obtaining permission (authorization) of the Reserve Bank and before commencement of money transfer operations.
- Name and address of the Overseas Principal with whom the MTSS will be conducted.
- Full details of the operation of the scheme by the Overseas Principal.
- List of branches in India and their addresses where MTSS will be conducted by the applicant.
- 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 certificate from Statutory Auditors regarding the position of the Net Owned Funds as on the 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 sealed cover.
- 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 tie up with the applicant and also to provide necessary collateral.
3.3 Collateral requirement
Collateral equivalent to 3 days' average drawings or USD 50,000, whichever is higher, may be kept by the Overseas Principal in favour of the Indian Agent with a designated bank in India. The minimum amount of USD 50,000 shall be kept as a foreign currency deposit while the balance amount may be kept in the form of a Bank Guarantee. The adequacy of collateral should be reviewed by Indian Agents at quarterly intervals on the basis of remittances received during the past three months.
3.4 Other conditions
- a. Only cross-border personal remittances, such as, remittances towards family maintenance and remittances favouring foreign tourists visiting India shall be allowed under this arrangement. Donations/ contributions to charitable institutions/t rusts, trade related remittances, remittance towards purchase of property, investments or credit to NRE Accounts shall not be made through this arrangement.
- b. 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.
- c. Only 30 remittances can be received by a single individual beneficiary under the scheme during a calendar year.
3.5 Criteria for RBI decisions
- (i) The Indian Agents need to have strength and efficiency to function profitably in a highly competitive environment. As a number of Indian Agents are already functioning, permission (authorization) will be issued on a very selective basis to those who meet the above requirements, have necessary outreach and who are likely to conform to the best international and domestic standards of customer service and efficiency.
- (ii) The Indian Agent should commence its money transfer operations under the scheme within a period of
six months
from the date of issuance of permission (authorization) and inform the regional office concerned of the Foreign Exchange Department of the Reserve Bank.
- Guidelines for Overseas Principals
Indian Agents entering into arrangements with Money Transfer Operators overseas, known as Overseas Principals, may note that Overseas Principals with adequate volume of business, track record and outreach will only be considered under the scheme. Further, since the primary objective of permitting the business of money transfer business in the country is to facilitate cheaper and more efficient means of receipt of remittances, operators with limited outreach in terms of branch network in the country and localized operations overseas will not be entertained.
Applicant Indian Agents should submit the following documents/ comply with the following requirements, in respect of their Overseas Principals:
- 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 Reserve Bank will verify the background and antecedents of the Overseas Principal with the help of Govt. of India,
- 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.
- 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.
- The Overseas Principal should be well established in the money transfer business with a track record of operations in well regulated markets.
- The arrangement with Overseas Principal should result in considerably increasing access to formal money transfer facilities at both ends.
- 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 report certified by independent Chartered Accountants, regarding steps taken 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, 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.
- Guidelines for appointment of Sub Agents by Indian Agents
