Reserve Bank of India (RBI) removes approval requirement for banks' outward remittance tie-ups with fintechs

Key facts

• The Reserve Bank of India (RBI) has allowed Authorised Dealer (AD) banks to facilitate outward remittance services through third-party online platforms without seeking prior approval from the central bank.
• The revised framework applies to cross-border outward remittance of funds for non-trade current account transactions facilitated through websites, online platforms, software applications, and mobile applications.
• The responsibility for regulatory compliance, Know Your Customer (KYC) checks, and Foreign Exchange Management Act (FEMA) adherence remains solely with the AD banks.
• The RBI directed that remitter funds must not flow into the account of the third-party entity in India and banks must ringfence customer funds from insolvency risks.
• Banks and their third-party partners must ensure customer data collection is consent-based and compliant with the Digital Personal Data Protection (DPDP) Act.