RBI/2006-07/184
FE.CO.FMD. 10653/17.03.00(Policy)/2006-07
November 16, 2006
To,
The Chairperson/ Chief Executives of Category – I Authorised
Dealer Banks
Dear Sir/ Madam,
Working group on Cost of NRI Remittances-
Implementation of the Recommendations
The Working Group (Chairman: Shri P.K. Pain)
constituted by the Reserve Bank to examine various cost aspects of NRI remittances
submitted its report in August 2006, which was placed on the Reserve Bank website
inviting feedback from the public. Taking into account the feedback received
on the Report, the Reserve Bank has decided to take following measures:
a) Rupee Drawing Arrangements
In terms of the extant policy, a prudential
cap of 20 arrangements has been placed on tie-ups by banks with Exchange Houses
under the Rupee Drawing Arrangements. Further, in terms of the provisions contained
in our Circular EC.CO.DRD/937/17.03.00(Policy)/98-99 dated June 10, 1999, the
total number of branches on which drafts of Exchange Houses could be drawn has
been capped at 300. In order to enhance the existing channels for cost-effective
and speedy remittance facilities to the NRIs, it has been decided to dispense
with the existing restrictions on the number of tie-ups with Exchange Houses
and the number of drawee branches for rupee drawing arrangements, subject to
the banks having sound risk management systems and regular monitoring of funds
position to avoid concealed overdrafts in the vostro accounts.
b) Awareness Programme for NRIs
The Group had suggested several measures to
sensistise the NRIs regarding the cost of remittances. Accordingly, the banks
may put in place an 'Awareness Programme' to sensitise NRIs on the options available
to them to minimize the cost of remittances.
c) Review of Charges and Improvements in Infrastructure
Banks may review their existing scale of charges,
both at the foreign and domestic end to minimize the current cost of remittances.
Banks may also endeavour for improvements in infrastructure and extending the
scope of electronic payment mechanism for inter-city settlement between the
banks in India so as to reduce the cost of NRI remittances.
d) Independent Business Segment
Large banks may examine the feasibility of setting
up Centralized Remittance Receiving Centers for efficiency and better customer
service. Further, they may identify remittances as an independent business segment
and resort to latest technology for handling large volume at lower cost and
explore tie-ups with more correspondent banks at existing and new centers.