Money Transfer Service Scheme
Money Transfer Service Scheme (“MTSS”) is a scheme notified by Reserve Bank of India (“RBI”) on 1st July 2015. An Indian agent for a quick and easy way of transferring the personal remittance from abroad to beneficiaries in India needs to register under MTSS. It is a tie-up between Overseas Principals and agents in India known as Indian Agents who would provide funds to beneficiaries in India at ongoing exchange rates.
Features of MTSS
- Personal remittances include family maintenance & remittance favoring foreign tourists visit India.
- Outward remittance from India is not permissible.
- Only individual personal remittance is allowed with the cap of US $ 2500.
- Amount up to 50,000 can be paid to the beneficiary in the form of cash beyond which shall as a mandate be via bank transfer.
- An individual can receive a maximum of 30 remittances during a calendar year.
Terms to know
An applicant who wants to become an Indian Agent has to follow certain criteria such as:
- Authorized Dealer of Category –I/Authorized Dealer of Category –II/Full Fledged Money Changer/Schedule Commercial Bank/Department of Posts.
- Minimum net owned funds of Rs. 50 lakh.
The registered entity, licensed by the Central Bank or Central 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 Anti Money Laundering compliant and the Overseas Principal should obtain necessary authorization from the Department of Payment and Settlement Systems, Reserve Bank of India to commence/ operate a payment system in India.
Any Indian individual who received the inward remittance from the Indian Agent.
Procedure to become Indian Agent
The following procedure has to be followed to become an Indian Agent:
- Application has to be made to the Regional Office of Foreign Exchange Department of RBI under whose jurisdiction of the registered office of the applicant falls.
- Along with the applicant is required to submit the documents of Indian Agent and Overseas Principal.
- Prepare documents and submit collateral security equivalent to 3 days average drawings or the US $ 50,000 whichever is higher by the Overseas Principal in favor of an Indian Agent with a designated bank in India.
- Indian Agent should commence the transaction under MTSS within a period of six months from the date of issuance of authorization by Reserve Bank of India.
- The authorization from the Reserve Bank of India is valid for a period of one year.
- The application for renewal of permission can be made for tenure one to three years on the basis of the fulfillment of conditions.
List of documents required for Indian Agent
- A declaration that no prosecutions are pending with the Directorate of Enforcement (“DoE”) & Directorate of Revenue Intelligence (“DRI”) against the company or its directors.
- A declaration that no criminal proceedings are initiated or pending against the company or its directors.
- the declaration that proper policy framework such as Know Your Customer(KYC)/Anti Money Laundering (AML) Standard/Combating of Finance of Terrorism (CFT)/Obligations of Banks/other obligations are followed.
- Name & address of Overseas Principal with whom MTSS will be followed.
- Full detail of the operation of the scheme by Overseas Principal.
- List of branches in India and their addresses where MTSS will be conducted.
- Estimated volume of business per month/year under the scheme.
- Audited balance sheet and profit & loss account of the last two financial year or a copy of the latest audited balance sheet with a certificate from statutory auditor regarding the net owned fund of the applicant.
- Memorandum of Association & Article of Association stating for taking up money transfer business or a copy of the amendment.
- Confidential report from at least two applicant’s bankers in a sealed envelope.
- Detail of associated entity of applicant dealing in the finance sector.
- A certified true copy of board resolution for undertaking the money transfer business.
- Acceptance letter from Overseas Principal for collaboration.
List of documents required for Overseas Principal
- Obtain authorization from the Department of Payment and Settlement Systems, RBI to commence/operate a payment system.
- Overseas Principal should be registered entity either with the Central Bank/Government or financial regulatory authority of the country for money transfer service.
- The minimum net owned fund should be at least US $ 1 million as per the latest audited balance sheet.
- Overseas Principal should be a well-established entity with a good track record of the money transfer business.
- Overseas Principal should be registered with the overseas trade/industry bodies.
- Overseas Principal should obtain a credit rating from one of the international credit rating agencies.
- Confidential report from at least two of its bankers.
- Statement regarding complies with anti-money laundering norms certified by an independent chartered accountant in the home country.
- Overseas Principal will be liable for all acts of Agent and Sub Agent in India.
- A proper record of remitters and beneficiaries is to be maintained.
Compliances by Indian Agent
Timely reporting by the Indian Agent to the Regional Office of Foreign Exchange Department by RBI in which the jurisdiction of registered office falls is as follow:
|Quarterly Statement||Within 15 days from the end of the quarter||Quantum of remittance received|
|List of additional location||Within 15 days from the end of the quarter||Where the Indian agent having its operation.|
|E-mail the excel sheet||Within 15 days from the end of the quarter||Appoint or remove any sub-agent|
|Half-yearly statement||Within 15 days from the end of half-year||Hold of collateral security|
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Also Read: Business Transfer Agreement