RBI removes prior approval for non-bank outward-remittance tie-ups
AD banks must own FEMA, KYC and settlement controls for remittance tie-ups
Change
The Reserve Bank of India (RBI) issued A.P. (DIR Series) Circular No.10 on 13 May 2026, deleting Para 10 of the Master Direction - Miscellaneous with immediate effect and removing RBI prior approval for non-bank entities to facilitate online outward remittances through Authorised Dealer Category I banks.
Why it matters
The approval gate moves from RBI to Authorised Dealer banks with immediate effect. AD banks now carry direct responsibility for FEMA compliance, KYC, customer disclosures, settlement, grievance redressal and third-party oversight when outward remittances use non-bank online interfaces. Non-bank platforms gain a simpler route to partner with AD banks, but the operating framework turns the bank agreement, customer flow, invoice, data handling and fund-routing controls into enforceable compliance objects.
Implications
- — Authorised Dealer Category I banks must approve, monitor and control non-bank remittance tie-ups under their own FEMA, KYC and customer-protection framework — RBI prior approval no longer acts as the external gate.
- — Remittance compliance, operations and product teams at AD banks must update third-party agreements, website disclosures, invoice formats, grievance processes, data-storage notices and settlement tracking before routing transactions through non-bank interfaces.
- — Non-bank remittance platforms must ensure customer-facing flows display the AD name, FX rate timestamp and validity, full cost break-up, credited foreign-exchange amount, beneficiary-credit timeline and grievance contact details.
Who is affected
- — Authorised Dealer Category I banks handling outward remittances
- — Non-bank remittance platforms using websites, apps or online interfaces
- — Payments compliance, remittance operations and product teams
What to watch
- — Immediate effect — Para 10 of Master Direction - Miscellaneous stands deleted from May 13, 2026.
- — Customer-funds routing — AD banks must ensure remitter funds do not flow into the third party's India account at any stage.
- — Third-party website disclosures — AD banks must publish names, roles, responsibilities and grievance contacts for online remittance arrangements.