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Master Circular on Money Transfer Service Scheme

FEMA - 01/2015-16 - Dated:- 1-7-2015 - RBI/2015-16/88 Master Circular No. 1 /2015-16 July 1, 2015 To All Authorised Persons, who are Indian Agents under the Money Transfer Service Scheme Madam / Sir, 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 permissibl .....

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PART-A SECTION I Guidelines for permitting (authorising) Indian Agents under Money Transfer Service Scheme (MTSS) SECTION II Guidelines for Overseas Principals SECTION III Guidelines for appointment of Sub-Agents by Indian Agents SECTION IV Guidelines for renewal of permission (authorisation) of existing Indian Agents SECTION V Inspection of Indian Agents SECTION VI KYC/ AML/ CFT Guidelines for Indian Agents SECTION VII General Instructions PART-B Reports / Statements Annex-I: Format for Sub Age .....

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ward 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 Agent is not allowed to remit any amount t .....

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e Reserve Bank. 1.3 These guidelines lay down basic conditions for grant of permission (authorisation) to Indian Agents and renewal of existing MTSS permissions given to them. These guidelines also include guidelines for Overseas Principals and appointment of Sub-Agents by the Indian Agents. The guidelines are not exhaustive and other relevant information, security considerations, etc., will be factored into the decision of permitting an entity. These guidelines will apply to all applications pe .....

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efined in the A.P. (DIR Series) Circular No. 25 [A.P. (FL Series) Circular No. 02] dated March 6, 2006, or a Scheduled Commercial Bank or the Department of Posts. (ii) The applicant should have minimum Net Owned Funds of ₹ 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 in .....

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Department of the Reserve Bank of India, under whose jurisdiction the registered office of the applicant falls1 and should be accompanied by the documents pertaining to its proposed Overseas Principal, as detailed in Section II below and the following documents: a. 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 o .....

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2 and other instructions in this regard so far and from time to time in future, mutatis mutandis, 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. c. Name and address of the Overseas Principal with whom the MTSS will be conducted. d. Full details of the operation of the scheme by the Overseas Principal. e. List of branches in India and their addresses where MTSS will be cond .....

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an appropriate amendment thereto has been filed with the Company Law Board. i. Confidential Report from at least two of the applicant's bankers in sealed cover. j. Details of sister/ associated concerns of the applicant functioning in the financial sector. k. A certified copy of the board resolution for undertaking money transfer business by the applicant. l. A letter from the proposed Overseas Principal, agreeing to enter into tie up with the applicant and also to provide necessary collater .....

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the past three months. 5. 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/trusts, 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 US $ 2500 has been placed on individual remitt .....

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tors. c. Only 30 remittances can be received by a single individual beneficiary under the scheme during a calendar year. 6. 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 .....

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ay 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 followi .....

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a, b. 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. c. The minimum Net Worth of Overseas Principals should be at least US $ 1 million as per the latest audited balance sheet, which should be maintained at all times. However, the Reserve Bank may consider relaxing the m .....

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pal should be registered with the overseas trade / Industry bodies. g. The Overseas Principal should have a good rating from one of the international credit rating agencies. h. The Overseas Principal should submit confidential reports from at least two of its bankers. i. 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. j. The Overseas Principals will be fully r .....

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. SECTION III Guidelines for appointment of Sub Agents by Indian Agents: 1. The Scheme Under the Scheme, Indian Agents can enter into Sub Agency agreements with entities, fulfilling certain conditions, for the purpose of undertaking money transfer business. 2. Sub Agents A Sub Agent should have a place of business, and whose bonafides are acceptable to the Indian Agent. Indian Agents are free to decide on the tenor of the arrangement as also the commission or fee through mutual agreement with th .....

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tive Regional Offices of the Foreign Exchange Department of the Reserve Bank under whose jurisdiction the registered office of the Indian Agent falls for onward submission to the Ministry of Home Affairs (MHA), Govt. of India (GoI) through the Ministry of Finance (MoF), Govt. of India (GoI). In case of any objection by the MHA, the Sub Agency arrangement concerned should be terminated immediately. Indian Agents should also furnish certificates along with the information in Annex-I that the Sub A .....

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her applicable municipal certification in favour of the Sub Agent 9 verification of physical existence of location of the Sub Agent conduct certificate of the Sub Agent from the local police authorities. (certified copy of Memorandum and Articles of Association and Certificate of Incorporation in respect of incorporated entities). Note: Although obtaining of conduct certificate of the Sub Agent from the local police authorities is non-mandatory for the Indian Agents, the Indian Agents must take .....

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least once in a year. The Indian Agents should obtain from the Sub Agents proper documentary evidence confirming the location of the Sub Agents in addition to personal visits to the site. The Indian Agents should discontinue agreements with Sub Agents who do not meet the criteria laid down above within three months from the date of this circular. 5. Selection of Centers The Indian Agents are free to select centers for operationalising the Scheme. However, this may be advised to the Reserve Bank .....

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nducted by Indian Agents. Such audits should involve a dedicated team and 'mystery customer'(Individuals acting as potential customers to experience and measure the extent up to which people and process perform as they should) concept should be used to test the compliance carried out by Sub Agents. As mentioned above, a system of inspection of the books of the Sub Agents should be put in place. The purpose of such inspection, which should be done at least once a year, would be to ensure .....

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an Agents concerned and Reserve Bank of India can in no way be held responsible for the activities of the Sub Agents. Each Indian Agent would be required to conduct due diligence before appointing a Sub Agent and any irregularity observed could render the Indian Agent s permission liable for cancellation. SECTION IV Guidelines for renewal of permission(authorization) of existing Indian Agents: 1. Necessary permission to Indian Agents will be issued initially for a period of one year, which may b .....

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Indian Agent should have minimum Net Owned Funds of ₹ 50 lakh. 4. Application for renewal of permission should be submitted to the Regional Office concerned of the Foreign Exchange Department of the Reserve Bank under whose jurisdiction the registered office of the Indian Agent falls along-with the documents pertaining to the Overseas Principal as detailed in Section II above and the following documents: a. A declaration to the effect that no proceedings have been initiated by / are pendin .....

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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. d. Confidential Reports from at least two of the bankers of the Indian Agent in sealed cover. e. Details of sister/ associated concerns of the Indian Agent functioning in the financial sector. f. A certified copy of the board resolution for renewal of permission. Note :- An application for the renewal of permission under MTSS .....

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Indian Agents Inspections of the Indian Agents may be conducted by the Reserve Bank under the provisions of Section 12(1) of the FEMA, 1999. SECTION VI KYC/ AML/ CFT Guidelines for the Indian Agents Detailed instructions on Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating the Financing of Terrorism (CFT) for Indian Agents under MTSS in respect of cross-border inward remittance activities, in the context of the FATF Recommendations on Anti Money Laundering standards .....

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er MTSS and to their Sub-agents. SECTION VII General Instructions All Overseas Principals are required to submit their annual audited balance sheet along with a certificate on Net Worth from their Statutory Auditors to the concerned Regional Office of the Foreign Exchange Department and the Department of Payment and Settlement Systems of the Reserve Bank. Similarly, all Indian Agents are required to submit their annual audited balance sheet along with a certificate from their Statutory Auditors .....

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the minimum level. PART-B Reports / Statements 1. A quarterly statement of the quantum of remittances received, as per the enclosed format (Annex-II) should be furnished by the Indian Agents to the Regional Offices (ROs) concerned of the Foreign Exchange Department (FED) of the Reserve Bank, under whose jurisdiction their registered offices fall within 15 days from the close of the quarter to which it relates. 2. List of their additional locations should be furnished by the Indian Agents to the .....

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e, full updated list (names and addresses of all the locations) of the Sub Agents, whenever they appoint/ remove any Sub Agent. Indian Agents should visit the RBI website and verify the list of Sub Agents on regular intervals and any aberration to the list observed may immediately be brought to the notice of the concerned FED ROs. Further, Indian Agents should confirm the veracity on quarterly basis of the list placed on RBI wesbite to their respective FED ROs either in form of a letter or by e- .....

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ondence with Reserve Bank including submission of prescribed statements to the Regional Office of the Foreign Exchange Department of the Reserve Bank, under whose jurisdiction their registered offices function. Annex-I Format for Sub Agents of Indian Agents of MTSS 1. Name of the Sub Agent 2. Sub Agent Category (AD Cat-I bank/ AD Cat-II/ Other Scheduled Commercial Bank/ Full Fledged Money Changer/ Department of Posts/ Registered NBFC/ Others) 3. Address of the registered/corporate/administrative .....

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s certified by which Chartered Accountant? Details (Enclosures as at Annex-Ia) 12. Whether prosecuted/ convicted for criminal/ economic offence? If yes, particulars thereof (Enclosures as at Annex-Ia) 13. Whether the Sub Agent is solvent as on date 14. Details (Name, Designation, Nationality, Residential address, PAN No., Name/s of other company/ies in which the person has held any post, Details of equity shareholding in the company, if any) of Chairman/Managing Director/Director/Chief Executive .....

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ion for conducting money transfer activities, submission of application and its contents including authorization of an official to make the application. 4. Details of associates, group companies, etc. 5. PAN Card/s of the Director/s. 6. Bank Account details and sealed confidential reports from banks. 7. A certificate from Chartered Accountant certifying Net Owned Funds 8. Balance Sheet and P&L A/c statement for the last three years. 9. Business plan for the next three years. 10.Conduct certi .....

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Indian Agent ______________________________________ Name of the Overseas Principal Total quantum of remittances received in US $ INR equivalent Note: This statement is required to be submitted to the Regional Office concerned of the Foreign Exchange Department of the Reserve Bank within 15 days from the close of the quarter to which it relates. Annex-III Statement of Collateral kept by Indian Agents Name of the Indian Agent __________________________ Name of the Overseas Principal Total quantum .....

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culars/ Notifications which have been consolidated in the Sl. No. Notification/ Circular Date 1. Notification on MTSS June 4, 2003 2. A.P. (DIR Series) Circular No. 18 [ A.P.(FL Series) Circular No. 05] November 27, 2009 3. A.P. (DIR Series) Circular No. 19 [ A.P.(FL Series) Circular No. 02] November 25, 2010 4. A.P. (DIR Series) Circular No. 21 [ A.P.(FL Series) Circular No. 04] November 30, 2010 5. A.P. (DIR Series) Circular No. 24 [ A.P.(FL Series) Circular No. 05] December 13, 2010 6. A.P.(D .....

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