Remittances is a channel which act as a source of income for a family  and national income and also are one of the largest sources of external financing. Through banking and postal channels beneficiaries in India can receive cross-border inward remittances. For conducting remittance business banks have general permission to enter into a partnership with other banks. For the postal channel the International Financial System (IFS) platform of Universal Post Union (UPU) is generally used. Rupee drawing arrangement (RDA) and Money Transfer Service Scheme ( MTSS) are two more channels for receiving inward remittances and which are the most common arrangements under which the remittances are received into the country.

What is Money Transfer Service Scheme?

Money Transfer Service Scheme (MTSS) is a channel used by the non-residents of India is a way of transferring personal remittances from abroad to beneficiaries in India. Only inward personal remittances is permitted s towards family maintenance and remittances favoring foreign tourists visiting India are permissible. Generally under this scheme there is a tie-up between reputed money transfer companies abroad which are known as Overseas Principals and agents in India known as Indian Agents who would disburse funds to the beneficiaries in India at the current ongoing exchange rates.

Overseas Principal

The Overseas Principal implies to a registered entity or organization which obtains its license from the central Bank/Government of financial regulatory authority of the  concerned for carrying on Money Transfer Activities. The country which is registered under There is a provision that  overseas Principal should be AML compliant. It is necessary for the the Overseas Principal entities to  obtain necessary authorization from the Department of Payment and Settlement Systems, Reserve Bank of India under the provisions of the Payment and Settlement Systems Act (PSS Act), 2007 to commence/ operate a payment system.

How To Become An Indian Agent?

There is a certain procedure that one must follow to   become an Indian Agent, the applicant should be an Authorised Dealer Category-I bank or the applicant should be an Authorised Dealer Category-II or the applicant should be a Full Fledged Money Changer (FFMC) or the Department of Posts. Further, there is a provision under which  the Indian agents can also be appointed as the  sub-agents which can be retail outlets, commercial entities having a place of business, and whose bonafides are acceptable to the Indian Agent.

Limit On The Amount Of Money Which Can Be Sent Under MTSS

There is a  cap of USD 2,500 along with  thirty remittances can be received by a single individual beneficiary under the scheme during a calendar year.

Also, the amounts up to INR 50,000/- may be paid in cash to a beneficiary in India which can  also be loaded on to a pre-paid card issued by banks. If there is any amount exceeding this limit shall be paid by means of account payee cheque/ demand draft/ payment order, etc., or credited directly to the beneficiary’s bank account.

Rupee Drawing Arrangement (RDA)

Rupee Drawing Arrangement (RDA) is a way through which one can  receive cross-border remittances from overseas jurisdictions. As per this system,  the Authorized Category I banks enter into tie-ups with the non-resident Exchange Houses in the FATF compliant countries to open and maintain their Vostro Account.

Types of Remittances which can be sent under RDA

RDA is primarily on private account the cross- border inward remittances into India under  The remitter and the beneficiary should be individuals barring a few exceptions. Upto a certain limit transaction are also permitted, through Exchange Houses for financing of trade.

What Is The Limit On The Amount Of Money Which Can Be Sent Under RDA?

Currently, there is no limit on the remittance amount as well as on the number of remittances but  there is an upper cap of Rs.15.00 lakh for trade related transactions. and there is no cash payment which can be made to the beneficiary under RDA.