{"id":68779,"date":"2023-12-27T22:31:30","date_gmt":"2023-12-27T17:01:30","guid":{"rendered":"https:\/\/pwonlyias.com\/stage\/?post_type=current-affairs&#038;p=68779"},"modified":"2023-12-28T17:36:56","modified_gmt":"2023-12-28T12:06:56","slug":"forex-and-money-changing-services","status":"publish","type":"current-affairs","link":"https:\/\/pwonlyias.com\/stage\/current-affairs\/forex-and-money-changing-services","title":{"rendered":"RBI&#8217;s Draft Norms for Forex and Money Changing Services"},"content":{"rendered":"<p><b>Context:<\/b><span style=\"font-weight: 400;\"> The Reserve Bank of India (RBI) has proposed draft norms to <\/span><b>improve the reach of Forex and Money changing services.\u00a0<\/b><\/p>\n<h2><span style=\"font-size: 18pt;\"><b>RBI&#8217;s Revised Approach to improve the reach of Forex and Money changing services<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">In light of the widespread availability of banking services but limited foreign exchange-related services, RBI has proposed improving access to such services.\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The Forex-related authorization is based on the <\/span><b>Foreign Exchange Management Act (FEMA).\u00a0<\/b>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">This Act empowers the Central Government to regulate the flow of payments from and to anyone outside India.\u00a0\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">These authorizations were <\/span><b>last reviewed in March 2006<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><span style=\"font-size: 18pt;\"><b>Present Situation:\u00a0<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Currently, the Reserve Bank <\/span><b>issues 2 types of licenses<\/b><span style=\"font-weight: 400;\">:<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">To <\/span><b>authorised dealers<\/b><span style=\"font-weight: 400;\"> such as banks authorized to deal in and settle foreign exchange\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">To <\/span><b>full-fledged money changers<\/b><span style=\"font-weight: 400;\">, who provide retail services.\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Special Licences<\/b><span style=\"font-weight: 400;\"> are also granted to financial and other institutions to carry out specific foreign exchange transactions related to their business.<\/span><\/li>\n<\/ul>\n<h2><span style=\"font-size: 18pt;\"><b>RBI\u2019s Proposed Norms for Forex and Money Changing Services<\/b><\/span><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>AD Category-I<\/b><span style=\"font-weight: 400;\">: They are the banks, who will have the authorisation for <\/span><b>settlement regarding forex prepaid cards.\u00a0<\/b><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>AD Category-II<\/b><span style=\"font-weight: 400;\">: Authorized dealers category-II can <\/span><b>issue forex prepaid cards<\/b><span style=\"font-weight: 400;\"> to residents traveling on private\/business visits abroad, subject to adherence to KYC\/AML\/CFT requirements.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">RBI has proposed to renew an existing authorisation as an AD category-II on a <\/span><b>perpetual basis. <\/b><span style=\"font-weight: 400;\">This will reduce the regulatory burden and enhance the ease of doing business.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">The draft proposed allowing AD Category-II entities to facilitate trade-related transactions up to a value of Rs 15 lakh per transaction.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A<\/span><b> new category of money changers<\/b><span style=\"font-weight: 400;\"> has been proposed:\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">They may conduct money changing business through a principal-agency model by becoming <\/span><b>Forex Correspondents (FxCs)<\/b><span style=\"font-weight: 400;\"> of category-I and category-II authorized dealers.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">AD Category-I or AD Category-II will act as the principal for the FxCs.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Such FxCs entities will not be required to seek authorisation from the RBI.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><b>Must Read: <\/b><a href=\"https:\/\/pwonlyias.com\/stage\/current-affairs\/indias-forex-reserve\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">India&#8217;s Forex Reserves Up By $2.54 Bn To $597.94<\/span><\/a><\/p>\n<p><b>Source: <\/b><a href=\"https:\/\/www.business-standard.com\/finance\/news\/rbi-proposes-framework-to-rationalise-money-changers-authorisation-123122600921_1.html\" target=\"_blank\" rel=\"nofollow noopener\"><b>Business Standard<\/b><\/a><\/p>\n<p>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Context: The Reserve Bank of India (RBI) has proposed draft norms to improve the reach of Forex and Money changing services.\u00a0 RBI&#8217;s Revised Approach to improve the reach of Forex and Money changing services In light of the widespread availability of banking services but limited foreign exchange-related services, RBI has proposed improving access to such&hellip; <a class=\"more-link\" href=\"https:\/\/pwonlyias.com\/stage\/current-affairs\/forex-and-money-changing-services\">Continue reading <span class=\"screen-reader-text\">RBI&#8217;s Draft Norms for Forex and Money Changing Services<\/span><\/a><\/p>\n","protected":false},"author":11,"featured_media":0,"menu_order":0,"comment_status":"open","ping_status":"open","template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"tags":[],"paper-wise":[2089],"subject":[2100],"acf":[],"_links":{"self":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs\/68779"}],"collection":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs"}],"about":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/types\/current-affairs"}],"author":[{"embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/comments?post=68779"}],"version-history":[{"count":3,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs\/68779\/revisions"}],"predecessor-version":[{"id":69005,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/current-affairs\/68779\/revisions\/69005"}],"wp:attachment":[{"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/media?parent=68779"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/tags?post=68779"},{"taxonomy":"paper-wise","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/paper-wise?post=68779"},{"taxonomy":"subject","embeddable":true,"href":"https:\/\/pwonlyias.com\/stage\/wp-json\/wp\/v2\/subject?post=68779"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}