Overview

The easiest way of money remittance to India is through Money Transfer Service Scheme. If you're confused about how to send money from foreign country to India through Money Transfer Service Scheme then you're at the right place.

About the MTSS

MTSS (Money Transfer Service Scheme) is the most convenient options for the purpose of inward remittance of money from abroad to India. The facility provided under this scheme can be availed by the tourists traveling to India. By using MTSS facility, money can be transferred to India. However, under MTSS, no outward remittance is permitted. Only Inward remittance in India is allowed. Under this, remittance can be done in a speedy & hassle-free manner.

Advantage

The concept of MTSS (Money Transfer Service Scheme) has been introduced as inward remittances contribute to the national income of India as well as it is the biggest source of external financing. With the help of MTSS, cross-border inward remittances can be received by the people through banking and postal channels. However, the most common postal channel which has been used for this purpose is the International Financial System (IFS) platform of Universal Post Union (UPU). Usually, banks are permitted to enter into agreements with other banks for the remittance business.

Two modes of inward remittances

• Rupee Drawing Arrangement (RDA)
• Money Transfer Service Scheme (MTSS)

Difference between RDA & MTSS

Rupee Drawing Arrangement (RDA) is a type of method through which money can be received from overseas in the form of remittance. RDA is only limited to individuals however for trade purpose money can be transferred up to a certain limit through RDA. Through this way, only certain AD-I (Authorized Dealer-I) category bank is permitted to transact. For the purpose of money exchange under RDA, authorized exchange houses as their representative in a foreign are used by the authorized banks which are RBI approved. Remitted money is transferred to the bank account of the receiver while no remittance in cash is permitted. Under RDA, there is no limit on the transfer of money to an account of the individual. For the trade purpose, there is an upper limit on money exchange of Rs. 500000. There is no provision of cash remittance under RDA.

These two are slightly different from the perspective of RBI.

Inward remittance through MTSS is done through the fund transfer services outside India, who work by coordinating authorized agents in India. Funds cannot be transferred through this way for trade or charity donations.

There are limits for inward remittance through MTSS which are capped at USD 2,500 per transfer along with this, maximum 30 transfers can be received by a single recipient in one calendar year.

Under MTSS; there is an allowance for cash remittance. Currently, for cash remittance, there is a limit of Rs. 50000 and in case of amount more than this; it will be paid via cheque, demand draft, etc. Whereas in case of foreign tourist more than Rs. 50000 is allowed in cash via MTSS.

Who can do?

Under the MMTS (Money Transfer Service Scheme), Reserve Bank of India may grant permission to any person to act as an Indian Agent as per Section 10(1) of the Foreign Exchange Management Act (FEMA), 1999. Unless the Reserve Bank of India has granted permission, no person can handle the business of cross-border money transfer to India.

In order to become an Indian agent, an applicant must be Authorized Dealer Category-I bank or an Authorized Dealer Category-II or a Full Fledged Money Changer (FFMC), or a Scheduled Commercial Bank or the Department of Posts.

Basic requirements

For the applicant, there is a requirement of minimum Net Owned Funds of 50 lakhs.

What is the procedure to apply to act as an Indian agent with the Reserve Bank of India?

To act as an Indian agent, an application is required to be filed with the Reserve Bank of India (Foreign Exchange Department) under whose jurisdiction the registered office of the applicant is situated.

The following documents are required to be filed, For filing application

• The declaration is required to be submitted regarding no proceedings have been initiated or pending against the Applicant and its Director, before the Directorate of Enforcement/ Directorate of Revenue Intelligence or any other law enforcing authorities.
• A declaration regarding the proper policy framework has been framed in respect of KYC / AML / CFT in accordance with the guidelines issued by Reserve Bank of India.
• Details such as the name and address of the registered entity (Overseas Principal) with whom the Indian Agent will enter into an agreement under MTSS.
• By the Overseas Principal, complete details of the operation of the scheme.
• Details of branches in India where MTSS will be conducted by the applicant.
• Under the scheme, the estimated volume of business per month/year.
• Audited financial statements of the applicant for the last two years, if available otherwise copy of the latest audited accounts along with a certified copy of Net Owned Funds from the statutory auditor as on date of Application.
• Copy of Memorandum and Articles of Association of the applicant where there is a provision regarding the money transfer business or make appropriate amendment.
• Confidential Report in a sealed cover from at least two of the applicant’s bankers.
• Details of sister concern or associated concern of the applicant operating in the financial sector.
• A certified copy of the board resolution by the applicant regarding the money transfer business.
• A letter from the proposed Overseas Principal who agrees to enter into an agreement with the applicant and also to provide necessary collateral.

Guidelines

Following documents are required to be submitted by the applicant:

• It is required to obtain prior permission 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 operate a payment system by the Overseas Principal.
• The overseas principal should be a registered entity with the Central Bank / Government or financial regulatory authority concerned for carrying on Money Transfer Activities.
• There should be a minimum Net-Worth of at least US $ 1 million of the registered entity as  
• The Apex Bank may relax the minimum Net Worth criterion in case of Overseas Principals incorporated in FATF member countries supervised by the government authority.
• The Overseas Principal should be well established in the money transfer business with a track record of operations in well-regulated markets.
• The facility or arrangement with Overseas Principal should result in considerably increasing access/entry to formal (legal) money transfer facilities at both ends. It means both countries should be benefited from this kind of arrangement. 
• They should be registered with the overseas trade / Industry bodies.
• They should have obtained a good rating from one of the international credit rating agencies.
• A confidential report has to be submitted from at least two of its bankers.
• A certified report should be submitted by independent Chartered Accountants, on the subject of initiation to comply with anti-money laundering norms in the home/ host country.
• It will be the full responsibility of the overseas principal regarding the activities of their Agents and Sub Agents in India.

Overseas Principals have to maintain proper records of remitters as also beneficiaries pertaining to all pay-outs in India. On demand to the Reserve Bank or other agencies of the Government of India, Ministry of Finance, Ministry of Home Affairs, FIU-IND, etc, records and full details of the parties should be accessible.

Process of sending money to India through MTSS

The process of sending money to India through MTSS is quite simple, which includes the following:

• For the remittance of money, remitter has to visit Money Gram location or Western Union Money Transfer outlet in such country where the service is operational. Then the form is required to be filled with the fees as required along with the additional charges applicable. After this, a unique MTCN (Money Transfer Control Number) will be generated by the system which acts as the Reference Number.
• The remitter has to inform payee regarding the deposit. After this, Payee has to visit the Post Office to fill the necessary form and to display identification documents for verification.
• Thereafter MTCN is required to be given to an officer who verifies from the transaction record.

After verification, money is delivered to the payee in Indian currency. In one transaction, remittance of up to 2500 USD is permitted as per the RBI guidelines which cannot be overruled. Only up to the amount 50,000 INR can be paid in cash above this, the amount can be directly deposited in the account or a cheque in the name of the beneficiary.

The process of money remittance to India hardly takes time. In spite of the fact that there is a limit of maximum 30 transactions annually, lots of people are taking benefit of this.

We highly recommend people should apply for this opportunity to become an Indian agent and take the permission of the concerned authority and disburse funds to beneficiaries in India at ongoing exchange rates.

Who is an Indian agent and what they do?

Indian agents carry out the money transfer activities under the MTSS framework. In order to become an Indian Agent, an applicant should be one of the following:

1. An Authorized Dealer Category-I bank or
2. An Authorized Dealer Category-II or
3. A Full Fledged Money Changer (FFMC) or
4. The Department of Posts

In addition, sub-agents may also be appointed by Indian agents who may be retail outlets, commercial entities.

What permissions are required to operate under MTSS?

To operate under the MTSS framework, Indian agents require permission from the respective Regional Office of the Reserve Bank of India (Foreign Exchange Department). Whereas the migrant head is required to obtain the necessary authorization from the Reserve Bank of India under the provisions of the Department of Payment and Settlement Systems, Payment and Settlement Systems Act (PSS Act), 2007.

What types of remittances can be received under MTS?

Under this arrangement, only individual cross-border remittances, such as remittances for the maintenance of family and remittances in favor of foreign tourists visiting India. Through this arrangement, donations to charitable institutions or trusts, remittances related to business, remittances towards property purchases, investments or credits in NRE accounts are not permitted.

Is there a limit on the amount of money to be sent under MTSS?

Under MTSS, there is a cap of 2,500 USD in case of individual remittances. In addition, 30 remittances under MTSS can be received by a single individual beneficiary in a calendar year.

Is cash remittance allowed under MTSS?

For cash remittance, there is a cap of INR 50,000 / -. This amount can be paid in cash to a beneficiary in India. Any amount in excess of this prescribed amount will be paid through account payee check / demand draft / payment order, etc., or credited directly to the beneficiary's bank account. However, in case of foreign tourist Rs. 50,000 can be distributed in cash.