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MTSS (Money Transfer Service Scheme)

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Registration of Indian Agent under the Money Transfer Service Scheme

Money Transfer System Scheme is the fastest way to transfer money to India. If you're uncertain about how to send money from abroad through the Money Transfer Service Scheme to India, then you're in the right place.

What does MTSS (Money Transfer Service Scheme) mean?

MTSS (Money Transfer Network Scheme) is the easiest way to transfer money from overseas to India. Tourists traveling to India will take advantage of the facilities offered under this scheme. Money can be transferred to India through the use of MTSS network. Under MTSS, however, no outward remittance is allowed. Only Inward remittance is permitted in India. In this way, the remittance can be done quickly and without any problems.

Why does MTSS (Money Transfer Service Scheme) concept has been introduced?

The MTSS (Money Transfer Service Scheme) idea is initiated as inward remittances add to India's national income as well as being the largest source of external funding. With the help of MTSS, people can receive cross-border inward remittances via banking and postal channels. The most popular postal system used for this purpose, though, is the Universal Post Union (UPU) International Financial System (IFS) network. Banks are typically allowed to enter into arrangements for the remittance sector with other banks.

There are, in comparison, two ways to consider internal remittances

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

What distinguishes the Rupee Drawing Arrangement (RDA) & Money Transfer Service Scheme (MTSS)?

Rupee Drawing Arrangement (RDA) is a type of system by which cash in the form of remittances can be obtained from overseas. RDA is limited to individuals, but money can be transferred through RDA up to a certain limit for commercial purposes. There is no cap on the transfer of money to an individual's account under RDA. There is an upper limit on Rs. 500000 money exchange for the purpose of trade. Under RDA, money remittance is not received.

Such two are somewhat distinct from RBI's viewpoint.

Inward remittance through MTSS is rendered via non-India fund transfer companies, which operate through the supervision of approved agents in India. Funds cannot be converted to trade or charity donations through this process.

There are restrictions for inward remittance via MTSS that, along with this, is fixed at USD 2,500 per transaction; a total of 30 transfers can be obtained in one calendar year by a single recipient.

Under MTSS; money remittance allowance is free. There is currently a limit of Rs. 50000 for cash remittance and, if the amount exceeds this, it will be paid by check, demand draft, etc. In the case of foreign tourists, MTSS allows more than Rs. 50000 in cash.

Who all are eligible to carry out the operations of money transfer business to India?

Under the MMTS (Money Transfer Service Scheme), Reserve Bank of India may allow anyone to work as an Indian Agent in compliance with Section 10(1) of the Foreign Exchange Management Work (FEMA), 1999. If approval has been given by the Reserve Bank of India, no one can conduct the trans-border money transfer sector to India.

An individual must be an Authorized Dealer Category I company or an Authorized Dealer Category II or a Full Fledged Money Changer (FFMC) or a Scheduled Commercial Company or Post Office in order to become an Indian director.

What requirements are required to be fulfilled for obtaining registration of Indian agents?

For the claimant, a minimum Net Owned Funds condition of 50 lakhs is in effect.

What is the protocol to submit to the Reserve Bank of India as an Indian applicant?

A application must be made to the Reserve Bank of India (Foreign Exchange Department) under whose control the applicant's registered office is situated in order to act as an Indian representative.

  • The relevant reports must be sent for filing the request
  • No charges against the Applicant and its Administrator have been launched or pending before the Directorate of Enforcement / Directorate of Revenue Intelligence or any other law enforcement agency shall be expected to be notified.
  • A report on the correct policy framework for KYC / AML / CFT has been drawn up in compliance with the guidelines provided by Reserve Bank of India.
  • Information such as the name and address of the licensed company (Overseas Principal) with which MTSS must sign an arrangement with the Indian Representative.
  • Full details of the scheme's service by the Overseas Director.
  • Description of branches in India where the applicant can perform MTSS.
  • The average market size per month / year under the system.
  • 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.
  • Print of the applicant's Memorandum of Understanding and Articles of Agreement where there is a clause related to the money Transfer Company or amendments.
  • Confidential report by at least two of the applicant's bankers in a sealed cover.
  • Description of the applicant's sister issue or associated problem in the financial sector.
  • A signed version of the applicant's board resolution on the money transfer company.
  • A letter from the prospective Overseas Principal promising to enter into an agreement with the claimant and providing the necessary collateral as well.

What instruction for Overseas Principal has been defined?

The applicant's Indian representative shall apply the following documentation with regard to its Overseas Principals:

  • The Department of Payment and Settlement Systems, Reserve Bank of India, shall seek prior permission under the terms of the Payment and Settlement Systems Act (PSS Act), 2007 to run the Overseas Principal's payment system.
  • The principal overseas should be a licensed company with the appropriate central bank / government or financial regulatory authority to carry out money transfer operations.
  • The registered entity should have a minimum Net-Worth of at least US$ 1 million as
  • In the case of Overseas Principals incorporated in FATF member states supervised by the government authority, the Apex Bank may relax the minimum Net Worth criterion.
  •  The Overseas Principal should have a good track record for activities in well-regulated markets in the money transfer industry.
  • The service or partnership with Overseas Principal will significantly increase access / entry to both ends of structured (legal) money transfer facilities. This implies that both countries will benefit from this type of arrangement.
  • They should be licensed with the institutions for international trade / industry.
  • One of the global credit rating agencies should have received a good rating.
  •  At least two of its bankers were required to submit a confidential report.
  • A professional document on the issue of induction to conform with anti-money laundering requirements in the host country should be issued by qualified Chartered Accountants.
  • The overseas principal will be fully responsible for the operations of its representatives and sub-agents in India.

Overseas Principals shall keep accurate lists of remitters as well as beneficiaries of all payouts in India. At t     he behest of the Reserve Bank or other government agencies of India, the Ministry of Finance, the Ministry of Home Affairs, FIU-IND, etc.

What procedure is defined in order to send money to India through MTSS (Money Transfer Service Scheme)?

The method of sending money through MTSS to India is quite easy, including the following:

  • To order to receive funds, the recipient must visit the location of Money Gram or the Western Union Money Transfer Outlet in the nation where the system is operating. Then you need to fill out the form with the fees as needed along with the relevant additional fees. After that, the device that serves as the reference number should produce a special MTCN (Money Transfer Control Number).
  • The payee must be told of the deposit by the recipient. Payee must then attend the Post Office to fill out the appropriate form and show identification documents for confirmation.
  • MTCN is then expected to be turned over to an officer checking the payment record.

After authentication, the cash is sent to the paying group in Indian currency. Remittances of up to USD 2500 are allowed in one payment as per the RBI guidelines that cannot be overruled. Also up to the value of INR 50,000 can be paid in cash above, the balance can be deposited directly into the bank or a check in the beneficiary's title.

It hardly takes time to remit cash to India. Despite the fact that there is a maximum limit of 30 sales per year, this benefits many people.

We strongly recommend that individuals apply for this opportunity to become an Indian agent and take permission from the authority concerned to disburse funds at current exchange rates to beneficiaries in India.

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