NEW DELHI — The Foreign Exchange Dealers’ Association of India (FEDAI) has advised member banks not to convert inward foreign-currency remittances into rupees without specific instructions from the sender or beneficiary.
The guidance follows concerns that intermediary banks were converting foreign currency at unfavourable exchange rates before transferring the money to the recipient’s bank. Such practices could reduce the amount received by small exporters and individuals receiving payments from overseas.
FEDAI has advised banks against converting foreign currency solely to facilitate transfers to another bank unless the sender or beneficiary has requested the conversion. Banks have also been asked to improve transparency around exchange rates and service charges.
The guidance is relevant to overseas Indians sending money to family members in India, including Malayalis receiving remittances from relatives abroad.
The advisory was issued by FEDAI. It should not be described as a new regulation announced by the Reserve Bank of India.
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