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RBI Flags Forex Pricing Gaps: Banks Urged to Clarify Charges
20 Aug
Summary
- RBI identified gaps in bank policies for outward remittances.
- Banks must now clarify documentation, charges, and timelines.
- Indian forex market daily turnover reaches $80 billion.
The Reserve Bank of India (RBI) has highlighted discrepancies between its regulatory intentions and the actual market outcomes concerning retail foreign exchange pricing by Indian banks. Deputy Governor Rohit Jain indicated that a recent RBI review uncovered deficiencies in banks' policies governing customer transactions, associated charges, and the documentation required for outward remittances.
Jain noted the observation of varied documentation requirements and instances of delayed cross-border remittances. Consequently, the central bank has empowered lenders to implement explicit policies detailing documentation charges, execution timelines, escalation procedures, and mechanisms for grievance redressal. This directive aims to streamline foreign exchange services for customers.
Meanwhile, the Indian foreign exchange market is experiencing substantial activity. The average daily turnover, encompassing spot and derivatives, has surged to $80 billion. The Non-Deliverable Forward (NDF) market segment alone records a daily turnover of approximately $7 billion. The RBI emphasizes the necessity of expanding the market-maker base, increasing participation from public sector banks, and promoting electronic trading platforms to further enhance the market's robustness.
