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MTSS (Money Transfer Service Scheme)
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MTSS (Money Transfer Service Scheme)

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Money Transfer Service Scheme (MTSS) registration.Money Transfer Service Scheme (MTSS) registration.

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    Overview of Money Transfer Service Scheme

    The simplest and fastest way to money remittance in India is using the Money Transfer Service Scheme or MTSS. For those who do not understand how to transfer money from a foreign country to their home in India, read further to understand the process.

    MTSS is the most convenient money transferring option for inward remittance of money from foreign countries to India. The facility provided under the scheme can be easily availed by tourists travelling to India. With this facility, money transfers become easy and quick for travellers seeking money in India.

    The MTSS contributes heavily to the external financing in India and thus contributes to the national income as well. This scheme allows cross border inward remittances that can be received by individuals through postal and banking channels. The most common postal channel used for this purpose is IFS or International Financial System platform. This platform is part of the Universal Post Union (UPU). As for banks, they can enter into agreements with other banks to accept remittance from foreign accounts.

    The other two modes of receiving inward remittance from a foreign country are MTSS and Rupee Drawing Agreement (RDA).

    Difference between MTSS and RDA

    The Rupee Drawing System is a money remittance method where a small amount of money can be transferred for personal use. However, for a large amount which may be used for trade purposes, this is not a suitable method as there is a limit to the maximum amount that can be transferred. With RDA, only an Authorized Dealer – I (AD-I) category bank can do the transactions. These authorized banks are approved by RBI.  Under the RDA scheme, no limit is set for transactions to an individual but for the transections of trade purposes, the limit is Rs. 500000. There is no provision of submitting remittance in cash in the RDA scheme. 

    Now in MTSS, the funds’ transfer service is conducted by coordinating authorized agents between the foreign country and in India. Funds for donations or charity cannot be transferred through MTSS. The limit of MTSS is set at USD 2500 per transfer with a maximum of 30 transfers allowed per single recipient in a single calendar year. 

    MTSS also allows submission of cash remittance. For cash remittance, the limit is set at Rs. 50000 and amounts higher than this are submitted through DD, cheque, etc. However, for tourists from a foreign country, the allowed cash remittance transfer is more than Rs. 50000. 

    Eligibility Norms to Carry the Money Transfer Business

    To carry out money transfer under the MTSS any entity needs to take permission from RBI.
    The permission would be granted to be an Indian agent in the transactions under Section 10(1) of the FEMA Act, 1999.
    No person can act as an Indian agent in MTSS transactions without the permission of RBI.
    To be an Indian Agent, an entity should be Authorized Dealer Category-I bank, Authorized Dealer Category-II, Full Fledged Money Changer, Department of Posts, or a Scheduled Bank.
    The applicant must have net owned funds of Rs. 50 lakhs.
    Document Required

    Documents Required For Registering As Indian Agent In MTSS

    Here is a quick checklist of documents required to register as an agent:

    A document stating that the Directorate of Enforcement (ED) or Directorate of Revenue Intelligence has no pending investigations against the applicant entity or its directors.
    A declaration stating the proper policy framework of the KYC/AML/CFT norms as prescribed in guidelines of the RBI.
    Details and address of the Overseas Principal with whom the applicant will be in agreement with MTSS.
    Complete details of operations of the scheme by the Overseas Principal.
    Details of branches in India where MTSS will be conducted by the applicant.
    Business plan stating the estimated volume of business per year. Audited financial statement of the previous two years or copy of the latest audit reports of accounts with a certified copy of net owned funds from a statutory auditor.
    Copy of AoA and MOA.
    Sealed Confidentiality report of at least two bankers of the applicant entity.
    A copy of the resolution by applicant entity’s board regarding the money transfer business.
    Letter from Overseas Principal stating agreement with the Indian entity and the assurance to provide the necessary collateral.
    Details of sister concerns of the applicant entity in the financial sector.

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      Documents to be Submitted for Overseas Principals:

      Permission from the Department of Payment and Settlement Systems, RBI under the Payment and Settlement Systems Act (PSS Act), 2007 to operate the payment system through Overseas Principal.
      Overseas Principal must be a central bank or regulatory authority for money transfer activities.
      A minimum net owned worth of USD 1 million.
      The criteria for minimum net worth could be changed for Overseas Principals incorporated in FATF member countries and are supervised by the government authority.
      The Overseas partner must be a well-established entity with a proven track record in the financial market of that country.
      The overseas partner must be registered with the overseas trade bodies and have good ratings from the rating agencies.
      A certified report from independent C.A.s must be submitted stating compliance on anti-money laundering norms in both countries.
      The Overseas Principals must maintain records of remitters and on-demand of RBI or other government agencies must share these records with them.

      Procedure for Registering as Indian Agent in MTSS

      Here is the process in brief on how to send money through the MTSS process:

      A remitter can visit the Money Gram office or Western Union Money Transfer outlet in the respective country for remittance of money. He needs to fill a form and submit the fees associated with the transaction. A unique MTCN or Money Transfer Control Number will be generated after the submission of forms and fees. This no. will act as a reference for the transaction.
      The remitter must inform the payee regarding the deposit. Now, the payee can visit the office of the Indian agent which can be a post office or s bank office, and fill the necessary form with identification documents.
      The MTCN must be shared with the officer of the Indian partner for verification of transaction post which the amount will be released to the Payees. The amount released will be converted into Indian currencies according to the ongoing exchange rates.

       

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      Frequently Asked Questions on MTSS (Money Transfer Service Scheme)

      Indian agents perform the cash transfer activities under the MTSS framework. So, to become an Indian agent, an applicant should be one among the following:

      • A Licensed Dealer Category-I bank or
      • A Licensed Dealer Category-II Bank or
      • A Full-Fledged exchanger (FFMC) or
      • The Department of Posts.

      To work under the MTSS framework, Indian Agents need permission from the concerned Regional Office of the RBI (Foreign Exchange Department). While Overseas Principal is required to get necessary authorization from the Department of Payment and Settlement Systems, RBI under the Payment and Settlement Systems Act (PSS Act), 2007.

      • For cash remittance, there’s a cap of INR 50,000/-. This amount is often paid in cash to a beneficiary in India. Amount higher than this prescribed amount shall be paid through the account payee cheque/ demand draft/ payment order, etc., or direct credit to the beneficiary’s checking account. However, just in case of a far-off tourist, more than Rs. 50,000 could also be disbursed in cash. 
       

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