MTSS (Money Transfer Service Scheme)
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
Documents Required For Registering As Indian Agent In MTSS
Here is a quick checklist of documents required to register as an agent:
Documents to be Submitted for Overseas Principals:
Procedure for Registering as Indian Agent in MTSS
Here is the process in brief on how to send money through the MTSS process:
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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.