What changed
RBI observed that overseas entities authorized under the Payment and Settlement Systems Act, 2007 were mandating exclusivity arrangements with their Indian agents and sub-agents, barring them from working with competitors. The central bank concluded such clauses limit competition, distort pricing, and hinder payment system goals of efficiency, affordability, and ubiquity. Consequently, RBI directed that no new or renewed contracts between these overseas entities and RBI-regulated agents/sub-agents may contain exclusivity clauses.
What it means for you
Banks and other RBI-regulated entities acting as agents or sub-agents for inbound cross-border money transfers can now freely partner with multiple overseas operators. This opens up revenue streams and reduces dependency on a single provider. For lenders, it means more competitive pricing and service options for remittance customers, but also requires renegotiating existing contracts to remove exclusivity clauses by the deadline.
What you must do
- Review all existing agent/sub-agent agreements with overseas money transfer operators for exclusivity clauses and amend them by December 31, 2010.
- Ensure all new contracts and renewals executed from September 17, 2010, with overseas entities do not include any exclusivity provisions that restrict partnerships with other operators.
- Communicate this circular to all agents and sub-agents in your network immediately.
- Agents appointed by overseas entities may enter exclusivity agreements with non-RBI regulated entities only through mutual consent.
Who it affects
All RBI-authorized inbound cross-border money transfer operators, Indian banks and financial institutions acting as agents/sub-agents for these services, Sub-agents regulated by RBI in the money transfer chain
Does this ban apply to agreements with entities not regulated by RBI?
No. Agents can still enter exclusivity arrangements with non-RBI regulated entities, but only through mutual consent.
What is the deadline for compliance?
All entities must comply with these directions by December 31, 2010. New agreements and renewals from the circular date (September 17, 2010) must not contain exclusivity clauses.