RBI reprimands banks for high charges on forex exchange transactions from MSMEs and retailers

Mumbai, Mar 10 (KNN) The Reserve Bank of India (RBI) has called out the banks against charging high fees on foreign exchange transactions and having lack of transparency in the process.

Addressing the Foreign Exchange Dealers’ Association of India (FEDAI), RBI deputy governor M Rajeshwar Rao said the central bank has been reached out by customers of authorised dealers, especially from the MSME and retail segments expressing concerns about the ‘high’ charges for foreign exchange transactions levied by authorised dealer banks.

He noted that owing to the liquidity in the forex markets the large corporates enjoy the benefits of tighter pricing but charges recovered from smaller customers do not appear to be justified by higher costs.

“The FX-Retail platform was introduced in a bid to shift price discovery to an automated platform. Banks do not, however, appear to have made efforts to encourage customers to use that platform,” said Rao.

He further said what is worrisome about the higher charges is the complete lack of transparency.

The deputy governor asked banks, individually or collectively through FEDAI, to make efforts so that the benefits of simplification, rationalisation and procedural ease reach every customer.

“An open issue is whether the changes in regulatory framework are being reflected in the conduct of inter-bank and customer transactions,” said Rao.  (KNN Bureau)