The Reserve Bank of India has released a draft circular proposing enhanced transparency norms to provide retail users with complete clarity on the actual costs involved in foreign exchange transactions. The move is aimed at strengthening pricing transparency across India’s forex market.
Detailed Cost Disclosure Framework
Under the proposed guidelines, authorised dealers (ADs) will be required to present a comprehensive, upfront cost breakdown to customers before executing any forex cash, tom, or spot transaction.
The disclosure must include:
- Remittance or service fees
- Applicable foreign exchange rates
- Currency conversion charges
- Sending and receiving charges
- Any fees imposed by intermediaries
This detailed cost structure must also be reflected in the final deal confirmation provided to the customer.
The framework applies to:
- Cash transactions: Same-day settlement
- Tom transactions: Next business day settlement
- Spot transactions: Standard settlement date
The RBI has invited stakeholder feedback on the draft until January 9, 2026.
Extension of Earlier Transparency Measures
The proposal builds on the RBI’s January 2024 directive, which mandated dealers to provide either the mid-market rate or the bid–ask quote to retail customers prior to executing any forex or foreign currency interest rate derivative transaction.
The new draft goes a step further by requiring disclosure of every individual cost component, enabling customers to better understand the total charges applied to their forex transactions.
Summary (As Requested)
The RBI has proposed new rules requiring authorised dealers to fully disclose all costs associated with forex cash, tom, and spot transactions to retail customers. The detailed breakdown must cover fees, conversion charges, intermediary costs, and exchange rates, both before execution and in the final confirmation. This proposal builds on the January 2024 transparency mandate and aims to give users clearer visibility into the true cost of currency conversion. Feedback is open until January 9, 2026.
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