Service Providers Urge Govt To Allow Foreign Currency Transactions Within Country Via RBI

Service providers and consultants within the country are urging the government to discontinue the practice of processing domestic foreign currency transactions through the US banking system.

This would prevent the imposition of transaction fees and conserve foreign currency. The Reserve Bank of India should be consulted for such domestic transactions involving foreign currencies, such as the US dollar. Currently, there is a transaction fee applied to all domestic US currency transactions.

As an example, if one entity in Delhi wants to make a payment in US dollars to another entity in nearby Faridabad, the current practice mandates that the transaction must go through the US banking system.

"This should be undertaken directly through the Reserve Bank of India and there should be no requirement of routing them through the American Banking system.

"By routing the transactions through the American Banking system, the country is losing substantial money, which is going to the Americans towards transaction costs," K.K. Kapila, ambassador for the Asia-Pacific region on behalf of the International Federation of Consulting Engineers, stated in a recent announcement.

Kapila pointed out that a small country like the Philippines does not route its internal foreign exchange transactions through the United States. "If the Philippines can do it, why not India? " he said, adding "this needs an urgent correction, lest we continue to lose every single day. If it is part of some Trade Agreement, it needs an urgent relook. Let this be addressed on top priority."

He stated that the consultants and service industry insisted that transactions involving foreign currencies like the US dollar within the country must be directed through the Reserve Bank of India.