Context:
The Reserve Bank of India (RBI) has issued a draft circular requiring banks and authorised dealers to provide complete disclosure of all fees and charges for retail foreign exchange (forex) transactions. The objective is to improve transparency and enable informed decision-making by individual customers.
Scope
- Applicable Transactions:
- Forex cash
- TOM (next-day settlement) contracts
- Spot contracts
Current Scenario
- Retail forex users often face hidden or unclear charges while transacting in cash, TOM, or spot markets.
- Overlaps and inconsistent disclosure across banks create confusion and limit price comparability.
Proposed Change
- Banks must clearly disclose all transaction costs, including service charges, margins, and conversion fees.
- Standardised reporting will allow retail users to make better-informed choices when engaging in forex transactions.
