Allow foreign currency transactions in country via RBI, demand consultants and service providers

India losing substantial money by routing foreign currency transactions via US

Allow foreign currency transactions in country via RBI, demand consultants and service providers

New Delhi: Consultants and service providers in the country have urged the government to stop routing domestic foreign currency deals via the US banking system in order to avoid transaction fees and save foreign currency.

“ At present a transaction fee is levied on US Dollars transactions within the Country. Say a payment in US$ from Delhi to even nearby Faridabad from one entity to the other in the current dispensation, is required to be undertaken 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, “said Mr K K Kapila, Chairman, Intercontinental Consultants and Technocrats (ICT), President emeritus, International Road Federation (IRF) and ambassador for Asia-Pacific region for the International Federation of Consulting Engineers ( FIDIC-The global consultants body ) and former president, Consulting Engineers Association of India (CEAI)

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“It is a peculiar scenario that for foreign currency transactions within the country one of the Banks from India sends dollars to the US to get them back in another Bank in India? To my mind, as long as we are transacting in US Dollars within India, there should be no transaction cost payable to the US.” Mr Kapila said. 

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? “ said  Mr Kapila.

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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.

The consultants and service sector demanded that such deals involving foreign currencies such as the US dollar in the country should be routed through the Reserve Bank of India. ''Currently, a transaction fee is levied on US dollar transactions within the country. As you are aware, while transacting in US dollars or UK Pounds or Japanese Yen between any two countries, the payment is routed through the corresponding banking system and a transaction fee is paid,'' added Mr Kapila.

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