RBI proposes full disclosure of forex transaction costs for retail users

RBI has proposed that authorised dealers give retail users a full break-up of transaction costs for forex cash, tom and spot contracts, including all fees, exchange rates and conversion charges

The Reserve Bank of India (RBI) has asked authorised dealers to disclose full details of transaction costs, including remittance fees, foreign exchange rates, and currency conversion charges, associated with foreign exchange cash, tom, and spot contracts offered to retail users, in a draft circular issued late Tuesday.

 

What is the timeline for feedback on the RBI’s draft circular?

 

Feedback on the draft circular on transaction costs for foreign exchange transactions can be submitted by January 9, 2026.

 

What disclosures will authorised dealers have to provide under the draft?

 

According to the draft, while offering foreign exchange cash, foreign exchange tom (where a currency trade is settled the next business day), and foreign exchange spot contracts to retail users, authorised dealers would be required to provide a breakdown of the total transaction cost, covering all relevant fees and charges.

 

“...it has been decided that while offering foreign exchange cash, foreign exchange tom and foreign exchange spot contracts to a retail user, authorised dealers shall provide to the user, details of the total transaction cost (showing all relevant costs and charges viz., sending and receiving fees including those of any intermediaries, foreign exchange rate and currency conversion charges), before entering into the contract and also include the same in the deal confirmation,” it added.

 

How does this build on RBI’s January 2024 transparency rules?

 

To enhance transparency in the foreign exchange market, the RBI mandated in January 2024 that authorised dealers must disclose the mid-market rate or the bid-ask quote of a foreign exchange or foreign currency interest rate derivative contract before executing it with a retail user, and include the same in the deal confirmation or term sheet. As a further step towards improving transparency, the RBI now proposes to require authorised dealers to clearly disclose all transaction costs, such as remittance fees, exchange rates, and currency conversion charges, associated with foreign exchange cash, tom, and spot transactions offered to retail users.