RBI vide notification dt. 02/04/2012, has clarified on redemption of the underutilized balance outstanding on International Debit Cards/Store Value Cards/Charge Cards/Smart Cards.
As per the prevalent practice followed by issuers, resident Indians who purchase their travel cards, are permitted refund of the unutilised foreign exchange balance only after 10 days from the date of last transaction and accordingly, this condition is stated in the “user guide”.
Since these cards are expected to act as substitutes for Cash/ Travellers Cheques, the facilities available to the user will have to be similar.
The clarifications are : –
a) All such Authorized Persons shall redeem the unutilized balance outstanding in the cards immediately upon request by the resident Indians to whom the cards are issued subject to retention of:-.
b) the amounts that are authorized and remain unclaimed/ not settled by the acquirers as of the date of redemption till the completion of the respective settlement cycle;
c) A small balance not exceeding US$ 100, for meeting any pipeline transactions till the completion of the respective settlement cycle; and
d) Transaction fees/service tax payable in India in Rupees.
For the amounts that are authorized but unclaimed/ not settled by the acquirer, the issuer of such cards can hold such amounts until such transactions are processed/ settled by the acquirers within the prescribed settlement timeframe.
The notification is addressed to ‘Authorised Persons in Foreign Exchange’.
Obviously, the next question is who is an authorized person in Foreign Exchange.
FEMA Foreign Exchange Management Act (FEMA) stipulates that all foreign exchange transactions are required to be routed only through the entities that are licenced by
the Reserve Bank to undertake such transactions.
Such entities are defined as : – Authorised persons in Section 10 of the Act. Under current dispensation, such authorised person may be :
a) A Commercial bank (AD), or
b) A Money changer (FFMC), or
c) Any financial institution authorised for limited kind of transactions, depending
on their activity, or
d) Any other entity authorised by the Reserve Bank.
The above clarifications should now encourage more bank customers going abroad to opt for International Debit Cards/Store Value Cards/Charge Cards/Smart Cards, instead of Cash/Traveler Cheques.