What is Rupee Drawing Arrangement (RDA)?

Above and beyond, normal channels of remittance to India from cross-borders(abroad), there are two more channels for receiving inward remittances, viz. Rupee Drawing Arrangement (RDA) and Money Transfer Service Scheme (MTSS) which are the most common arrangements under which the remittances are received into our country.

Rupee Drawing Arrangement (RDA) is a way of transferring personal remittances from abroad (overseas jurisdiction) to beneficiaries in India. Under Rupee Drawing Arrangement, the Authorised Category I banks enter into tie-ups with the non-resident Exchange Houses in the FATF compliant countries to open and maintain their Vostro Account. The non-resident Exchange Houses means the companies and financial institutions which are licenced and regulated by the competent authority in the sending country for sourcing the funds from the remitters.

The inward remittance under the RDA scheme is primarily on a private accounts where the remitter and the beneficiary should be individuals barring a few exceptions. The inward remittances have to be credited to the bank account of the beneficiary under the RDA scheme. No cash disbursement of remittances is allowed. In case the beneficiary is maintaining a bank account with another bank that does not have any tie-up with a non-resident Exchange House, the amount may be credited directly to the account of the beneficiary held with that other bank through electronic modes, such as, NEFT, IMPS, etc.

Remittances through Exchange Houses for the financing of trade transactions are also permitted up to a certain limit. Although there is no limit on the remittance amount as well as on the number of remittances for transactions between individuals, there is an upper cap of Rs.15.00 lakh for trade-related transactions under the RDA scheme. Further, this scheme can not be used for cross-border outward remittances from India.

Prior to entering into an agreement with a non-resident exchange house for the first time, the concerned AD-category–I bank is required to take permission from RBI. Only pursuant to the obtention of permission from RBI, the AD-category-I bank may enter into an agreement with RDA subject to the prescribed guidelines. Immediately after entering into an agreement with a non-resident exchange house, AD-category-I bank shall inform the same to RBI.