If you use a credit card for international transactions, it's important to understand the recent changes in reporting rules by the Reserve Bank of India (RBI). This article will explain the new rules, so you can make informed decisions about your credit card usage.
The Finance Ministry's notification now includes international credit card payments in the LRS, allowing residents to remit money abroad up to $2.50 lakh per annum without prior authorization from the RBI. Any remittance exceeding this limit requires approval from the RBI, tightening the oversight on foreign exchange transactions.
What are International Credit Card Spends?
When you use your credit card to make purchases or withdraw cash from ATMs outside India, it's called international credit card spends. These transactions can be in foreign currency or in Indian rupees.
Why are Banks Reporting International Credit Card Spends to RBI?
The RBI regulates and supervises banks in India. To ensure that banks follow the rules and regulations, the RBI requires them to report international credit card spends. This helps the RBI to monitor the foreign exchange transactions and maintain the stability of the Indian rupee.
What are the New Rules for Reporting International Credit Card Spends?
Under the new rules, banks are required to report international credit card spends on a monthly basis. The report should include the following details:
- The name and address of the cardholder
- The credit card number
- The date and amount of the transaction
- The currency in which the transaction was made
- The merchant category code (MCC)
The MCC is a four-digit code that categorizes the type of merchant where the transaction was made. For example, MCC 5812 is for eating places and MCC 5311 is for department stores.
How Will Banks Report International Credit Card Spends to RBI?
Banks will report international credit card spends to RBI through the Indian Financial Network (INFINET). INFINET is a secure and efficient network that connects banks and financial institutions in India.
What are the Benefits of Reporting International Credit Card Spends to RBI?
Reporting international credit card spends to RBI helps to keep an eye on the stability of the Indian rupee and prevent fraudulent activities. It also helps the RBI to monitor the foreign exchange transactions and ensure that banks follow the rules and regulations.
What Should You Do If You Have Questions about International Credit Card Spends?
If you have questions about international credit card spends or the new reporting rules, you should contact your bank. They will be able to provide you with the necessary information and help you understand the rules and regulations.
