“Consultants Urge Government to Avoid US Banking System for Domestic Foreign Currency Transactions”
Consultants and service providers have voiced concerns over the current practice of routing domestic transactions involving foreign currencies, particularly dollars, through the US banking system. Intercontinental Consultants and Technocrats (ICT) chairman, K K Kapila, highlighted the imposition of transaction fees on US dollar transactions within India. Kapila provided an illustrative example, noting that even payments made in USD from Delhi to nearby Faridabad must go through the US banking system under the existing setup.
Kapila emphasized the need for these transactions to be conducted directly through the Reserve Bank of India (RBI), bypassing the American banking system entirely. He argued that this approach would not only help avoid transaction fees but also conserve foreign currency reserves. Drawing a comparison, Kapila pointed out that the Philippines, a small country, does not route its internal foreign exchange transactions through the United States, suggesting that India should adopt a similar strategy.
Sources Of Information: Business Standard
