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Foreign airlines operating in India cannot settle transactions overseas: RBI
6th April 2011 According to a Reuters report, the Reserve Bank of India (RBI) has asked foreign airlines operating in India to stop the practice of using overseas banks to settle transactions on the sale of air tickets in India.
Some foreign airlines have an arrangement in India with credit card companies for allowing customers to select the country and currency of their choice while buying tickets from India. In such a transaction, the overseas bank receives funds from the card company in its account maintained with an authorised dealer bank in India or in its foreign currency account maintained abroad and makes the payment in a foreign currency to the foreign airline.
“It is clarified that the practice adopted by foreign airlines, as mentioned above, is not in conformity with the extant provisions of the Foreign Exchange Management Act. Therefore, advise the foreign airlines to discontinue immediately the practice of using overseas banks for settlement of INR transactions on account of sale of air tickets in India,” stated the statement issued by RBI.
Some foreign airlines have an arrangement in India with credit card companies for allowing customers to select the country and currency of their choice while buying tickets from India. In such a transaction, the overseas bank receives funds from the card company in its account maintained with an authorised dealer bank in India or in its foreign currency account maintained abroad and makes the payment in a foreign currency to the foreign airline.
“It is clarified that the practice adopted by foreign airlines, as mentioned above, is not in conformity with the extant provisions of the Foreign Exchange Management Act. Therefore, advise the foreign airlines to discontinue immediately the practice of using overseas banks for settlement of INR transactions on account of sale of air tickets in India,” stated the statement issued by RBI.
" travelbizmonitor "
