RBI says 'no' to exclusive agreements for money transfer

"We are constrained to conclude that 'exclusivity' arrangements limit competition, distort pricing and thereby act as a deterrent to a payment system from achieving the desired goal of efficiency, affordability and being ubiquitous," said a central bank notification.

The RBI was responding to the request of authorised overseas money transfer agents that were keen to enter into an exclusive arrangement with Indian agents and also sub-agents for cross-border transfer of funds on their behalf.

The exclusivity arrangement, it said, would have prohibited Indian agents and sub-agents from undertaking similar services on behalf of other overseas money transfer agents.

However, it added, the agents appointed by overseas entities can enter into "exclusivity" arrangements with mutual consent of entities that are not regulated by the central bank.
All agents, which have been authorised by the RBI to undertake the money transfer business will be required to comply with the new regulations by December 31, 2010, the notification added.

It further added that all new agreements and those which are coming up for renewal will not have any exclusivity clause.