RBI bars external settlement of air ticket transactions
06 Apr 2011
Mumbai: The country's central bank, the Reserve Bank of India, 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.
An arrangement with credit card companies in India allows customers of some foreign airlines to select the country and currency of their choice while buying tickets in India, the central bank said.
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," the RBI said.
"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."
