The forex rates will be closer to the interbank rate if bought through the new online platform.
Recently, the Reserve Bank of India (RBI) notified that a new platform has been developed by the Clearing Corporation of India. The online platform is currently being tested and will be available for users by August ’19. Through this platform, both individuals and small business owners, who need foreign currency for traveling abroad, will now be able to buy forex at a lower rate. The forex rates will be closer to the interbank rate if bought through the new online platform. People buying forex, especially small lots of currency, generally pay a mark-up ranging between 1 to 3 per cent, which also varies depending on where it is bought from.
Back in October 2017, it was first proposed by the RBI that a foreign exchange trading portal for retail participants is introduced, that would provide customers with access to an online electronic trading platform. Through which one can buy or sell foreign currency at market-clearing prices.
The RBI in a statement said, “By unifying the existing fragmented market microstructure, this platform would provide transparency of pricing and promote competition among market-makers leading to better pricing for all customers, regardless of order size.” It further added, “The circular on operational guidelines for the platform shall be issued by the end of June 2019.”
Industry experts suggest especially the price-conscious customers, might shift to the online platform looking for a better deal, who otherwise used to turn towards the unorganized market. The Foreign Exchange Dealers Association has that the customer registration process for the new platform will start from 1st of July ’19.
Foreign currency dealers believe the forex that will be sold through the upcoming online platform could possibly be the notes that banks receive from returning passengers and non-residents who choose to sell foreign exchange to their banks in India.
However, experts say having enough currency all the time, to cope up with the increasing demand, could be a problem that can arise through the platform.