New platform may allow travellers to buy forex online at cheaper rates: Things to know

Individuals and small businesses who need foreign currency for travelling abroad will soon get to buy it at rates closer to the interbank rate through a new online platform. (Click here to read the complete article)

Currently, buyers of small lots of currency pay a mark-up of anywhere between 1 per cent and 3 per cent, depending on where they purchase it from.

Clearing Corporation of India has developed a new platform -- which is being tested and will be available for users by early August, the RBI said.

The RBI had first proposed a foreign exchange trading portal in 2017, for retail participants that would provide customers with access to an online electronic trading platform on which they can purchase/sell foreign currency at market-clearing prices.

"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," the RBI said in a statement.

Bankers say that price-conscious customers, who turn to the unorganised market, might shift to the online platform to get a better deal.

The Foreign Exchange Dealers Association has informed members that the customer registration process for the new platform will go live on July 1.

The dealers are of the view that the currency that will be sold through the new online exchange will be the notes that banks receive from returning passengers and non-residents who choose to sell dollars to their banks in India.

Currently, banks consolidate their forex currency collections from various branches and accumulate it at a nodal branch and sell to the highest bidder among foreign currency dealers.

It is, however, unclear that how will the new online platform ensure enough currency is available at all times.