New Delhi: The consultant and service community in the country in a letter to the Reserve Bank of India's (RBI) Governor Shaktikanta Das has urged the Central bank of the country to intervene and ensure that the foreign currency transactions within the country be not routed through the United States (US) banking system in order to avoid transaction fee.
“Currently transaction fee is levied on US Dollars transactions within the country. As you are aware, while transacting in US Dollars or UK Pounds or Japanese Yen between any two countries, the payment is routed through the corresponding banking system and a transaction fee is paid. Till date, billions of US dollars have been paid as transaction fee to the US,“ said KK Kapila, Chairman, Intercontinental Consultants and Technocrats (ICT), President emeritus, International Road Federation (IRF) and ambassador for Asia-Pacific region for the International Federation of Consulting Engineers (FIDIC-The global consultants body).
“The transactions in US Dollars payments within India, say a payment in US$ from Delhi to Faridabad from one entity to the other in the current dispensation, is required to be undertaken through the US. This should be undertaken directly through the RBI and there should be no requirement of routing them through the American banking system. By routing the transactions through the American banking system, the country is losing substantial money, which is going to the Americans towards transaction costs, “said Kapila.
“As per information provided by Ashok Lavasa, Vice-President for Public-Private Partnership (PPP) for private sector operations even a small country like Philippines does not route its internal foreign exchange transactions through the United States. If the Philippines can do it, why not India,“ said Kapila.
“Is it not a peculiar scenario that one of the banks from India sends dollars to the US to get them back in another bank in India? To my mind, as long as we are transacting in US Dollars within India, there should be no transaction cost payable to the US,” he added.