Can an issuer impose a blanket ten-day travel-card refund wait?
RBI’s Master Direction on Other Remittance Facilities directs authorised persons to redeem a resident Indian’s unutilised prepaid travel-card balance immediately on request, subject to specified retentions. Those include authorised but unsettled transactions, a pipeline reserve not exceeding USD 100 until the relevant settlement cycle completes, and applicable transaction fees/charges payable in India in rupees. The USD 100 provision is a ceiling on the small pipeline reserve, not a compulsory charge or a ceiling on genuine separately authorised transactions.
This article examines paragraphs 3.4.4–3.4.5 of the RBI Master Direction on Other Remittance Facilities, shown as updated on 1 October 2026 and checked on 23 October 2026. The direction first describes the practice of refunding only after ten days, then gives the operative instruction for immediate redemption subject to retentions. Read that sequence: reproducing the introductory description as the operative waiting rule reverses its purpose.
Separate three amounts before quoting the refund
| Amount | Treatment under the direction | Reconciliation evidence |
|---|---|---|
| Authorised but unsettled merchant transactions | May be retained until processing/settlement within the prescribed settlement timeframe | Transaction-level authorisation, merchant/acquirer reference, amount and cycle |
| Small pipeline reserve | Not more than USD 100, retained for pipeline transactions until the relevant settlement cycle completes | Reason, reserve amount and release tracking |
| Fees and charges payable in India | Denominated and settled in rupees under paragraph 3.4.4; paragraph 3.4.5 also refers to rupee fees/tax | Applicable tariff, rupee deduction and actual tax documentation |
Do not combine the first two categories into an unexplained reserve. A genuine USD 300 authorisation can be retained despite exceeding USD 100; that does not allow an unrelated USD 300 pipeline reserve. Conversely, the direction does not make a USD 100 retention mandatory for every redemption. Ask for the actual basis and avoid double counting the same transaction under both categories.
Use the current card balance and release unused holds
Begin with the current outstanding balance after posted transactions. Separately identify unsettled authorisations still reflected in that balance. Deducting previously posted spending a second time understates the refundable amount. A card statement’s available-to-spend figure may already be net of authorisation holds; establish the issuer’s definition before subtracting holds again.
After settlement, compare the retained authorisation with the amount actually charged. Release the unused difference and any pipeline reserve no longer needed when its relevant settlement cycle completes. Track the original redemption, subsequent merchant settlement and later release as a single reconciliation. The direction’s settlement-linked permission is not authority to retain an unexplained balance indefinitely.
Rupee charges and conversion need their own evidence
The direction requires fees/charges payable in India on these cards to be denominated and settled in rupees. Obtain the actual redemption exchange-rate quote and tariff; do not assume the original loading rate is the refund rate. The direction’s historical wording refers to service tax; that is not a current tax-rate prescription. Use the actual applicable tax law and tax document for a real charge. This guide deliberately does not invent a GST percentage or a universal redemption exchange rate.
An instruction to redeem immediately on request should not be converted into a promise that every receiving bank will display funds instantaneously. Separate the redemption request, permitted settlement holds, conversion advice and credit evidence. If an issuer relies on a standard ten-day guide, request its transaction-specific hold reconciliation and application of the current RBI direction.
Scope and common errors
These provisions concern prepaid travel-card redemption for resident Indians. They should not be applied indiscriminately to every domestic prepaid instrument, credit-card refund or non-resident card arrangement. They also do not make prohibited foreign-exchange uses permissible or remove separate surrender/retention requirements applicable to unused foreign exchange. The operational question here is the refundable card balance and permissible holds, not a fresh remittance limit.
For an employer reconciling a returning employee’s advance, distinguish the issuer’s card balance from the employee’s expense claim. Record actual merchant spending, fees, original loading cash flow and refunds separately. An unresolved merchant authorisation is not yet proof of the final business expense. Retain statements and release evidence until both the travel advance and the card reconciliation close.
Worked illustrations
These illustrations use fictional facts and expressly stated assumptions. Amounts are Indian rupees unless a different currency or unit is specified. They are independent examples, not findings about any actual client.
Illustrative example 1: No identified hold
Assume a current USD 1,000 outstanding balance, no unsettled transactions, no pipeline exposure and no fees. The illustrated refundable balance is USD 1,000. A blanket USD 100 deduction is not mandated merely because that is the pipeline ceiling.
Illustrative example 2: Authorisation and separate pipeline reserve
Assume USD 2,000 outstanding before holds, a documented unsettled authorisation of USD 300 and a distinct justified pipeline reserve of USD 80. Initial redeemable balance is USD 2,000 − USD 300 − USD 80 = USD 1,620, ignoring fees and conversion. The USD 300 authorisation is a separate category from the USD 100 pipeline ceiling.
Illustrative example 3: An excessive pipeline-only hold
Assume USD 500 outstanding, no authorised unsettled transaction and a proposed USD 150 pipeline-only reserve. The pipeline ceiling is USD 100, so this basis supports no more than USD 100 retention and at least USD 400 redemption before fees. The excess proposed reserve is USD 50; no other lawful retention is assumed.
Illustrative example 4: Reconcile the later release
Continue the USD 2,000 case: the USD 300 authorisation settles for USD 240, releasing USD 60, and the separate USD 80 reserve is unused when its cycle completes. Further release is USD 140. Total refund is USD 1,620 + USD 140 = USD 1,760; plus USD 240 actual merchant spending reconciles to USD 2,000.
Illustrative example 5: Keep the rupee charge explicit
Assume USD 1,000 eligible for redemption, a quoted redemption rate of ₹85 per USD and an agreed all-inclusive rupee charge of ₹500. Gross proceeds are ₹85,000 and net proceeds ₹84,500. The charge is ₹500, not USD 500; neither the exchange rate nor this assumed charge is a statutory tariff.
Illustrative example 6: Do not deduct posted spending twice
A card loaded with USD 1,500 has USD 600 already posted as spending, leaving USD 900 outstanding before a separate USD 200 authorisation hold. With no pipeline reserve or fees, the illustrated refund is USD 900 − USD 200 = USD 700. Subtracting the posted USD 600 again would misstate the balance.
Illustrative example 7: A request the day after the last transaction
The last transaction is on 19 October 2026 and the resident requests redemption on 20 October, one day later. Assuming no permitted retentions, the direction’s immediate-on-request instruction applies; the introductory ten-day practice is not an automatic waiting condition. Keep actual request and redemption evidence without promising instantaneous receiving-bank credit.
Ten-step verification table
| Step | Verification | Evidence to retain |
|---|---|---|
| 1 | Confirm the product and resident scope | Prepaid travel-card agreement and holder status |
| 2 | Record the redemption request | Dated request and acknowledgement |
| 3 | Establish what the displayed balance includes | Statement and issuer explanation of outstanding/available balance |
| 4 | Separate posted spending from live authorisations | Transaction-level reconciliation |
| 5 | Validate each unsettled hold | Authorisation, acquirer reference and settlement timeframe |
| 6 | Review the pipeline reserve | Distinct exposure, USD 100 ceiling and no double counting |
| 7 | Obtain the rupee fee and conversion quote | Tariff, quoted rate and applicable tax documentation |
| 8 | Verify the initial redemption | Advice and receiving-account credit evidence |
| 9 | Track subsequent settlement and release | Actual merchant charge and unused-hold release |
| 10 | Close the travel advance reconciliation | Loading, spending, fees, all refunds and zero unexplained balance |
Sixteen practitioner FAQs
1. Does RBI require every refund to wait ten days?
The operative direction requires immediate redemption on request subject to specified retentions. Its preceding discussion of ten-day practice must be read in that context.
2. Is USD 100 a compulsory deduction?
No. It is the maximum small pipeline reserve permitted under that category, tied to the relevant settlement cycle.
3. Can an authorised unsettled transaction exceed USD 100?
Yes, the direction treats authorised unsettled amounts separately. Substantiate the actual authorisation and settlement timeframe.
4. Can the same authorisation also form the pipeline reserve?
Avoid counting one exposure twice. Obtain a reconciliation explaining the distinct amounts retained.
5. When should an unused authorisation difference be released?
Reconcile it when the actual transaction processes or settles within the prescribed timeframe; retain only the amount supported by the applicable permission.
6. Can a pipeline reserve be held indefinitely?
The direction links it to completion of the relevant settlement cycle. An unexplained indefinite retention is not the stated rule.
7. Should posted purchases be deducted again from the outstanding balance?
No. Establish whether the stated balance already reflects posted transactions and holds before calculating the refund.
8. Are fees payable in India denominated in foreign currency?
Paragraph 3.4.4 requires fees/charges payable in India on the instrument to be denominated and settled in rupees.
9. Does the direction fix the redemption exchange rate?
The cited provision does not prescribe one universal refund rate. Obtain the actual applicable quote and conversion advice.
10. Can the original loading rate be assumed for redemption?
No. The original purchase and later redemption are separate transactions. Reconcile using the evidenced actual rates.
11. Does the reference to service tax prescribe today’s tax rate?
No. Apply current tax law and the actual charge document. Historical wording is not authority to invent a current tax percentage.
12. Does immediate redemption mean an instant bank credit guarantee?
The direction addresses redemption on request subject to retentions. Verify actual processing and receiving-bank credit rather than promising a universal instant posting.
13. Can a corporate travel policy override the issuer’s RBI instruction?
A company can manage employee advance settlement, but its policy does not replace the authorised person’s applicable redemption obligations.
14. Is a merchant hold already a final travel expense?
Not necessarily. Compare the authorisation with the final posted charge before closing the expense and advance records.
15. Does this article determine how long unused currency may be retained?
No. Separate foreign-exchange surrender and retention rules must be considered. This guide addresses prepaid-card redemption and holds.
16. What should be requested when a standard guide says ten days?
Seek a written application of paragraph 3.4.5, a transaction-level hold schedule, the relevant settlement cycles, the rupee charges and the refund/release advice.
Conclusion
Request redemption with a clear balance reconciliation. Separate genuine authorisation holds, a justified capped pipeline reserve and documented rupee charges, then track every subsequent release.