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RBI lets banks use e-payments for imports to facilitate e-commerce

25 September 2015

Reserve Bank of India (RBI) has permitted authorised Category-1 foreign exchange dealer banks to enter into pacts with online payment gateway service providers (OPGSPs) for import payments, in order to facilitate e-commerce transactions.

Category-1 authorised dealer banks are already allowed to facilitate repatriation of export related remittances by entering into standing arrangements with OPGSPs in respect of export of goods and services. The limit for such repatriation has been fixed at fixed at $10,000.

To facilitate e-commerce, it has now been decided to permit such dealer banks to offer similar facility of payment for imports by entering into standing arrangements with the OPGSPs.

The facility will "only be available for import of goods and software (as permitted in the prevalent Foreign Trade Policy) of value not exceeding $2,000", RBI said.

Banks desirous of entering into such an arrangement should report the details of each such arrangement as and when entered into to the foreign exchange department of the RBI.

For operationalising such arrangements, banks should:

  • Carry out due diligence of the OPGSP;
  • Maintain separate export and import collection accounts in India for each OPGSP;
  • Satisfy themselves as to bona fides of the transactions and ensure that the related purpose codes reported to the RBI are appropriate;
  • Submit all the relevant information relating to any transaction under such arrangements to RBI, as and when advised to do so; and
  • Conduct reconciliation and audit of the collection accounts on a quarterly basis.

Foreign entities, desirous of operating as OPGSP, should open a liaison office in India with the approval of the Reserve Bank before operationalising the arrangement with any AD category-I bank.

It would be incumbent upon the OPGSP to ensure adherence to the Information Technology Act, 2000 and all other relevant laws / regulations in force.

They should put in place a mechanism for resolution of disputes and redressal of complaints besides creating a reserve fund appropriate to its return and refund policy.

Onboard sellers, both Indian as well as foreign, should follow appropriate due diligence procedure.

Resolution of all payment related complaints in India shall remain the responsibility of the OPGSP concerned.

Domestic entities functioning as intermediaries for electronic payment transactions in terms of the guidelines stipulated by RBI and intending to undertake cross border transactions should maintain separate accounts for domestic and cross border transactions.

E-commerce in India has been growing at a blasting pace, driven by affordable smart phones and increasing Internet penetration.

Internet and Mobile Association of India estimates the overall e-commerce market, of which e-tail is a segment, at $16 billion. The e-tail market in India is expected to grow 10 times to $50 billion by 2020.

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