Introduction
The
Reserve Bank of India (“RBI”) had
vide its Circular No 109 dated June 11, 2013 (“Export Circular”), permitted the AD Category – I banks (“AD Banks”) to offer the facility to
repatriate export related remittances by entering into standing arrangements
with Online Payment Gateway Service Providers (“Service Provider”) for export of goods and services subject to the
conditions stipulated contained in the Export Circular. Although the Export Circular provided
specific sanction to export related remittances, the e-commerce companies were
not permitted from remitting sales proceeds directly to the bank account of the
overseas vendors for import of goods.
With a view to facilitate e-commerce, the RBI has vide its Circular No 16 dated September 24, 2015 (“Revised Circular”), permitted AD Banks
to enter into arrangements with the
Service Providers to offer similar
facility of payment for import transactions also in addition to the export
transactions.
Reserve Bank of India (“RBI”) had
vide its Circular No 109 dated June 11, 2013 (“Export Circular”), permitted the AD Category – I banks (“AD Banks”) to offer the facility to
repatriate export related remittances by entering into standing arrangements
with Online Payment Gateway Service Providers (“Service Provider”) for export of goods and services subject to the
conditions stipulated contained in the Export Circular. Although the Export Circular provided
specific sanction to export related remittances, the e-commerce companies were
not permitted from remitting sales proceeds directly to the bank account of the
overseas vendors for import of goods.
With a view to facilitate e-commerce, the RBI has vide its Circular No 16 dated September 24, 2015 (“Revised Circular”), permitted AD Banks
to enter into arrangements with the
Service Providers to offer similar
facility of payment for import transactions also in addition to the export
transactions.
Operationalization
The
Revised Circular requires the AD Banks to report the details of the
arrangements entered into with the Service Providers to the RBI. The Revised
Circular lays down certain steps to be taken by the AD Banks for
operationalizing such arrangements, which include (a) due diligence on the
Service Provider; (b) maintenance of separate export and import collection
accounts in India for each Service Provider; and (c) conducting reconciliation
and audit of the collection accounts on a quarterly basis.
Revised Circular requires the AD Banks to report the details of the
arrangements entered into with the Service Providers to the RBI. The Revised
Circular lays down certain steps to be taken by the AD Banks for
operationalizing such arrangements, which include (a) due diligence on the
Service Provider; (b) maintenance of separate export and import collection
accounts in India for each Service Provider; and (c) conducting reconciliation
and audit of the collection accounts on a quarterly basis.
In the event a foreign entity wishes to
operate as a Service Provider, it will be required to, with the prior approval
of the RBI, open a liaison office in India, before operationalizing
arrangements with the AD Banks. The foreign entity will have to, inter alia, (a) ensure compliance with
the Information Technology Act, 2000; (b) put in place a mechanism for
resolution of disputes and redressal of complaints; and (c) create a reserve fund appropriate to its
return and refund policy.
operate as a Service Provider, it will be required to, with the prior approval
of the RBI, open a liaison office in India, before operationalizing
arrangements with the AD Banks. The foreign entity will have to, inter alia, (a) ensure compliance with
the Information Technology Act, 2000; (b) put in place a mechanism for
resolution of disputes and redressal of complaints; and (c) create a reserve fund appropriate to its
return and refund policy.
Indian
entities which are functioning as intermediaries for electronic payment
transactions and are desirous of undertaking cross border transactions will be
required to maintain separate accounts for domestic and cross border
transactions.
entities which are functioning as intermediaries for electronic payment
transactions and are desirous of undertaking cross border transactions will be
required to maintain separate accounts for domestic and cross border
transactions.
Import Transactions
In
terms of the Revised Circular, the facility is available for import of goods
and software (as permitted in the prevalent Foreign Trade Policy) of value not
exceeding USD 2,000. Further, immediately on receipt of funds from the importer
and, in no case, later than two days from the date of credit to the collection
account, the balances held in the import collection account is to be remitted
to the respective overseas exporter’s account.
terms of the Revised Circular, the facility is available for import of goods
and software (as permitted in the prevalent Foreign Trade Policy) of value not
exceeding USD 2,000. Further, immediately on receipt of funds from the importer
and, in no case, later than two days from the date of credit to the collection
account, the balances held in the import collection account is to be remitted
to the respective overseas exporter’s account.
While
the permitted debits in the Service Provider’s import collection account
include (a) payment to overseas exporters in permitted foreign currency; (b)
payment to Indian importers for returns and refunds; (c) payment of commission
at rates/frequencies as defined under the contract to the current account of the
OPGSP; and (d) bank charges, the permitted credits in such account include (a)
collection from Indian importers for online purchases from overseas exporters
electronically through credit card, debit card and net banking; and (b) charge
back from the overseas exporters.
the permitted debits in the Service Provider’s import collection account
include (a) payment to overseas exporters in permitted foreign currency; (b)
payment to Indian importers for returns and refunds; (c) payment of commission
at rates/frequencies as defined under the contract to the current account of the
OPGSP; and (d) bank charges, the permitted credits in such account include (a)
collection from Indian importers for online purchases from overseas exporters
electronically through credit card, debit card and net banking; and (b) charge
back from the overseas exporters.
Export Transactions
In
terms of the Revised Circular the facility is available for exports of goods
and services (as permitted in the prevalent Foreign Trade Policy) of value not
exceeding USD 10,000. Further, the AD Banks providing such facilities are
required to open a NOSTRO collection account for receipt of the export related
payments facilitated through such arrangements. If the exporter availing of
this facility is required to open notional accounts with the Service Provider,
it has to be ensured that no funds are allowed to be retained in such accounts
and all receipts should be automatically swept and pooled into the NOSTRO
collection account opened by the AD Bank. Immediately on receipt of the
confirmation from the importer and, in no case, later than seven days from the
date of credit to the NOSTRO collection account the balances held in the NOSTRO
collection account is required to be repatriated to the export collection
account in India and then credited to the respective exporter’s account with a
bank in India.
terms of the Revised Circular the facility is available for exports of goods
and services (as permitted in the prevalent Foreign Trade Policy) of value not
exceeding USD 10,000. Further, the AD Banks providing such facilities are
required to open a NOSTRO collection account for receipt of the export related
payments facilitated through such arrangements. If the exporter availing of
this facility is required to open notional accounts with the Service Provider,
it has to be ensured that no funds are allowed to be retained in such accounts
and all receipts should be automatically swept and pooled into the NOSTRO
collection account opened by the AD Bank. Immediately on receipt of the
confirmation from the importer and, in no case, later than seven days from the
date of credit to the NOSTRO collection account the balances held in the NOSTRO
collection account is required to be repatriated to the export collection
account in India and then credited to the respective exporter’s account with a
bank in India.
While
the permitted debits to the Service Provider’s export collection account
maintained in India include (a) payment to the respective Indian exporters’
accounts; (b) payment of commission at rates/frequencies as defined under the
contract to the current account of the Service Provider; and (c) charge back to
the overseas importer where the Indian exporter has failed in discharging his
obligations under the sale contract, the permitted credit in such account
includes repatriation from the NOSTRO collection accounts electronically only.
the permitted debits to the Service Provider’s export collection account
maintained in India include (a) payment to the respective Indian exporters’
accounts; (b) payment of commission at rates/frequencies as defined under the
contract to the current account of the Service Provider; and (c) charge back to
the overseas importer where the Indian exporter has failed in discharging his
obligations under the sale contract, the permitted credit in such account
includes repatriation from the NOSTRO collection accounts electronically only.
Impact of the
Revised Circular
Revised Circular
With
the advent of online marketplaces, the Revised Circular is definitely a step
forward by the RBI. The online marketplaces which have products from the overseas
vendors listed, can now appoint Service Provider to make payments to such
vendors. The Indian e-commerce companies have the comfort that they can remit
the money to the overseas vendor, through a Service Provider, without requiring
any approval from RBI, the overseas vendors are now assured that the money will
be remitted to their accounts hassle free.
the advent of online marketplaces, the Revised Circular is definitely a step
forward by the RBI. The online marketplaces which have products from the overseas
vendors listed, can now appoint Service Provider to make payments to such
vendors. The Indian e-commerce companies have the comfort that they can remit
the money to the overseas vendor, through a Service Provider, without requiring
any approval from RBI, the overseas vendors are now assured that the money will
be remitted to their accounts hassle free.
