RBI's new circular allows authorised dealer category-l banks to offer payment facility for e-commerce players for imports by entering into standing arrangements with the online payment gateway service providers
E-commerce world has taken conventional business by a sweep and has become the new age way of doing business. Online aggregation business has re-defined the service segment from bookmybai to departmental store aggregation to online home services aggregator such as Housejoy.
The ease of carrying out business through these platforms has facilitated the growth of e-commerce transactions at both the national and international level. In order to exercise regulatory control over such transactions, specifically to the cross border transactions, Reserve Bank of India (RBI) vide its circular dated 16 November 16 2010 on “Processing and Settlement of Export related receipts facilitated by Online Payment Gateways
” issued a set of guidelines to cover such e-commerce arrangements. Under these guidelines, the Authorised Dealer Category- l (AD Category-l) banks were permitted to offer the facility to repatriate export related remittances only
by entering into standing arrangements with online payment gateway service providers (OPGSPs) in respect of export of goods and services
This article at length discusses the new set of consolidated guidelines applicable to both the export and import transactions routed standing arrangement between AD Category-l and OPGSPs.
The AD Category-I banks entering into standing arrangements are firstly required to report the details of each such arrangement as and when entered into to the Foreign Exchange Department, Central Office, Reserve Bank of India, Mumbai. In order to operationalise such arrangement/arrangement(s) AD Category-I banks shall ensure the following:
• carry out the due diligence of the OPGSP;
• maintain separate Export and Import Collection accounts in India for each OPGSP;
• satisfy themselves as to the bonafides of the transactions and ensure that the related purpose codes reported to the Reserve Bank are appropriate;
• submit all the relevant information relating to any transaction under such arrangements to the Reserve Bank, as and when advised to do so; and
• conduct the reconciliation and audit of the collection accounts on a quarterly basis.
Mandates for operating as OPGSP
Before entering into an arrangement with the AD Category-I banks, foreign entities would be required to open liaison office in India with the prior approval of the RBI. In this regard, it will have to adhere with the following:
• ensure adherence to the Information Technology Act, 2000 and all other relevant laws / regulations in force;
• put in place a mechanism for resolution of disputes and redressal of complaints;
• create a Reserve Fund appropriate to its return and refund policy and
• onboard sellers, Indian as well as foreign, following appropriate due diligence procedure.
Also, resolution of all payment related complaints in India shall remain the responsibility of the OPGSP concerned.
Indian entities functioning as intermediaries for electronic payment transactions intending to undertake cross border transactions are required to maintain separate accounts for domestic and cross border transactions.
Guidelines for import and export transactions
The following table enumerates the salient features of the export and import transactions undertaken through standing arrangement between the AD Category-I banks and OPGSP: