The Reserve Bank of India (“RBI”) has, by a circular dated September 24, 2015, permitted AD Category-I banks (“AD Bank”) to offer the facility to repatriate export related remittances by entering into standing arrangements with Online Payment Gateway Service Providers (“OPGSPs”), in respect of export of goods and services. The key items of the prescribed consolidated guidelines on such imports and exports are as follows:
- AD Bank shall take the following steps for operationalising the arrangements:
- 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 reporting to the RBI, including all the relevant information relating to any transaction under such arrangements and that the purpose codes are appropriate and timely; and
- reconciliation and audit of the collection accounts are on a quarterly basis.
- Foreign entities, desirous of operating as OPGSP, will be required to open a liaison office in India, subject to necessary RBI approval before operationalising the arrangement with any AD Bank. Further, OPGSP shall be obligated to take the following steps:
- ensure adherence to the Information Technology Act, 2000 and all other relevant laws in force, including putting in place a mechanism for resolution of disputes and redressal of complaints;
- create a reserve fund appropriate to its return and refund policy; and
- have adequate due diligence procedure for onboard sellers, whether Indian or otherwise.
- Domestic intermediaries entities involved for electronic payment transactions shall maintain separate accounts for domestic and cross border transactions.
- For import transactions, the facility shall only be available for import of goods and software (as permitted under the prevalent Foreign Trade Policy) of value not exceeding US$ 2,000 (United States Dollars Two thousand) only.
- For export transactions, the facility shall only be available for export of goods and services (as permitted in the prevalent Foreign Trade Policy) of value not exceeding US$ 10,000 (United States Dollars Ten thousand) per transaction.
- The directions contained are without prejudice to any permissions/approvals that may be required under any other law.
With the advent and increasing popularity of e-commerce and online payment gateway services, the RBI’s decision to allow AD Banks to offer similar facilities will not only ease trade but also reduce transaction time and endless paperwork.