Industry concerned over draft RBI guidelines on settlement of payments related to low value exports and imports

Following the draft guidelines of the Reserve Bank of India (RBI) on Guidelines for Online Import-Export Facilitators (OEIF Guidelines) released on 7th April 2022, several industry bodies and experts have voice their concerns. Removed “services” from online export categories while retaining exports of digital goods and products; and mandatory KYC of foreign importers with OEIFs were the main issues.

OEIFs were previously called Online Payment Gateway Service Providers (OPGSP).

The RBI Proposed Guidelines on Processing and Settlement of Payments Related to Low Value Exports and Imports have been drafted with the aim of simplifying and streamlining the process of settling payments for exports and imports through the e-commerce. The central bank had asked for comments and recommendations from the industry after the publication of the draft guidelines.

“There are around 6-7 lakh small exporters who export goods and services worth around ₹30,000 crore every year from India, and the export transaction limit at a time is 10 $000. Of that ₹30,000 crore, 50-60% is service exports,” said a senior executive at a global payment gateway company. Activity area, seek anonymity.

He added, “For the past 12 years, the export of services has been allowed in the guidelines. The proposed new guidelines omitted services as a category for exports; they kept only digital goods and products. This is a big omission that will likely affect 3-4 lakh of small exporters, as services cover more than half of exports. If they exclude services, our banks will stop serving them as customers. Although there are some good things like they increased the export transaction limit from $10,000 to $15,000.

Among other industry bodies to send in their recommendations, the National Association of Software and Services Companies (Nasscom) also expressed concerns.

“The exclusion of export services will impact a plethora of low-value services that are exported from India, such as yoga classes, chef/cooking classes, accounting services, bookkeeping , web design, online web services, consulting, education, etc.” It said.

Nasscom recommended: “We note that OEIFs should, in line with previous RBI circulars, be permitted to facilitate the export of services in addition to the export of goods and digital products. Therefore, clauses 3.8 and 5.1 of the draft OEIF guidelines should be amended.

Ashish Agarwal, Vice President and Chief Policy Officer, Nasscom, said Activity area, “I think it is important for the RBI to look at the situation from the perspective of the service exporter. Many services are exported digitally. At the current stage, these policies can create a lot of uncertainty for exporters. We hope this is not an intentional move by the RBI. It looks like an editorial oversight, although it is something that needs to be corrected. We don’t think the RBI wants to actively do that. But given what’s in the project, that’s a problem. We want to make sure that RBI solves this problem.

KYC of importers

The other concern that was unanimously raised was the mandatory KYC of importers and exporters for which OEIFs will facilitate transactions.

“Basically, the RBI wants us to have the same type of KYC standards for exporting and importing customers as for banks, although we are only third party payment facilitators. Domestically, most exporters have already done KYC for their bank accounts, and for international importers, even to pay someone $100 for, say, a blog post written from India, they will need to complete KYC separately . Why would they even do that,” said the executive of the payment gateway company.

Nasscom, in its recommendations, emphasized that “OEIFs are only facilitators of payment transactions and are not responsible for interacting with consumers and verifying that the consumer is already KYC-ed. Foreign importers would be subject to the KYC requirements applicable in their respective jurisdictions. For example, consumers must be KYC-ed by their payment instrument providers, such as card companies, banks providing internet banking services, etc., in accordance with their respective laws.

He added, “Instruments required for KYC as per RBI main KYC direction i.e. Aadhaar, PAN etc. are specific to India and may not be possessed by foreign importers.”

Published on

June 14, 2022

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