Processing and Settlement of Export Payments through Online Payment Gateway Service Providers (OPGSP’s)

Keeping in mind the ever-growing e-commerce business in India, RBI has decided to permit AD category-1 banks to facilitate export payments by entering into an arrangement with OPGSP’s. The latest guidelines for the same are given below- AD Category-1 banks should diligently report each such arrangement to Foreign Exchange Department, RBI. (i) Banks have to carry out due diligence on the OPGSP that they are making an arrangement with.(ii) Maintain separate Export and Import Collection accounts in India for each OPGSP.(iii) They have to make sure the transactions are genuine and ensure that the purpose codes reported to the RBI are in line with the actual transaction.(iv) Any pertinent information relating to such transactions should be submitted to RBI as and when advised. (v) AD Category-1 banks have to do the reconciliation and conduct an audit of collection accounts on a quarterly basis.Foreign companies, operating as OPGSP should open a liaison office in India after an approval from RBI before entering into such arrangement with any AD category-I bank. OPGSPs have to strictly adhere to the below-mentioned conditions.(i) Adherence to the Information Technology Act, 2000 and all other applicable laws/regulations for such transactions.(ii) There has to be an infallible system for resolution of disputes and complaints related to these transactions. Any issues related to payments should be resolved by the concerned OPGSP.(iii) There has to be reserve fund in line with their refund on returns policy.(iv) Sellers should be signed up after conducting necessary due diligence.Domestic companies, which are intermediaries for electronic payment transactions and want to take up cross-border transactions, should have separate accounts for both domestic and cross border transactions.Export transactions(i) This facility is made available only for export of goods and services (as permitted under the current Foreign Trade Policy) and the transaction cannot exceed USD 10,000 per transaction.(ii) AD Category-I banks offering such facilities should open a NOSTRO collection account for receipt of the export-related payments enabled through such setup. Exporters availing this facility should mandatorily open notional accounts with the OPGSP. Funds cannot be retained in notional accounts and should be transferred to NOSTRO collection accounts of the banks.(iii) Any balance held in the NOSTRO collection account should be repatriated to Export Collection account in India and transferred within 7 days to the respective exporter’s account with the bank, post receipt of confirmation from the importer.   Below debits are permitted to the OPGSP Export Collection account maintained in India.Any payments to the respective Indian exporter’s account.Commission at rates or frequencies as per the contract to the current account of the OPGSP andCharge the importer in cases where the Indian exporter has failed to execute as per contract.Export Collection accounts can only receive credits from the NOSTRO collection accounts.Also read Processing and Settlement of Import Payments through Online Payment Gateway Service Providers (OPGSP’s) 
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Processing and Settlement of Export Payments through Online Payment Gateway Service Providers (OPGSP’s)

Kranthi Tilak Reddy
Blog
03rd Oct, 2017
Processing and Settlement of Export Payments through Online Payment Gateway Service Providers (OPGSP’s)

Keeping in mind the ever-growing e-commerce business in India, RBI has decided to permit AD category-1 banks to facilitate export payments by entering into an arrangement with OPGSP’s. The latest guidelines for the same are given below-

AD Category-1 banks should diligently report each such arrangement to Foreign Exchange Department, RBI.

(i) Banks have to carry out due diligence on the OPGSP that they are making an arrangement with.

(ii) Maintain separate Export and Import Collection accounts in India for each OPGSP.

(iii) They have to make sure the transactions are genuine and ensure that the purpose codes reported to the RBI are in line with the actual transaction.

(iv) Any pertinent information relating to such transactions should be submitted to RBI as and when advised.

(v) AD Category-1 banks have to do the reconciliation and conduct an audit of collection accounts on a quarterly basis.

Foreign companies, operating as OPGSP should open a liaison office in India after an approval from RBI before entering into such arrangement with any AD category-I bank.

OPGSPs have to strictly adhere to the below-mentioned conditions.

(i) Adherence to the Information Technology Act, 2000 and all other applicable laws/regulations for such transactions.

(ii) There has to be an infallible system for resolution of disputes and complaints related to these transactions. Any issues related to payments should be resolved by the concerned OPGSP.

(iii) There has to be reserve fund in line with their refund on returns policy.

(iv) Sellers should be signed up after conducting necessary due diligence.

Domestic companies, which are intermediaries for electronic payment transactions and want to take up cross-border transactions, should have separate accounts for both domestic and cross border transactions.

Export transactions

(i) This facility is made available only for export of goods and services (as permitted under the current Foreign Trade Policy) and the transaction cannot exceed USD 10,000 per transaction.

(ii) AD Category-I banks offering such facilities should open a NOSTRO collection account for receipt of the export-related payments enabled through such setup. Exporters availing this facility should mandatorily open notional accounts with the OPGSP. Funds cannot be retained in notional accounts and should be transferred to NOSTRO collection accounts of the banks.

(iii) Any balance held in the NOSTRO collection account should be repatriated to Export Collection account in India and transferred within 7 days to the respective exporter’s account with the bank, post receipt of confirmation from the importer.  

Below debits are permitted to the OPGSP Export Collection account maintained in India.

  1. Any payments to the respective Indian exporter’s account.

  2. Commission at rates or frequencies as per the contract to the current account of the OPGSP and

  3. Charge the importer in cases where the Indian exporter has failed to execute as per contract.

Export Collection accounts can only receive credits from the NOSTRO collection accounts.

Also read Processing and Settlement of Import Payments through Online Payment Gateway Service Providers (OPGSP’s) 


Kranthi
Blog Author

Kranthi Tilak Reddy is one of the co founders and COO of White Matter Advisory services P Ltd. He is an Engineering graduate from SRM University and has done his Masters in finance.Being a true go-getter and an optimist to the core he has grown up the ranks in banking industry at an astonishing rate, his last stint being Associate Director, Business Clients -South with Standard Chartered Bank. With over 10 years of association with SME businesses and clients he certainly brings rich vein of expertise to the WMA table but more importantly his alluring passion towards great and customer service” the foundation on which he asserts WMA has been built.

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