Industry raises concerns over RBI’s draft guidelines on settlement of small value export and import related payments

Debangana Ghosh | | Updated on: Jun 14, 2022
There are about 6-7 lakh small exporters exporting goods and services worth roughly around ₹30,000 crore.

There are about 6-7 lakh small exporters exporting goods and services worth roughly around ₹30,000 crore. | Photo Credit: UGURHAN

The exclusion of export services will impact a plethora of small-value services that are exported from India, says Nasscom

Following the Reserve Bank of India (RBI’s) draft guidelines on Online Export-Import facilitators Guidelines (OEIF guidelines) released on April 7, 2022, several industry bodies and experts have raised concerns. Removal of ‘services’ from the categories of online exports while retaining exports of goods and digital products; and mandatory KYC of overseas importers with the OEIFs have been the key issues.

OEIFs were earlier referred to as Online Payment Gateway Service Providers (OPGSPs).

The RBI’s proposed guidelines on processing and settlement of small value export and import related payments were drafted with the objective of simplifying and rationalising the process for settlement of payments for export and import through e-commerce. The central bank had asked for industry feedback and recommendations following the release of the draft guidelines.

“There are about 6-7 lakh small exporters exporting goods and services worth roughly around ₹30,000 crore every year from India, and the export transaction limit at a time is $10,000. Out of this ₹30,000 crore, 50-60 per cent is service exports, “a senior executive of a global payments gateway company told BusinessLine, seeking anonymity.

He added, “For the last 12 years, the export of services was allowed in guidelines. The new proposed guidelines have omitted services as a category for exports; they have only retained goods and digital products. That’s a big omission that will likely impact 3–4 lakh small exporters as services cover over half of the exports. If they exclude services, our banks will stop servicing them as our clients. Though there are some good things, like they have increased the export transaction limit from $10,000 to $15,000.”

Among other industry bodies to have sent their recommendations, the National Association of Software and Service Companies (Nasscom) too has voiced its concerns.

“Exclusion of export services will impact a plethora of small-value services that are exported from India, such as yoga classes, chef/cooking classes, accounting services, bookkeeping, website designing, online web services, consultancy, education, etc.,” it said.

Nasscom recommended, “We note that the OEIFs should, in line with the previous RBI’s 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 Head of Policy, Nasscom, told BusinessLine, “I think it is important for the RBI to look at it from the service exporter’s perspective. There are a lot of services that are exported digitally. In its current stage, these policies can create a lot of uncertainty for exporters. We are hoping this is not an intentional move by the RBI. This looks like a drafting oversight, though this is something that needs to be addressed. We don’t think that the RBI would want to actively do this. But given what is in the draft, that is a problem. We want to ensure RBI addresses this.”

KYC of Importers

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

“Basically, the RBI wants us to have the same kind of KYC norms for the exporter and importer clients as they would have for the banks, though we are just third-party payment enablers. Domestically, most exporters already have KYC done for their bank accounts, and for international importers, even to pay someone $100 for, say, a blog post written from India, they will have to fill in KYC separately. Why would they even do that,” the payments gateway company executive said.

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

It added, “Instruments required for KYC according to RBI’s KYC Master Direction, i.e., Aadhaar, PAN, etc., are specific to India and may not be possessed by overseas importers.”

Published on June 14, 2022
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