RBI draft norms for trade via e-commerce

What is the news :

The draft guidelines named ‘Processing and Settlement of small value Export and Import related payments’ that are facilitated by Online Export-Import Facilitators (OEIF) have been issued by the RBI.
Currently, the banks are permitted by the RBI to offer the facility of settlement and the processing of export and import-related remittances.
It is done by entering into a contract with the Online Payment Gateway Service Providers (OPGSPs) with respect to the export of services and goods and the import of software and goods.

How are the guidelines being modified?

With development in the ecosystem for e-commerce and the feedback received from banks and other stakeholders, on a comprehensive review, the extant guidelines are being modified to further simplify and rationalise the process for settlement of payment for export and import through e-commerce

Transaction limit

Regarding import transactions, the RBI has proposed that this facility will be made available for the online import of digital products and goods that do not exceed the value of USD 3,000.
In the case of exports, the limit of USD 15,000 has been proposed.

E-Commerce :

e-commerce means buying and selling of goods and services, including digital products, conducted over digital and electronic network. For the purposes of Merchandise Exports from India Scheme (MEIS) e – commerce shall mean the export of goods hosted on a website accessible through the internet to a purchaser.
While the dispatch of goods shall be made through courier or postal mode, as specified under the MEIS, the payment for goods purchased on e- commerce platform shall be in terms of extant guidelines under FEMA, 1999.
Online Export-Import Facilitators (OEIF) earlier referred to as Online Payment Gateway Service Providers (OPGSPs) are Payment Aggregator (PA) or Payment Gateway (PG) that facilitate on-line remittances for small value export and import of goods and digital products through e-commerce taking place in compliance with instructions given in this circular.
OEIFs may act as Payment Aggregator (PA) or Payment Gateway, or both, as the case may be, in their contract with AD bank.
Import Collection Account is an account opened by an OEIF with an AD bank in India, for collection of payments for imports as an internal account of the AD bank.
Export Collection Account is an account opened by an OEIF with an AD bank in India, for receipt of payments for exports as an internal account of the AD bank.

Import Transactions

The facility shall be available for online import of goods and digital products (as permitted in the extant Foreign Trade Policy) of value not exceeding USD 3,000 (US Dollar Three Thousand) only.
Collection of payment from importer in India shall only be through online payment mode using credit card, debit card, UPI, net banking or any other online payment methods as specified in Foreign Exchange Management

Export Transactions

The facility shall only be available for export of goods and digital products (as permitted in the prevalent Foreign Trade Policy) of value not exceeding USD 15,000 (US Dollar Fifteen thousand) only.

Recent news :

RBI to operationalise Standing Deposit facility (SDF)

A Standing Deposit Facility (SDF) scheme is being operationalised by RBI with immediate effect from April 8, 2022.
The SDF would replace the Fixed Rate Reverse Repo (FRRR) as the floor of the LAF corridor.
The SDF rate will be 25 basis points (bps) below the policy repo rate, i.e., at 3.75 per cent. Eligible participants can place deposits with the RBI on an overnight basis at the fixed rate. The RBI, however, retains the flexibility to absorb liquidity for longer tenors under the SDF with appropriate pricing, as and when the need arises.
All other liquidity arrangements under the extant liquidity management framework will continue as hitherto.

About Standing Deposit facility (SDF)

Eligibility Criteria

All liquidity adjustment facility (LAF) participants will be eligible to participate in the SDF scheme.

Tenor

Under the SDF, the eligible entities can place deposits with the RBI on an overnight basis. The RBI, however, retains the flexibility to absorb liquidity for longer tenors under the SDF with appropriate pricing, as and when the need arises.

Timing

The overnight SDF facility will be available between 17:30 hrs to 23:59 hrs on all days, including Sundays and holidays and would be reversed on the following working day in Mumbai.

Rate of Interest

The rate of interest on amount deposited under this facility will be as decided by the RBI from time to time. Effective April 8, 2022, it will be at 25 basis points below the policy repo rate, i.e., at 3.75 per cent.

CRR and SLR Eligibility

Deposits under the SDF shall not be reckoned as balances eligible for the maintenance of the cash reserve ratio (CRR) under Section 42 of the RBI Act, 1934, but shall be an eligible asset for maintenance of the statutory liquidity ratio (SLR) under Section 24 of the Banking Regulation Act, 1949.

Mechanics of Operation

SDF operations will be conducted on the RBI’s e-Kuber system, where banks can submit their bids through electronic mode.
The overnight SDF would be operated under Straight Through Processing (STP) mode.
Under the STP mode, the bids would be settled automatically and immediately on receipt by e-Kuber system with concurrent debit of funds so as to ensure efficient and faster processing. The transactions undertaken by the participant shall be final and any request for cancellation/ modification of the bids shall not be entertained.
Participants will have the option to use the SDF-ASISO (Automated Sweep-In and Sweep-Out facility) wherein depending upon a pre-set limit, the SDF bids will be triggered automatically without any manual intervention at the end of the day. For details on the SDF-ASISO, please refer to Serial No. 8 below.
The STP-based operations (including ASISO) would be available on all days, including Sundays and holidays and would be reversed on the following working day in Mumbai.

About RBI:

The Reserve Bank of India(RBI) is India’s central bank and regulatory body and is responsible for the issue and supply of the Indian rupee and the regulation of the Indian banking system.
It also manages the country’s main payment systems and works to promote its economic development.
Established : 1 April 1935
Governor: Shaktikanta Das
Deputy governors (4): Rabi Sankar, M. Rajeshwar Rao, Dr. M. D. Patra, M. K. Jain

3 years ago