RBI Takes Charge: Regulating Cross-Border Payment Facilitators

In a significant move, the Reserve Bank of India (RBI) has brought all entities facilitating cross-border payment transactions for the import and export of goods and services under its direct regulation. This decision aims to enhance oversight and streamline the payment and settlement processes for online cross-border trade.

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Entities to be Regulated as Payment Aggregators – Cross Border (PA-CB)

Under the Payment and Settlement Systems Act, the RBI will regulate entities facilitating payment and settlement for online cross-border export and import transactions as Payment Aggregators – Cross Border (PA-CB). This regulatory framework will ensure greater transparency, security, and efficiency in cross-border payment transactions.

Minimum Networth Requirements for Non-Bank PA-CBs

Non-bank entities providing PA-CB services must meet specific networth requirements. At the time of submitting an application to the RBI for authorization, they should have a minimum networth of Rs 15 crore. By March 31, 2026, this networth requirement will increase to Rs 25 crore. New non-bank PA-CB entities yet to commence operations must also maintain a minimum networth of Rs 15 crore when applying for authorization and achieve a networth of Rs 25 crore within three years of authorization.

Transition Period and Compliance

Existing non-bank PA-CBs that fail to comply with the networth requirement or do not apply for authorization within the stipulated timeframe must cease PA-CB activities by July 31, 2024. This transition period allows entities to align their operations with the new regulatory framework.

Transaction Limits for Import and Export Transactions

For import and export transactions processed by PA-CBs, the RBI has set a maximum value per unit of goods or services sold at Rs 25,00,000. This limit aims to ensure that cross-border transactions are conducted within a manageable and secure framework.

The RBI's decision to regulate entities facilitating cross-border payments is a positive step towards enhancing the efficiency, security, and transparency of online cross-border trade. By bringing these entities under its direct regulation, the RBI can ensure that cross-border payment transactions are conducted in a safe and compliant manner, fostering the growth of international trade and commerce.