rbi: For over 3-lakh service exporters, RBI’s draft OEIF guidelines a shot in the arm for the gig economy

Buoyed by the second-largest global population and increasing internet and smartphone penetration, India has emerged as a leader in small value services online exports despite a slowdown in the global economy and the recent geopolitical developments in Europe. Therefore, the draft guidelines issued by the Reserve Bank of India on ‘Processing and Settlement of small value Export and Import related payments facilitated by Online Export-Import Facilitators (OEIF), what was the erstwhile OPGSP, will simplify online remittances for small value import and export of goods and digital products through e-commerce.
Currently, over 3 lakh Micro, Small, and Medium Enterprises (MSME) exporters across the country rely on the OPGSP facility to receive payments. Therefore, this step taken by the Reserve Bank of India (RBI), to facilitate the processing and settlement of import-export-related payments is commendable in catering to the industry’s needs.
Several clauses in the new draft guidelines for OEIFs have placed additional responsibilities to reinforce consumer protection. For instance, OEIFs must ensure that the buyer is compensated and protected from possible liabilities that may arise from cross-border imports before the delivery of goods and digital products. It is also the responsibility of OEIFs to indicate the exact amount that can be refunded before a purchase is made. OEIFs are also accountable for the creation of a Reserve Fund for refunds in cases of disputes.

India is one of the biggest services export markets, with the estimated value of services exports amounting to $ 22.52 billion as of March 2022. The country’s flourishing gig economy has been further accelerated by the pandemic-induced work from home culture. This has resulted in many households and MSMEs being dependent on income generated from service exports. There has been an increase in small value exports of services like various training and life skill improvement programs, accounting, online web services, consultancy, and teaching, among others – all of which have tremendous growth potential.
The OEIF draft guidelines also state that the time taken to pay an exporter from the date of receipt of payment from the overseas buyer will be decided by the exporter and OEIF. Such provisions are expected to ensure better cash flow management as working capital will not be locked up and will ensure better transparency.
As the applicability of the KYC Master Directions has been extended as per the new guidelines, it will allow OEIFs to undertake full-fledged KYC verification for small and medium-sized businesses (SMBs) that are already using an existing bank account for settlements. However, there should be a good mix of digital KYC, including video verifications and physical verification. This would bring in the element of self-audits that would ensure compliance, maintain proper risk management, and minimize business inefficiencies.
About 65% of all transactions in the e-commerce industry comprise export services and the policy initiatives of the Government have been consistently promoting the growth of the export of services. However, the term ‘Digital Products’ has not been clearly defined in either the draft guidelines or the Foreign Trade Policy and it is unclear if ‘services’ is covered in any of the provisions of the OEIF. This could lead to multiple interpretations in the industry with explicit exclusion of “services” causing a complete derailment of the growth of MSMEs and SMBs. This can also have a long-term impact on new job creation and export statistics of India, a substantial chunk of which comprise such service exports.
RBI’s supporting regulatory initiatives will bring increased attention to this sector and help boost collaboration between fintech players and banks to enter this segment, which will propel innovation and provide a healthy choice for the MSMEs. We are confident that the RBI will look into some of the aspects mentioned and provide clarity as that will go a long way for this program to succeed and for India to maintain its leadership position in small value services online exports.
(The writer is Founder and CEO, moneyHOP, a cross border neo-bank)
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