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Anirban Nag
Mumbai, Sept 19: A small change in Reserve Bank regulations last month has made the rupee convertible for some kinds of cybershopping. A resident Indian who wants to order the latest bestseller on the New York Times list can click onto Amazon.com -- the world's largest online bookstore-and pay for it with a international credit card (ICC). In other words, he can incur some kinds of dollar liabilities without venturing out of India.
Surely, there is a catch somewhere. Yes, there is. The Reserve Bank says that though ICCs can be used to buy information or databases from the Internet, this applies only to items for which the release of foreign exchange is permissible under current exchange control regulations. Book imports are freely allowed anyway, so there is no problem cybershopping for printed stuff. But you can't obviously buy a second-hand foreign car through the net. You can also pay cyberdollars for flowers, greeting cards, hotel accommodation abroad and air tickets. On the ban list are payments forgold, silver, lottery tickets and "anything not allowed by the exim policy."
Last month, the central bank simplified payments on international credit cards issued to Indian nationals. It issued a directive (whose import was largely missed by the media) to the effect that a resident Indian can spend money from his allotted basic travel quota (BTQ) without travelling abroad. What's more, he does not need to submit an authorised dealer (AD) form for settling overseas spends in India. The only requirement is: the passport should be endorsed for his spending.
Till two months back, a cardholder was required to produce documents to ADs at the time of settling credit card dues arising out of such uses.
However, there is one caveat: for individual purchases, the spending has to within the BTQ of $3,000 for a calendar year. This effectively means that foreign exchange costs incurred through the ICC will be released to you for spending in India. You need not travel abroad to avail of the BTQ, as was the rule sofar. However, as a holder of a global credit card, if you have already spent $2,000 on cybershopping from India, you will be released only $1,000 if you wish to take a trip abroad during the calendar year.
According to the RBI, it is the responsibility of residents who use ICCs for drawing foreign exchange against the BTQ to get their passports endorsed for the amount drawn against the credit card. Currently, global credit card issuers are harping on the fact that ICCs are acceptable in 220 countries around the world and across millions of establishments where Visa, Amex and MasterCard have their setups.
Henceforth, they can add cybershopping to their list of enticements as well. But ICCs cannot be used by resident Indians for the payment of all international transactions. The money will be released only for those personal purposes for which release of exchange is permitted under the extant regulations. For example, under extant regulations, release of foreign exchange is not permitted for buyingforeign lottery tickets and, therefore, the ICC cannot be used for buying such tickets.
According to the RBI, the ICC can be used for payment of advance against personal imports for an amount not exceeding $ 15,000 or its equivalent. The physical import of the goods or services so paid should be as per the extant exim policy and procedures.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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