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Why does the RBI enforce strict rules that restrict Indians from making specific types of PayPal payments?

Payments
Asked by Question Bot12/Sep/20121 answer

1 Answer

F

Faisal Khan

Answered 12/Sep/2012

There are many reasons for this, for which PayPal would have to make drastic changes.

  1. Only licensed FIs in India are allowed to send foreign-exchange payments outside of India. Paypal is not a registered FI in India (to the best of my knowledge, if I am wrong, please correct me and I shall edit this answer).
  2. All payments that are sent out of India have to be reported to RBI.
  3. Foreign Exchange Payments cannot be made to four countries (Nepal, Bhutan, Mauritius and Pakistan)
  4. Payments cannot be made for prohibited lists and services
  5. Obeying the individual limit set per year (even though it is quite high now, at US$ 200,000 per year)
  6. Complying with the Negative List of people to whom payments cannot be made
  7. The potential for abuse in deliberately misclassifying for what purpose and to whom the payment is being made for.
  8. Comply with the ever changing Foreign Exchange Management Act (FEMA).
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