February 27th in Money & Finance by .

Paypal outage resolved in India! Bank withdrawals resume on March 3rd

Indian paypal users have been desperate for this news and it looks like there has been both good and bad news.  Let me start with good news first.

  • The good news, is local bank withdrawals will start on March 3, 2010
  • The bad news is, Export code is needed to initiate a bank withdrawal.

According to paypal official blog,

I’m pleased to tell you that the RBI has now allowed us to resume bank withdrawals for settlements for exports of goods and services. We are currently making changes to comply with Indian regulations for settlements for exports of goods and services, and we anticipate that as of Wednesday, March 3rd, we will be able to resume the bank withdrawal service.

As part of the changes, you will be required to fill out a new field entitled ‘Export Code’ when you request a withdrawal. This information is required under the current laws of India in order to identify the nature of cross-border merchant transactions.

On Monday, March 1st, we will be back in touch with specific instructions on how you can move your money into your bank account. I will be posting another blog then.

RBI has told us that PayPal needs specific approvals to allow personal inward remittances to India, which we currently do not have. Until we get these approvals, personal payments into India will remain suspended.

However, if you are an exporter, you will continue to be able to use the PayPal service for payments of goods and services. In fact, with the changes we are making to our system, PayPal is now set to be a more powerful engine for exporters in India. With purpose codes for export transactions and FIRCs (Foreign Inward Remittance Certificates), you should now be able to get the export related benefits you seek.

Is Import Export code  really necessary?

Well! according to paypal, yes.

There has been a lot of talk among indian paypal users, about how to get “export code” (a.k.a IEC code or Import export code ) issued by directorate of foreign trade from Indian govt.  In my personal view, asking for IEC ,  would not make the process much simpler and doesnt encourage a lot of individuals and small business. Instead a PAN no would be much better option.

How to Apply for Export code (IEC code)

Quite contrary to many people think, it is very easy to apply and get the IEC code (usually 10 digits) from the Office of the Director General, Foreign Trade in your city for a small fee. You can apply as individual name under services and dont need to form a company or proprietorship.  Both savings and current account are accepted. It usually takes 2-5 days to get this code. You can also consult your auditor or CA on this.

As of now, you cannot apply for IEC code online, at this time, except you can only check the IEC status online.

Documents Required

**Read this pdf document on IEC procedures and fees

  • Download the IEC Application and print it.
  • PAN card (2 copies)
  • 2 Photos
  • Bankers Certificate stamped by your bank where you hold savings/current account (see the format in IEC application)
  • Bank Account statement (1 month)
  • Self Addressed envelope
  • Demand draft for Rs 250.

See a sample IEC certificate on how it looks like

Lets see how it works out with paypal!

Similar Posts:

2 Comments

Leave A Comment.