The Reserve Bank is open to looking at increasing the limit on international e-commerce transactions currently set at $3,000, a top official said today.
“If the system wants the limit to be enhanced, that is something that we are positively inclined to look at,” Reserve Bank executive director G Padmanabhan said on the sidelines of a CII event.
Padmanabhan said the limit was set in consultation with PayPal, a major player among the international payment gateways, and added that as many as 99 percent of the e-commerce transactions fall under the limit of $3,000.
Giving rationale for setting the limit (there are no limits for domestic e-commerce transaction) he said it is needed in a country like India which has exchange controls.
To a question on extending trading hours in the forex market beyond 1700 hrs, the RBI official said it is difficult to relax as “we do not have full capital account convertibility”.
“Most of the currency markets which work beyond a reasonable time are the markets which are capital account convertible, where in case there is a liquidity concern, you can source the money from some other country or currency,” he said.
“As long as we have certain capital account controls, or as long as we think liquidity has to be provided within the system, then we have to work within certain time limits,” he said, adding considering the needs of trade, the RBI is conscious of the fact that there is a need to relook at it.
When asked about the volatility in the rupee and how domestic businesses, especially the smaller ones should cope with it, Padmanabhan said we have to learn to live with the fluctuations and opined that the only way it can be handled is through hedging of cash flows.