Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: ACCOUNTING STANDARDS :: form 3cd :: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: Central Excise rule to resale the machines to a new company :: empanelment :: list of goods taxed at 4% :: articles on VAT and GST in India :: cpt :: TDS :: VAT Audit :: ACCOUNTING STANDARD :: TAX RATES - GOODS TAXABLE @ 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: due date for vat payment
 
 
« Latest Circulars »
 RBI imposes penalty on Janata Urban Co-operative Bank Ltd., Wai, District Satara
 Monitoring of Foreign Investment under PIS in Indian Companies- Incorporation in Ban List–M/s HDFC Bank Ltd.
 Reserve Bank of India seeks Comments on Draft Circular on Rationalisation of Merchant Discount Rate (MDR) for Debit Card Transactions
 Forward Rate Agreement (FRA) and Interest Rate Swap (IRS) - Withdrawal of Fortnightly return
 RBI-Foreign Investments in India
  RBI cancels the Licence of the Shri Chhatrapati Urban Co-operative Bank Ltd., Pimple Nilakh, Pune, Maharashtra
  Finance Minister meets the Directors of the RBI Central Board
  RBI-Removal of limits on withdrawal of cash from Saving Bank Accounts
 Government of India nominates Dr. Rajiv Kumar, Dr. Ashok Gulati and Shri Manish Sabharwal on RBI Central Board
 RBI cancels the Licence of the Shri Chhatrapati Urban Co-operative Bank Ltd., Pimple Nilakh, Pune, Maharashtra
 RBI-Removal of limits on withdrawal of cash from Saving Bank Accounts

RBI-Security Issues and Risk mitigation measures related to Card Not Present (CNP) transactions
August, 26th 2014

RBI/2014-15/190
DPSS.PD.CO. No.371/02.14.003/2014-2015

August 22, 2014

The Chairman and Managing Director / Chief Executive Officers
All Scheduled Commercial Banks including RRBs /
Urban Co-operative Banks / State Co-operative Banks /
District Central Co-operative Banks/Authorised Card Payment Networks

Madam / Dear Sir

Security Issues and Risk mitigation measures related to Card Not Present (CNP) transactions

Please refer to our circulars RBI/DPSS No. 1501 / 02.14.003 / 2008-2009 dated February 18, 2009RBI/DPSS No.1503 / 02.14.003 /2010-2011 dated December 31, 2010 and RBI/DPSS No.223/02.14.003/2011-2012 dated August 04, 2011 wherein directives were issued making it mandatory for banks to put in place additional authentication / validation based on information not visible on the cards for all on-line card not present (CNP) transactions (e-commerce / IVR / MOTO / recurring based on standing instructions).

2. A reference is also invited to our circular RBI / DPSS No.914/02.14.003/2010-2011 dated October 25, 2010 on the subject, clarifying the applicability of the above directives on the nature of card not present transactions. It was clarified that the mandate shall apply to all transactions using cards issued in India for payments on merchant sites where no outflow of foreign exchange is contemplated. It was further stated that the linkage to an overseas website/payment gateway cannot be the basis for permitting relaxations from implementing the mandate.

3. It has come to our notice that despite the above clarifications there are instances of card not present transactions being effected without the mandated additional authentication/validation even where the underlying transactions are essentially taking place between two residents in India (card issued in India being used for purchase of goods and service offered by a merchant/service provider in India). It is also observed that these entities are evading the mandate of additional authentication/validation by following business / payment models which are resulting in foreign exchange outflow. Such camouflaging and flouting of extant instructions on card security, which has been made possible by merchant transactions (for underlying sale of goods / services within India) being acquired by banks located overseas resulting in an outflow of foreign exchange in the settlement of these transactions, is not acceptable as this is in violation of the directives issued under the Payment and Settlement Systems Act 2007 besides the requirements under the Foreign Exchange Management Act, 1999.

4. In view of the above, it is advised that entities adopting such practices leading to willful non-adherence and violation of extant instructions should immediately put a stop to such arrangements.

5. It is further advised that where cards issued by banks in India are used for making card not present payments towards purchase of goods and services provided within the country, the acquisition of such transactions has to be through a bank in India and the transaction should necessarily settle only in Indian currency, in adherence to extant instructions on security of card payments.

6. The directive is issued under Section 10(2) read with Section 18 of Payment and Settlement Systems Act 2007, (Act 51 of 2007).

7. This directive shall come into effect immediately from the date of this circular. However, existing arrangements if any, will be accorded time up to October 31, 2014 to comply with our instructions, to avoid any business disruption, without prejudice to further action, if any, for violation of extant provisions under PSS Act/FEMA.

8. Please acknowledge receipt.

Yours faithfully

(Vijay Chugh)
Principal Chief General Manager

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Custom Software Development Outsourcing Custom Software Development Offshore Cus

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions