Tuesday, March 2, 2010

Paypal - New Withdrawal Instructions for India

eLagaan releases detailed purpose codes for export transactions. These can be used while initiating withdrawals from Paypal account or wherever the purpose codes are required to be furnished.

Paypal in their blog today announced new bank withdrawal instructions for their customers in India.
"As I indicated in my earlier blog post, we are making changes to comply with Indian regulations for settlements for exports of goods and services. In order to facilitate this process, PayPal will be suspending new withdrawals on March 1, 2010. We expect to resume the service on March 3rd. When you select the ‘Withdraw Funds’ option on your PayPal account after March 3rd, we will ask you to fill out a new field entitled ‘Purpose Code’. This information is required under the laws of India in order to identify the nature of cross-border merchant transactions."

What is Purpose Code?
Purpose codes are unique codes used by your bankers to furnish various information to Reserve Bank of India. You donot need any registration for purpose codes and they are pre-defined. For any international business transactions which mandates a purpose code, the same should be specified.

When is Purpose code needed?
Whenever you receive money at your Bank in India, your Bankers will require a purpose code to be associated, if the money received is for a international commercial transaction. Only after identifying the purpose code, the banker can credit the amount to your account. Since the bankers are not aware of the purpose for which the money is received, you should provide the purpose for the same.

You can check out details of various purpose codes here. Please confirm with your bankers once before actually using the same.