Uber-mess - Why RBI is right ?
Reserve Bank of India has kicked up a storm by preventing the use of foreign payment gatways in local transactions.. The first casuality of the move is Uber. Traditional media & social media is up in arms against RBI quickly for killing innovation with archaic laws. Even some of the most learned economists have written against RBI move ( http://ajayshahblog.blogspot.ae/2014/08/shutting-down-uber-in-india-was-unwise.html ) In reality, is the RBI really a regulatory villain in this case ? Here's the link to the original circular http://rbi.org.in/scripts/NotificationUser.aspx?Id=9183&Mode=0 There are three main things that are emphasized in this circular, directly or indirectly (1) Transctions between two residents of India should be in INR. (2) The INR credit card transaction should be acquired by an Indian bank through an Indian payment gateway if the card is issued in India. .I.e, there should not be any forex flow in such transactions...