The Reserve Bank of India (RBI) has said that it has not authorised the cash-on-delivery (CoD) system practiced in the ecommerce sector, reported The Economic Times report.

RBI made the statement in a reply to an RTI query.

“Aggregators/payment intermediaries like Amazon and Flipkart are not authorised under Section 8 of the PSS (Payments and Settlements Systems) Act, 2007,” the apex bank said in its response according to the report.

The statement by the RBI could be critical blow to the ecommerce industry in the country. As per the report over half of the e-commerce transactions in the country is based on this pattern.

However, the report said that the RBI statement does not necessarily invalidate the cash on delivery system.

Legal experts, who spoke in the report said that ‘the act mentions electronic and online payment, but doesn’t make explicit mention of money received through the cash-on-delivery route’.

“This by no means makes the cash-on-delivery model illegal or unauthorised…The Payment and Settlement Systems Act, 2007 should apply to cash-on-delivery transactions by ecommerce operators,” Abhishek A Rastogi, partner at Khaitan & Co was quoted as saying in the report.

First Published:Jul 24, 2018 1:27 PM IST