What is Nodal Account?

If any ecommerce website sells the products of merchant and get money on the behalf of actual merchant, he has to keep it in a separate account in Bank. This account will be called Nodal Account. As per RBI, it is must.

As per RBI, no ecommerce website mixes his own selling money with other merchant’s sold value. When ecommerce website will release the money to merchant, it will record the balance of this account.

If any merchant does not send product as per the requirement of customer of ecommerce website, ecommerce website can use his balance amount for refund the money to the customer.

Moreover this nodal account is also necessary for ewallets and payment service companies. Except this, all other companies who hold money for third party settlement must keep nodal account in bank. ( Reference 1 and 2)

Importance of Nodal Account

1.  There will be more transparency of all transactions with merchants and customers if it will be in separate nodal account.

2.  It will provide more security to customer and merchants for online shopping because nodal account can be audited.

Maintenance of Nodal Account

1.       Credit : All payments will be credit in Nodal account which any ecommerce

      website gets from customer on the behalf of merchants relating to buying of

its goods and services.

2.       Debit : All the payments which is done to merchants or refunds to customers.
3. Settlement : 

   i.   All payments to merchants which do not involve transfer of funds to nodal banks shall be effected within a maximum of T+2 settlement cycle (where T is defined as the day of intimation regarding the completion of transaction).

       ii.  All payments to merchants involving nodal banks shall be effected within a maximum of T+3 settlement cycle.

Practical Examples :

1. Remittances to the Seller would be in compliance with directions issued by Reserve Bank of India for opening and operation of accounts and settlement of payments for electronic payment transactions involving intermediaries vide its notification RBI/2009-10/231 DPSS.CO.PD.No.1102 / 02.14.08/ 2009-10 dated November 24, 2009 (“RBI Intermediary Guidelines”). eBay has appointed Deutsche Bank AG, a banking company incorporated in Frankfurt under the laws of Federal Republic of Germany and having its registered Head Office at Frankfurt operating in India and having an office interalia at Kodak House, 222, Dr DN Road, Fort, Mumbai – 400001 as the nodal bank. eBay may at its sole discretion add, replace or remove any nodal bank (“Nodal Bank”).
Express Remittance shall be subject to RBI Intermediary Guidelines and arrangement / directions of Nodal Bank and in eBay’s sole discretion. (Reference 3)

2. On receipt of the Payments in the Nodal Account, we will endeavour to instruct the nodal bank to transmit the Payments payable to the Seller, after deducting our Fees, from the Nodal Account to the Seller's designated bank account, within 3 (three) Business Days (or such other period as may be prescribed by the RBI from time to time) from Completion of Transaction. (reference 4)


1.       Notification RBI/2009-10/231 DPSS.CO.PD.No.1102 / 02.14.08/ 2009-10 dated November 24, 2009.
2.       Notification DPSS.CO.PD.No.1102/ 02.14.08/2009-10, dated 24/11/2009
3.       http://deals.ebay.in/tnc/psxp-rules-policies.html
4.       https://www.payumoney.com/usertnc.html






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Accounting Education: What is Nodal Account?
What is Nodal Account?
Accounting Education
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