fema regulations relating to exports - · pdf filefema regulations relating to expor ts &...
TRANSCRIPT
FEMA Regulations relating FEMA Regulations relating to to
EXPOR TS & IMPORTSEXPOR TS & IMPORTS Dr. S.Durai Rajan, M.Sc., MBA, CAIIB, Ph.D Professor of International Finance Formerly Dy.GM, RBI, Hyderabad ICAI_SIRC 22 APRIL 2017
I. Export of Goods & Services – RBI Regulations
•RBI has notified FEMA (Export of Goods and Services) Regulations, 2000 viz. Notification No. FEMA 23/2000-RB dated May 3, 2000
• This was repealed and replaced by FEM (Export of Goods and Services) Regulations, 2015 with effect from January 12, 2016 and notified vide Notification No. FEMA 23(R)/2015-RB dated January 12, 2016.
•Exports/er has to comply with Trade Policy (Foreign Trade Policy 2015-20)
Mandatory EDF declaration• SDF/EDF declaration• Diff. between EDI and non-EDI port exports• Exports thru Post – AD to countersign• Softex forms-single, bulk-excel, duplicate• Now Generation of EDF no. online• S/W-EDF_once a month/on milestone invoicing• One-shot-within 15d from completion of SWD• Exp. Of Services-no Form prescribed• Third party realisation-declared in EDF?
Submit EDF/SDF to AD• The duplicate copy of the EDF/SDF form is
submitted to the bank for monitoring purposes, by the exporters within 21 days from the date of shipment
• The export proceeds are repatriated through the AD named in the EDF/SDF Form.
• Unrealised outstanding export proceeds are reported to RBI by AD in XOS stt. HYly
• Monitored now thru [email protected]
Exemptions from EDFEDF not required to be furnished in cases of:
• a) trade samples of goods and publicity material supplied free of payment;
• (b) personal effects of travellers, whether accompanied or unaccompanied;
• c) ship's stores, trans-shipment cargo and goods supplied under the orders of GOI or of the military, naval or air force authorities
• d) by way of gift of goods if they are not more than Rs.5 lakh.• e) aircrafts or aircraft engines and spare parts for overhauling
and/or repairs abroad subject to their re-import into India after overhauling /repairs, within a period of six months from the date of their export;
• f) goods imported free of cost on re-export basis;[email protected]
EDF waiver• AD to grant waiver-for export of goods free
of cost, for export promotion up to 2 % of the average annual exports during the preceding three F.Yr subject to a ceiling of Rs.5 lakhs. • For SHE*s, this limit as per FTP is Rs.10 lakhs
or 2 % of average annual export realization during preceding 3 Yrs (April-March), whichever is lower.
* Status Holder [email protected]
Trade Fairs, Exhibitions-EDF Approval• EDF/SDF to be approved by ADs, certain conditions
to be complied with –export for display, can sell abroad, can sell at a discount and also could gift upto $5000 per exporter
• Repatriation of sale proceeds, report to AD• B/E for re-import within one month of import• EDF/SDF _AD’s approval for Export, for re-imports • re-import after repairs / maintenance / testing /
calibration • Certificate of destruction during testing in lieu of B/E
Foreign Currency A/c• Exporters may deposit the foreign
exchange obtained by sale of goods at the international exhibition/ trade fair and operate the account during their stay outside India provided• Balance in the a/c is repatriated to India
through normal banking channels within a month from the date of closure of the exhibition/trade fair and full details are submitted to the AD [email protected]
Invoicing & Realising Exp proceeds•All export contracts and invoices shall be denominated either in freely convertible currency or in INR say, $1493 @ 67. But if invoiced at Rs. 1 lakh; it comes to $ 1544 @ Rs.64.75. if @Rs.70, then $ 1429. Who will bear the exchange risk?•but export proceeds shall be realised in freely convertible currency.•Export proceeds against specific exports may also be realised in Rupees provided it is through a freely convertible Vostro account of a non-resident bank [email protected]
Repatriation of proceeds• to realise and repatriate the full value
of goods / software / services within a stipulated period of 9 months (for all exporters including SEZ, EOUs, STP, EHTP & SHEs) from the date of export; • Within 15 months from the DoS in r/o
goods exported to a warehouse established outside India ( As soon as it is realised). [email protected]
Extension of time • AD can extend upto 6m at a time from
due date for realisation, against exporter’s declaration that proceeds would be realised within extended time• Extension beyond 1yr, provided total
outstanding of the exporter is not > USD 1 mio or 10% of the average export realizations during the preceding 3 Financial years, whichever is higher.
Short Shipments and Shut out Shipments • (i) Short-shipped, (EDF already filed with
Customs)- give notice of short-shipment to the Customs. Get certificate of short shipment. • (ii) In Shut out shipment, give notice in
duplicate to the Customs - attaching thereto the unused duplicate EDF and the shipping bill. Customs will forward it to the RBI together with unused duplicate EDF.
Despatch of Documents• AD despatches to overseas
brs/correspondent;• Occasionally to agents/consignees if there
is ILC, or full advance payment and agreement contains such a clause• Based on standing/track record of exporter
and Bank is satisfied that arrangements have been made for realisation. SHE/SEZ Units can directly despatch s/to conditions.
Direct despatch by Exporter• AD may regularize cases of dispatch of shipping documents by
the exporter direct to the consignee or his agent resident in the country of the final destination of goods, up to USD 1 mio, per export shipment, subject to the following conditions:
• The export proceeds have been realised in full. • The exporter is a regular customer of AD bank for a period of at
least six months. • The exporter’s account with the AD bank is fully compliant with
the Reserve Bank’s extant KYC / AML guidelines. • The AD bank is satisfied about the bona-fides of the transaction. • In case of doubt, the AD bank may consider filing Suspicious
Transaction Report (STR) with FIU_IND (Financial Intelligence Unit in India).
Part Drawing/Undrawn balances• Due to differences in weight, quality, etc., to
be ascertained after arrival and inspection, weighment or analysis of the goods. • maximum of 10 per cent of the full export
value. • Undertake on EDF that Exporter would
realise balance amount within the prescribed period of realisation• AD to ensure that at-least 90% or drawn
amount is realised and one year has [email protected]
Consignment exports• AD instructs correspondent bank to deliver
shipping docs against Trust Receipt/undertaking that sale proceeds would be paid within the period for realisation
• Consignee to Render account sales; Deductions should be supported by bills/receipts in original
• In case the goods are exported on consignment basis, freight and marine insurance must be arranged in India.
Export of goods on lease, hire, and on elongated credit terms-apply to RBI
•Prior approval of RBI required for export of machinery, equipment, etc., on lease, hire basis against collection of lease rentals/hire charges and ultimate re-import.
•Exporters intending to export goods on elongated credit terms may submit their proposals giving full particulars through their banks for consideration to the Regional Office concerned of the Reserve Bank.
Export of Currency • Permission of RBI required for any export of Indian
currency except to the extent as per general permission-- as under:
• (i) Any resident in India may take outside India (other than to Nepal and Bhutan) currency notes of GoI and RBI up to an amount not exceeding Rs.25,000
• (ii) Any person resident outside India (not being a citizen of Pakistan and Bangladesh and also not a traveller coming from and going to Pakistan or Bangladesh) visiting India may take outside India currency notes up to an amount not exceeding Rs. 25,000 while exiting only through an airport.
Advance Payments against Exports
• Shipment of goods to be made within one year from date of receipt of advance payment;
• The Rate of Interest, if any, payable on the advance is not more than LIBOR + 100 bps;
• Shipping Documents are routed through the same AD through whom the advance is received.
• No remittance towards refund of unutilized portion of adv.pmt/payment of interest after one year, without the prior approval of Reserve Bank.
• Monitored now thru [email protected]
Long term export advance (up to 10 years max.)
• Exporters having a min.of 3 yrs’ satisfactory track record can receive long term export advance to be utilized for execution of long term supply contracts for export subject to the conditions :
• (i) Firm irrevocable supply orders and contracts should be in place – at prevailing international pricing .
• (ii) Company should have capacity, systems and processes - that the orders over the said tenure can actually be executed.
• (iii) only to those entities, who have not come under the adverse notice of ED or have not been caution listed.
• (iv) The RoI payable, should not exceed LlBOR plus 200 basis points.• (v) Documents should be routed through one AD only. AD should
ensure compliance with AML / KYC guidelines .• vi) Cannot be used to liquidate Rupee loans classified as NPA.
BG for Export advance• BG/SBLC for Export Performance – 2yrs at a
time and rolled over for another 2 yrs – not more than the value of adv. outstanding on reducing balance basis. No discounting of this L/C by branch of Indian bank abroad.
• Advance Payment received for more than one year s/t certain conditions – Bonafides, KYC/AML, not more than LIBOR +100 bps, no refund > 10%., no refund without RBI approval
Agency commission on exports
• Either by remittance or by deduction from invoice value subject to conditions:
• Commission amt. is declared on EDF/SOFTEX form and accepted by the Customs authorities; if not
• Reasons for not declaring commission on EDF, provided there is a valid agreement for Commission Payment.
• b) Shipment has already been made. • Commission is prohibited on exports made by Indian
Partners towards equity participation in an overseas Jv/ Wos as also exports under Rupee Credit Route, except commission up to 10 % of invoice value of exports of tea & tobacco. [email protected]
Opening / Hiring of Ware houses abroad
• AD permits on application for one year, renewable subject to conditions--Applicant’s export outstanding does not exceed 5 % of exports made during the previous Fin. year. • Applicant has a minimum export turnover of
USD 100,000/- during the last financial year. • All transactions should be routed through the
designated branch of the AD Banks and realised within the prescribed period.
Setting up of Offices Abroad and Acquisition of Immovable Property
• (i) initial expenses: up to 15% of the average sales/income or turnover p.a. during the last 2 Fys or up to 25% of the NW, whichever is higher.
• (ii) Recurring expenses: up to 10% , may be sent for the purpose of normal business operations of the office, subject to conditions:
• a. The overseas branch/office has been set up or representative is posted for conducting normal business activities of Indian entity;
• b. The overseas branch/office/representative shall not enter into any contract or agreement in contravention of the Act, Rules or Regulations made there under; [email protected]
Offices Abroad• It should not create any financial liabilities, contingent or
otherwise, for the HO in India and also not invest surplus funds abroad without prior approval of the Reserve Bank. Any funds rendered surplus should be repatriated to India.
• (iii) The details of bank accounts opened in the overseas country should be promptly reported to the AD Bank.
• (iv) Such approved remittances can also be for acquisition of immovable property outside India for its business and for residential purpose of its staff.
• (v) The overseas office / branch of software exporter company/firm may repatriate to India 100 per cent of the contract value of each ‘off-site’ contract.
• (vi) In case of ‘on site’ contracts, they should repatriate the profits after the completion. [email protected]
Counter-Trade Arrangement • = adjustment of value of goods imported into India against value of goods
exported from India- voluntarily, through an Escrow Account , be considered by RBI. Application for opening an Escrow Account may be made by overseas exporter / organisation through his AD bank to the Regional Office , Reserve Bank.
• Imports and exports should be at international prices• No interest will be payable on balances at credit of the Escrow Account.• Temporary surplus Funds may be held in a short-term deposit up to a total
period of 3 m (in a block of 12 months) and earn interest at applicable rate. • No fund based/or non-fund based facilities permitted against the balances
in the Escrow A/c• For Romania: Indian exporter should utilize the funds for import of goods
from Romania into India within six months from the date of credit to Escrow Accounts allowed.
Reduction in invoice value• In prepayment of usance bills =cash discount to overseas buyers
for prepayment of the usance bills. AD may allow to the extent of amount of proportionate interest.
• Reduction in other cases: AD may approve such reduction, if satisfied ; a) The reduction is not > 25 % of invoice value
• b) It does not relate to export of commodities subject to floor price stipulations c) The exporter is not on the exporters’ caution list of the RBI, d) The exporter is advised to surrender proportionate export incentives availed.
• Without any % ceiling, subject to the above conditions as also subject to their track record being satisfactory
• Change of buyer/consignee • If goods are to be transferred to a buyer other than the original
buyer, the reduction is not >25% [email protected]
Write-off of unrealized export bills • Self-write off or approach the AD. • In case of self-write-off, the exporter should submit to
the concerned AD bank, a CA certificate, indicating• the export realization in the preceding calendar year and
also the amount of write-off already availed of during the year, if any, the relevant EDF to be written off, Bill No., invoice value, commodity exported, country of export.
• The CA certificate may also indicate that the export benefits, if any, availed of by the exporter have been surrendered
• The limits prescribed are as under: Self “write-off” =5%*; • by Status Holder Exporters 10%*
Write-off by AD• ‘Write-off” by AD -10%* of total export proceeds realized during
previous calendar year subject to conditions that the• relevant amount has remained outstanding for > 1Yr, satisfactory
doc. evidence is furnished in support of the exporter having made all efforts to realize the dues, and:
• a) overseas buyer has been declared insolvent• b) The overseas buyer is not traceable over a reasonably long period
of time. • c) The goods exported have been auctioned or destroyed by the
Port / Customs in importing country. • d) The unrealized amount represents the balance due in a case
settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organization;
• e) The unrealized amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value) remaining outstanding and turned out to be unrealizable despite all efforts made by the exporter;
• f) The cost of resorting to legal action would be disproportionate to the unrealized amount.
• AD should obtain documents evidencing surrender of proportionate export incentives before permitting write off.
• However, Exports made to countries with externalization problem & EDF under investigation by ED, DRI, CBI, as also outstanding bills which are subject matter of civil / criminal suit do not qualify for Write off Facility.
• AD banks to report write off of Exp. bills through EDPMS to the Reserve Bank. • AD banks to have their internal inspectors or auditors (including external
auditors) carry out random sample check / percentage check of write-off.• Cases not covered by the above instructions / beyond the above limits, may
be referred to the concerned Regional Office of Reserve Bank of India.
Set-off of export receivables against import payables
• subject to following conditions: (i) Set-off should be in respect of the same overseas buyer and supplier and that consent for set-off has been obtained from him/her.
• The import is as per the Foreign Trade Policy in force.• (ii) Invoices/B/L,/AWBs and ECcopies of BoE for home
consumption have been submitted by the importer to AD. • (iii) Payment for the import is still outstanding in the books . • (iv) The relative EDF will be released by the AD only after the
entire export proceeds are adjusted. • (v) All relevant docs. are submitted to concerned AD who should
comply with all the regulatory requirements relating to transactions.
• (vi) ) The export / import transactions with ACU countries are outside the [email protected]
General provisions• Import, regulated by DGFT . AD to ensure these are
complying FTP, FEMA (Current Account Transactions) Rules, 2000, Directions issued by Reserve Bank under FEMA, 1999 and adhere to provisions of UCPDC.
• Compliance with the provisions of R & D Cess Act, 1986 (for import of drawings and designs) and IT Act provisions.
• Only a simple letter from the applicant containing the basic information, as long as the exchange being purchased is for a current account transaction (not in Sch I & II) when the amount does not exceed USD 5,000 and the payment is made by a cheque drawn on the applicant's bank account or by a D.D.
Form A-1 for import remittances• Applications by persons, firms and companies
for payments, for > USD 5000 or its equivalent, towards imports must be made in Form A-1.
• ADs may freely open L/Cs and allow remittances for import. (Except for goods in negative list)
• EC copy of the Licence should be called for and• after effecting remittances banks may preserve
the copies of utilised licences till they are verified by the internal auditors or inspectors.
Obligations of purchaser of FX• In terms of Section 10(6) of the FEMA, 1999 the person acquiring
foreign exchange is permitted to use it either for the purpose mentioned in the declaration made by him to AD or to use it for any other permissible purpose.
• (ii) When FX drawn is utilised for import, the importer furnishes evidence viz., EC copy of the BoE, Postal Appraisal Form or Customs Assessment Certificate, to the AD, and AD satisfies that goods have been imported.
• (iii) In addition to the permitted methods of payment for imports laid down in Notification No.FEMA14/2000-RB dated 3rd May 2000, payment for import can also be made by way of credit to non-resident Rupee account of the overseas exporter maintained with a bank in India.
Time Limit for Settlement of Imports• Remittances against imports should be completed
within six months from the DoS, except where amounts are withheld towards guarantee of performance, etc.
• (ii) AD banks may permit settlement of import dues delayed due to disputes, financial difficulties, etc. Interest in respect of delayed payments, usance bills or overdue interest for a period upto three years from the DoS.
• No Time Limit for Import of Books.• Time Limit for Deferred Payment Arrangements –
Trade Credit guidelines – under [email protected]
Import of Foreign Exchange • Any amount of foreign exchange can be brought into India,
s/t declaring it in the CDF to the Custom Authorities at the Airport. No CDF if the amount TC+Cy <= $10000, and/or the aggregate value of foreign currency notes (cash portion) alone brought in by such person at any one time does not exceed USD 5,000 .
• Import of Indian Currency and Currency Notes• Any person resident in India who had gone out of India on
a temporary visit, may bring into India at the time of his return from any place outside India, Indian currency notes up to an amount Rs.25,000/- per person.
• (ii) A person may bring into India from Nepal or Bhutan, currency notes of denominations of less than Rs.100 [email protected]
Third Party Payment for Imports• Payments to a third party for import of goods, allowed subject to
conditions:• a. Firm irrevocable purchase order / tripartite agreement should be
in place. However this requirement may not be insisted upon in case where documentary evidence for circumstances leading to third party payments / name of the third party being mentioned in the irrevocable order / invoice has been produced.
• b. AD bank should be satisfied with the bonafides of the transactions and should consider the FATF statement before handling the transactions;
• c. The Invoice & B/E should contain a narration that the related payment has to be made to the (named) third party;
• d. Importer should comply with the extant instructions relating to imports including those on advance payment being made for import of goods.
Advance Remittance• (i) AD may allow advance remittance for import of goods without
any ceiling subject to the conditions:• (a) For amount exceeding USD 200,000 or its equivalent, an
unconditional, ISBLC or a guarantee from an international bank of repute situated outside India or a guarantee of an AD bank in India, if such a guarantee is issued against the counter-guarantee of an international bank of repute situated outside India, is obtained.
• (b) In cases where the importer (other than a Public Sector Company or a Department/Undertaking of the Government of India/State Government/s) is unable to obtain bank guarantee from overseas suppliers and the AD is satisfied about the track record and bonafides of the importer, the requirement of the bank guarantee / standby Letter of Credit may not be insisted upon for advance remittances up to USD 5,000,000 .
Advance Remittance• Since large amount is involved, AD may frame their own
internal guidelines to deal with such cases as per a suitable policy framed by the bank's Board of Directors.
• (c) A Public Sector Company or a department/Utkng. of the GOI / State Govt.s which is not in a position to obtain a guarantee from an international bank of repute against an advance payment, is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance, GOI before making advance remittance exceeding USD 100,000.
• (ii) All payments towards advance remittance for imports shall be subject to the specified conditions.
AR for the Import of Services• AD bank may allow remittance for import of services without any
ceiling subject to the following conditions:• (a) Where the advance is >USD 500,000 or its equivalent, a g’tee
from a bank of international repute situated outside India, or a g’tee from an AD in India, if such a guarantee is issued against the counter-guarantee of a bank of international repute procured by Service provider.
• (b) Usual restriction for PSU, for AR > $100000 without BG. – Ministry of Finance approval.
• (c) AD should also follow-up to ensure beneficiary of the advance remittance fulfils his obligation under the agreement with the remitter in India, failing which, the amount should be repatriated to India.
Interest on Import Bills• (i) AD bank may allow payment of interest on usance
bills or overdue interest for a period of less than three years from the DoS at the rate prescribed for trade credit from time to time.
• (ii) In case of pre-payment of usance import bills, remittances may be made only after reducing the proportionate interest for the unexpired portion of usance at the rate at which interest has been claimed or LIBOR, whichever is applicable.
• Where interest is not separately claimed or expressly indicated, remittances may be allowed after deducting the proportionate interest for the unexpired portion of usance at the prevailing LIBOR of the [email protected]
Remittances/G’tees against Replacement Imports
• Where goods are short-supplied, damaged, short-landed or lost in transit and the EC Copy of the import licence has already been utilised to cover the opening of LC against the original goods which have been lost, the original endorsement to the extent of the value of the lost goods may be cancelled by AD and
• fresh remittance for replacement allowed, provided, the insurance claim relating to the lost goods has been settled in favour of the importer. It may be ensured that the consignment being replaced is shipped within the validity period of the license.
• In case replacement goods for defective import are being sent by the overseas supplier before the defective goods imported earlier are reshipped out of India, AD may issue G’tees for dispatch/return of the defective goods, according to their commercial judgment. [email protected]
Receipt of Import Bills/Documents• Import of Equipment by BPO Companies and ICCs for
their Overseas Sites--• Approval from MC & IT for setting up ICC• AD’s comml. Judgment and directly paid to suppliers• Certificate from CEO/Auditor about import abroad• Receipt of Import Bills/Documents• Import bills and documents should be received from the
banker of the supplier by the banker of the importer in India. AD should not, therefore, make remittances where import bills have been received directly by the importers, except in the following cases:
Receipt of import documents by the importer directly from overseas suppliers
• (i) Where the value of import bill does not exceed USD 300,000.
• (ii) Import bills received by wholly-owned Indian subsidiaries of foreign companies from their principals.
• (iii) Import bills received by SHE as defined in the FTP, 100% EOU/ Units in SEZ, PSUs/ and Limited Companies.
• Sector specific measure: AD permitted to allow remittance for imports up to USD 300,000 where the importer of rough diamonds, rough precious and semi-precious stones has received the import bills / documents directly from the overseas supplier and the d/e for import is submitted by the importer at the time of remittance. Subject to conditions:
Receipt of imp.docs. By AD directly• (i) The transactions are based on their commercial judgment and they are
satisfied about the bonafides of the transactions.• (ii) AD should do the KYC and due diligence exercise and should be fully satisfied
about the financial standing / status and track record of the importer customer. Before extending the facility, they should also obtain a report on each individual overseas supplier from the overseas banker or reputed overseas credit rating agency.
• Receipt of import documents by AD directly from overseas suppliers• (i) At the request of importer, provided the AD is fully satisfied about the
financial standing/status and track record of the importer customer.• (ii) Before extending the facility, the AD should obtain a report on each individual
overseas supplier from the overseas banker/reputed overseas credit agency. However, such credit report on the overseas supplier need not be obtained in cases where the invoice value does not exceed USD 300,000 provided the AD is satisfied about the bonafides of the transaction and track record of the importer.
Evidence of Import - Physical Imports• (i) If Rem. exceeds USD 100,000 or its equivalent, it is obligatory on
the part of the AD to ensure that the importer submits :-• (a) EC copy of B/E for home consumption, or• (b) EC copy B/E for warehousing, in case of 100% EOU/ or • (c) Customs Assessment Certificate or Postal Appraisal Form, as
declared by the importer to the Customs Authorities, where import has been made by post, as evidence that the goods for which the payment was made have actually been imported into India.
• (ii) For imports on D/A basis, AD should insist on production of evidence when effecting remittance. However, if importers fail to produce documentary evidence due to genuine reasons such as non- arrival of consignment, delay in delivery/ customs clearance of consignment, etc., AD may, if satisfied, allow reasonable time, upto 3 months from the date of remittance, to the importer.
Evidence in Lieu of Bill of Entry• (i) AD may accept, in lieu of EC copy B/E, a certificate from the
CEO or auditor of the company that the goods for which Rem. was made, have actually been imported into India provided :-
• (a) The amount of foreign exchange remitted is less than USD 1,000,000 .
• (b) The importer is a company listed on a stock exchange in India and whose net worth is not less than Rs.100 crore as on the date of its last audited balance sheet, or, the importer is a public sector company or an undertaking of the Government of India or its departments.
• (ii) The above facility may also be extended to autonomous bodies, including scientific bodies/academic institutions, such as IISc/IITs whose accounts are audited by CAG. AD to insist on a declaration from the auditor/CEO to this effect.
Non-physical Imports, Issue of Ack. And Verification and Preservation
• (i) Software or data through internet / datacom channels and drawings and designs through e-mail / fax, a certificate from a CA that it has been received by the importer, may be obtained.
• (ii) AD should advise importers to keep Customs Authorities informed of the imports made by them under this clause.
• ii) AD to acknowledge receipt of evidence of import e.g. EC copy B/E, Postal Appraisal Form or Customs Assessment Certificate, etc., from importers by issuing acknowledgement slips containing all relevant particulars relating to the import transactions.
• iii) Internal inspectors or auditors (including external auditors appointed by AD) should carry out verification of the documents evidencing import.
• (iv) D/e for import should be preserved by AD for a period of one year from the date of its verification. In respect of cases which are under investigation , till it is [email protected]
Follow-up for Import Evidence• (i) Evidence of import for > $100000, within 3 m from date of
remittance, AD to rigorously follow-up for the next 3 months.• (ii) AD should forward a statement on half-yearly basis as at the
end of June & December of every year, inBEF online eXBRL furnishing details of import transactions, to the Regional Office of Reserve Bank under whose jurisdiction the AD is functioning, within 15 days from the close of the half-year to which the statement relates.
• (iii) AD need not follow up submission of evidence of import involving amount of USD 100,000 or less provided they are satisfied about the genuineness of the transaction and the bonafides of the remitter. A suitable policy may be framed by the bank's Board of Directors and AD may set their own internal guidelines to deal with such cases.
Merchanting Trade• In Merchanting Trade following conditions should be satisfied:• a. Goods acquired should not enter the Domestic Tariff Area and• b. The goods should not undergo any transformation.• AD may handle bonafide MT Transactions and ensure that:• (a) All regulations and directions applicable to export (except
Export Declaration Form) and import (except Bill of Entry) are complied with.
• (b) Both the legs of a Merchanting Trade Transaction are routed through the same AD.
• The bank should verify the documents like invoice, packing list, transport documents and insurance documents (if originals are not available, Non-negotiable copies duly authenticated by the bank handling documents may be taken) and satisfy itself about the genuineness of the trade.
Merchanting Trade ..2• (c) The entire Merchanting Trade Transactions should be
completed within nine months and there should not be any outlay of foreign exchange beyond four months.
• (d) The commencement of Merchanting Trade would be the date of shipment /export leg receipt or import leg payment, whichever is first. The completion date would be the date of shipment / export leg receipt or import leg payment, whichever is the last;
• (e) Short-term credit either by way of suppliers' credit or buyers' credit will be available for MT transactions, to the extent not backed by advance remittance for the export leg, including the discounting of export leg LC by an AD bank, as in the case of import transactions ;
MT……3• (f) AD should ensure that export advance if any is
earmarked for making payment for the respective import leg.
• (g) Mtraders allowed to make advance payment for the import leg on demand made by the overseas seller.
• For making outward rem to overseas supplier, before inward export remittance is received, AD may provide facilities based on commercial judgement.
• Any advance payment for the import leg beyond USD 200,000/- per transaction, should be made against Bank Guarantee / LC from an international bank of repute, if payment for export leg has not been received in advance;
Merchanting Trade..4• (h) L/C to the supplier is permitted against
confirmed export order keeping in view the outlay and completion of the transaction within nine months;
• (i) Payment for import leg may also be allowed out of balances in EEFC a/c. of the Merchant Trader.
• (j) AD bank should ensure one-to-one matching of each MT transaction and report defaults in any leg, to the concerned R.O. of RBI, on HY basis within 15 days from the close of each half year, i.e. June and December.
M.T………5• (k) The names of defaulting Merchanting Traders, where
outstanding reaches 5% of their annual export earnings, would be Caution-listed.
• (l) The KYC and AML guidelines should be observed.• The Merchanting Traders have to be genuine traders of
goods and not mere financial intermediaries. Confirmed orders have to be received by them from overseas buyers. AD banks should satisfy themselves about the capabilities to perform the obligations under the order. The overall Merchanting Trade should result in reasonable profits to the Merchanting Trader.
Recent changes
• EDPMS• IDPMS• No FIRC for exports• IRM No.• eBRC• EDF for any amount (incl. < Rs. 25k)• Online generation of EDF nos/Softex form Nos
