fema regulations.doc.doc

8/9/2019 FEMA regulations.doc.doc

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Chapter FEMA Regulations on Imports

1. General

All the Authorised dealers are to be governed by normal trade practices, while undertaking importpayments. In particular, Know Your Customer guidelines issued by Reserve Bank o India andinternally need to be ollowed scrupulously.In respect o transactions with !epal and Bhutan, which are re"uired to be made in Indian rupeesonly, transers can be eected without speciic reerence to RBI.

#ale o $oreign %&change or current account transactions with persons residents in !epal and'or

Bhutan, or against import into these countries made by residents in India, is prohibited.

Imports which are inanced in rupees and payment or which is made by crediting rupees to an a non

resident account in India or to a rupee account maintained by a non(resident bank will also not come

under these regulations.

2. Form A-1

Applications by persons, irms and companies or making payments, e&ceeding )#* + or its

e"uivalent, towards imports into India must be made on $orm A(-. I the payment is made y means o

a che"ue drawn on applicants bank, a letter with basic inormation such as name and address,

amount and purpose o remittance will be suicient. /hese orms need not be sent to RBI.

3. Import Licenses

i) General

Authorised banks may reely open letters o credit and allow remittances or import o goods otherthan in the negative list re"uiring license under the $oreign /rade 0olicy in orce. In such cases,

licenses marked 1$or %&change Control purposes should be called or and the conditions attached to

such licenses adhered to.

ii) Enorsement on Import Licenses

Banks should endorse on the %&change controls copy o import licenses, under their stamp and

signature, the details o letters o credit opened or orward contracts booked or remittances made in

oreign currency as also the amount o insurance and reight paid by the importer locally in rupees,

wherever licenses have been obtained by importers.

iii) !reser"ation o# Import Licences

%&change control copy o the import licence submitted by importer or opening o 2etter o Credit or

making remittance, when ully utili3ed, should be preserved till its scrutiny by the internal auditors.

i") Import Licences #or C.I.F. "alue

a. Import licences are normally issued or the C.I.$. value o the goods to be imported. 4hen

imports are $.5.B. terms, the ull amount o import licence 6o C.I.$. value7 cannot be used8

allowance or insurance and reight to be paid in rupees need to be kept.

b. Imports are sometimes made even $.5.B. terms and Indian importers agreeing or

reimbursement o reight with the cost o the goods. In such cases, banks should beore


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making the remittance o reight charges, ascertain the actual reight amount paid with

reerence to the relevant reight bill or the amount mentioned on the relative bill o lading.

") Imports on C.I.F. $asis $% Go"ernment &epartments'!u$lic (ector nerta*ings.

In cases where imports are made on C.I.F. terms an through ocean transport by 9overnment

*epartments'0ublic #ector )ndertakings, they are re"uired to obtain the approval o the Chartering4ing o :inistry o #hipping or payment o imports on C.I.$. basis. #uch approvals will not be

re"uired by 0ublic #ector )ndertakings'9overnment *epartment, i the mode o transport is other

than ocean transport.

+. Manner o# Rupee !a%ment

0ayments or retirement o bills drawn under letters o credit as well as bills received rom abroad or

collection against imports into India, must be received by the bank, irrespective o amount, by debit to

the account o the importer maintained with them or by means o a crossed che"ue drawn by the

importer on his other bankers. 0ayments against bills should not be accepted in cash.

,. Letter o# Authorit% holers'Agents o# Importers

A bank can open letters o credit or make remittances where the %&change Control copy o the

relative import licence has been issued in the name o a party other than the applicant. /he

re"uirements are i7 the applicant to give a letter o authority rom the import licence holder in his

avour or opening letters o credit and'or make remittances or payment towards import under the

licence ii7 sub;ect to the terms and conditions, as per $oreign /rade 0olicy in orce. In respect o

imports where licence is not re"uired, the $oreign /rade 0olicy should permit imports through agents.In all such cases, the responsibility or production o the %&change control copy o the Bill o %ntry,

wherever re"uired, will be that o the agent.

. $ligation o# !urchaser o# Foreign E/change

6a7 In terms o #ection - 6


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0. ime Limit #or (ettlement o# Import !a%ments

i) In terms o the e&tant regulations, remittances against imports should be completed not later than

si& months rom the date o shipment e&cept in cases where amounts are withheld towards

guarantee o perormance etc. *eerred payment arrangements including suppliers and buyers credit

providing or payments beyond a period o si& months rom date o shipment up to a period o lessthan three years are treated as trade credits 6#uppliers Credit and Buyers Credit7 or which the

instructions or trade credits should be ollowed.

6ii7 /he bank may permit settlement o import dues delayed due to disputes, inancial diiculties

etc. Interest in respect o such delayed payments may be permitted or less than three years.

. ime limit #or import o# $oo*s4

Remittances against import o books may be allowed without restriction as to time limit, provided,

interest payment, is not or more than three years.

5.Import o# Foreign e/change'Inian Rupees

6i7 %&cept as otherwise provided in the Regulations, no person shall, without the general or

special permission o the Reserve Bank, import or bring into India, any oreign currency.

Import o oreign currency, including che"ues, is governed by clause 6g7 o sub(section 6?7 o

#ection < o the $oreign %&change :anagement Act -===, and the $oreign %&change

:anagement 6%&port and Import o Currency7 Regulations @, made by Reserve Bank vide

!otiications !o. $%:A

6i7 #end into India without limit oreign e&change in any orm other than currency notes, bank notes

and travelers che"ues.

6ii7 bring into India rom any place outside India, without limit oreign e&change 6other than unissued

notes7, sub;ect to the condition that such person makes, on arrival , a declaration to the Custom

Authorities in Currency *eclaration $orm 6C*$7 .It shall not be necessary to make such declaration

where the aggregate value o the oreign e&change in the orm o currency notes, bank notes or

travelers che"ues brought in by such person at any one time does not e&ceed )#* -, 6)#

dollars ten thousand7 or its e"uivalent and'or the aggregate value o oreign currency notes brought in

by such person at any one time does not e&ceed )#* +, 6)# *ollars ive thousand7 or its

e"uivalent.

11Import o# Inian currenc% an currenc% notes

6i7 Any person resident in India who had gone out o India on a temporary visit, may bring into India at

the time o his return rom any place outside India 6other than rom !epal and Bhutan7 currency notes

o 9overnment o India and Reserve Bank notes up to an amount not e&ceeding Rs. ,+'( per

person.

6ii7 A person may bring into India rom !epal or Bhutan, currency notes o 9overnment o India and

Reserve Bank notes other than notes o denominations o above Rs. - .


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12. Interest on Import 7ills

i7 A bank may allow payment o interest on usance bills or overdue interest or a period o less than

three yearsrom the date o shipment at the rates prescribed or trade credits rom time to time.

ii7 In case o pre(payment o usance import bills, remittances may be made only ater reducing the

proportionate interest or the une&pired portion o usance at the rate at which interest has beenclaimed or 2IB5R o the currency in which the goods have been invoiced, whichever is applicable.

4here interest is not separately claimed or e&pressly indicated, remittances may be allowed ater

deducting the proportionate interest or the une&pired portion o usance at the prevailing 2IB5R o the

currency o invoice.

13. A"ance Remittances.

Advance remittance or import o goods may be allowed without any ceiling sub;ect to the ollowing

conditions.

6a7 i7 I the amount o advance remittance e&ceeds )# @. or i ts e"uivalent, an

unconditional, irrevocable standby 2etter o Credit or a guarantee rom an international bank o repute

situated outside India or a guarantee o an Authori3ed *ealer in India, i such a guarantee is issued

against the counter(guarantee o an international bank o repute situated outside India, is obtained.

ii7 In cases where the importer 6other than a 0ublic #ector Company or a

*epartment')ndertaking o the 9overnment o India'#tate 9overnments7 is unable to obtain bank

guarantee rom overseas suppliers and the A* Category( I bank is satisied about the track record

and bonaides o the importer, the re"uirement o the bank guarantee'standby 2etter o Credit may notbe insisted upon or advance remittances upto )#* +,, 6)# dollar ive million7. A* Category >

I banks may rame their own internal guidelines to deal with such cases as per a suitable policy

ramed by the banks Board o *irectors.

iii7 A 0ublic #ector Company or a *epartment')ndertaking o the Central'#tate 9overnment's

which is not in a position to obtain a guarantee rom an international bank o repute against an

advance payment, it is re"uired to obtain a speciic waiver or the bank guarantee rom the :inistry o

$inance, 9overnment o India beore making advance remittance e&ceeding )#* -..

6b7 All payments towards advance remittance or imports shall be sub;ect to the other usual

conditions on KYC, bona ide nature, being in tune with contract and amount paid through customers

account.

6 c 7 0hysical imports should be made within si& months 6three years in case o capital goods7 rom

the date o remittance and the importer should give an undertaking to urnish documentary evidence

o import, within iteen days rom the close o the relevant period.


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d7 In the event o non(import o goods, the bank should ensure that the amount o advance

remittance is repatriated to India or is utili3ed or any other purposes or which release o e&change is

permissible under the Act, Rules or Regulations made there under.

1+. A"ance Remittance #or Import o# Rough &iamons

Based on the Recommendations o the %&pert Committee on 9ems and ewellery #ector, constituted

by the :inistry o $inance, 9overnment o India, and with a view to liberali3ing the procedure urther

and acilitate import o rough diamonds, banks are permitted to allow advance remittance without any

limit and without bank guarantee or standby letter o credit, by an importer 6other than a 0ublic #ector

Company or a *epartment')ndertaking o the 9overnment o India'#tate 9overnment's7, or import o

rough diamonds into India rom the under noted mining companies, vi3.

i7 *e Beers )K 2imited., )K,

ii7 RI5 /I!/5, )Kiii7 B0 Billiton, Australia

iv7 %!*IA:A, %.0. Angola,

v7 A2R5#A, Russia,

vi7 95KARA!, Russia,

vii7 RI5 /I!/5, Belgium and

viii7 B0 Billiton, Belgium

i&7 !amibia *iamond /rading Company 60/Y7 2td. 6!*/C7

4hile allowing the advance remittance, should ensure D

6i7 /he importer should be a recogni3ed processor o rough diamonds as per a list be approved by

9em and ewellery %&port 0romotion Council in this regard and should have a good track record o

e&port realisation.

6ii7 Banks should undertake the transaction based on their commercial ;udgment and ater being

satisied about the bonaides o the transaction.

6iii7 Advance payments should be made strictly as per the terms o the sale contract and should bemade directly to the account o the company concerned, that is, to the ultimate beneiciary and not

through numbered accounts or otherwise. $urther, due caution may be e&ercised to ensure that

remittance is not permitted or import o conlict diamondsD

6iv7 KYC and due diligence e&ercise should be done by the banks or the Indian importer entity and

the overseas company8 and

6v7 Banks should ollow up submission o the Bill o %ntry'documents evidencing import o rough

diamonds into the country by the importer, in terms o the Act'Rules'Regulations'*irections issued inthis regard.


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In case o an importer entity in the 0ublic #ector or a *epartment')ndertaking o the 9overnment o

India'#tate 9overnment's, A* Category > I banks may permit advance remittance sub;ect to the

above conditions and a speciic waiver o bank guarantee rom the :inistry o $inance, 9overnment

o India where the advance payments is e"uivalent to or e&ceeds )#* -.'( 6)#* one hundred

thousand only7.

Banks are re"uired to submit a report o all such advance remittances made without a bank guarantee

or standby letter o credit, where the amount o advance payment is e"uivalent to or e&ceeds )#*

+,,'( 6)#* $ive :illion 5nly7, to /he Chie 9eneral :anager, Reserve Bank o India, $oreign

%&change *epartment, /rade *ivision, Central 5ice, :umbai, on a hal yearly basis, as at the end o

#eptember and :arch every year. /he report should be sent within -+ calendar days rom the close

o each hal year.

1,. A"ance Remittance #or Import o# aircra#ts'helicopters'other a"iation relate purchases

As a sector speciic measure, airline companies which have been permitted by the *irectorate

9eneral o Civil Aviation to operate as a schedule air transport service, can make advance remittance

without bank guarantee, up to )#* + million.

Accordingly, banks may allow advance remittance, without obtaining a bank guarantee or an

unconditional, irrevocable standby 2etter o Credit, up to )#* + million, or direct import o each

aircrat, helicopter and other aviation related purchases. /he remittances or the above transactions

shall be sub;ect to the ollowing conditionsD

i. /o undertake the transactions based on their commercial ;udgment and ater being satisied

about the bonaide o the transactions. KYC and due diligence e&ercise should be done or the Indian

importer entity and the overseas manuacturer company as well.

ii. Advance payments should be made strictly as per the terms o the sale contract and are

made directly to the account o the manuacturer 6#upplier7 concerned.

iii. Banks to rame their own internal guidelines to deal with such cases, with the approval o their

Board o *irectors.

iv. In the case o a 0ublic #ector Company or a *epartment')ndertaking o Central'#tate

9overnments, the A* Category > I bank shall ensure that the re"uirement o bank guarantee has

been speciically waived by the :inistry o $inance, 9overnment o India or advance remittances

e&ceeding )#* -..

E. 0hysical import o goods into India is made within si& months 6three years in case o capital

goods7 rom the date o remittance and the importer gives an undertaking to urnish documentary

evidence o import within iteen days orm the close o the relevant period. It is clariied that where


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advance is paid as milestone payments, the date o last remittance made in terms o the contract will

be reckoned or the purpose o submission o documentary evidence o import.

vi. 0rior to making the remittance, the bank to ensure that the re"uisite approval o the

:inistry o Civil Aviation ' *9CA ' other agencies in terms o the e&tant $oreign /rade 0olicy has been

obtained by the company or import.

vii. In the event o non(import o aircrat and aviation sector related products, A* Category > I

bank should ensure that the amount o advance remittance is immediately repatriated to India.

0rior approval o the concerned Regional 5ice o the Reserve Bank will be re"uired in case o any

deviation rom the above stipulations.

1. Remittances #or Import o# #ilms on lease'rental $asis.

Banks may allow remittance o rent, royalty, licence ee, proit etc. in connection with import o

cinematograph eature ilms and video ilms sub;ect to the ollowing conditionsD

i7 A 1!o 5b;ection Certiicate rom Central Board o $ilm Certiication, wherever re"uired,

has been submitted.

ii7 A Chartered Accountants certiicate is produced indicating that the payment to overseas

supplier is due and the amount sought to be remitted is in conormity with the terms o the

contract8 and

iii7 An undertaking'certiicate regarding payment o income(ta& has been submitted.

10. A"ance Remittances #or Import o# (er"ices

Banks may allow advance remittance or import o services without any ceiling sub;ect o the

ollowingD

6a7 4here the amount o advance e&ceeds )#* +. or its e"uivalent, a guarantee rom a

bank o international repute situated outside India, or a guarantee rom an A* Category > Ibank in India, i such a guarantee is issued against the counter(guarantee o a bank o

international repute situated outside India, or a guarantee rom an A* Category > I bank in

India, i such a guarantee is issued against the counter(guarantee o a bank o international

repute situated outside India, should be obtained rom the overseas beneiciary.

6b7 In respect o 9overnment *epartment'0#)s , approval re"uired or waiver o the above

condition or amounts e&ceeding )#* -,


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6c7 Banks should also ollow(up to ensure that the beneiciary o the advance remittance ulils his

obligation under the contract or agreement with the remitter in India, ailing which, the amount

should be repatriated to India.

1. Remittances #or 8ar Ris* Insurance'7un*er'Congestion (urcharge'!remium #or

E/tene Insurance.

Banks may make remittances towards 4ar Risk insurance premium, Bunker'Congestion

surcharge at oreign ports, and premia or e&tended insurance cover etc., which are incidental to

imports.

15. Remittances #or Imports uner !enalt%

Banks may make remittances against goods imported without authority, but later allowed to be

cleared by the Customs Authorities against payment o penalty, to the e&tent o C.I.$. value o the

goods indicated on the relative %&change Control copy o Bill o %ntry evidencing import o goods

in to India.

26. Remittances against Replacement Imports

4here goods are short(supplied, damages, short(landed or lost in transit and the %&change

Control copy o the import licence has already been utili3ed to cover the opening o a letter o

credit against the original goods which have been lost, the original endorsement to the e&tent o

the value o the lost goods may be cancelled by banks and resh remittance or replacementimports permitted without reerence to Reserve Bank, provided the insurance claim relating to the

lost goods has been settled in avour o the importer. It may be ensured that the consignment

being replaced is shipped within the validity period o the licence.

21. Guarantees #or Replacement Import

In case replacement goods or deective import are being sent by the 5verseas supplier beore

the deective goods imported earlier are reshipped out o India, banks may issue guarantees at

the re"uest o importer client or dispatch'return o the deective goods, according to their

commercial ;udgment.

22. E"ience o# Import

i. In case o all imports, where value o oreign e&change remitted'paid or import into India

e&ceeds )#* -. or its e"uivalent, it is obligatory on the part o the bank through whom the

relative remittance was made, to ensure that the importer submitsD

a. /he %&change Control copy o the Bill o %ntry or home consumption, or


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b. /he %&change Control copy o the Bill o %ntry or warehousing, in case o -F %&port

5riented )nits or

c. Customs Assessment Certiicate or 0ostal Appraisal $orm, as declared by the Importer to the

Customs Authorities where import has been made by post, as evidence that the goods or which

the payment was made have actually been imported into India.

ii. Imports in !on(physical orm44here imports are made in non(physical orm i.e. sotware or

data through internet'datacom channels and drawings and designs through e(mail'a&, a

certiicate rom a Chartered Accountant that the sotware'data'drawing'design has been received

by the importer, may be obtained.

III. Imports on *'A basisDIn respect o imports on *'A basis, banks should insist on production o

evidence o import at the time o eecting remittance o import bill. owever, i importers ail to

produce documentary evidence due to genuine reasons such as non(arrival o consignment,

delay in delivery'customs clearance o consignment, etc. banks may, i satisied with the

genuiness o re"uest, allow reasonable time, not e&ceeding three months rom the date o

remittance, to the importer to submit the evidence o import.

Iv. Issuing acknowledgementD Banks should acknowledge receipt o evidence o import e.g.

%&change Control copy o the Bill o %ntry, 0ostal Appraisal *orm or Customs Assessment

Certiicate, etc., rom importers by issuing acknowledgement slips containing all relevant

particulars such asD

a7 Importers ull name and address with code number8

b7 Import licence number and date 6wherever applicable7

c7 Banks reerence o letter o credit number, etc. i anyD

d7 !umber and date o %&change Control copy o Bill o %ntry'0ostal Appraisal $orm or Customs

Assessment certiicate and the amount o import, and

e7 0articulars o goods imported.

v. Eeriication by auditorsDInternal inspectors or auditors 6including e&ternal auditors appointed

by dealers7 should carry out veriication o the documents evidencing import e.g. %&change

Control copies o Bills o %ntry or 0ostal Appraisal $orms or Customs Assessment Certiicates,

etc.

vi. 0reservation o evidence o import4 *ocument evidencing import into India should bepreserved by banks or a period o one year rom the date o its veriication. owever, in respect


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o cases which are under investigation , the documents may be destroyed only ater obtaining

clearance rom the investigating agency concerned.

vii. Certiicate rom C%5'Auditor o the company as evidence o importD

7anks may accept either %&change Control copy o Bill o %ntry or home consumption or a

certiicate rom the Chie %&ecutive 5icer 6C%57 or auditor o the company that the goods or which

remittance was made have actually been imported into India providedD(

a. /he amount o oreign e&change remitted is less than )#* -,, 6)#* one million7 or its

e"uivalent,

b. /he importer is a company listed on a stock e&change in India and whose net worth is not less

than Rs. - crores as on the date o its last audited balance sheet.

5r

c. /he importer is a public sector company or an undertaking o the 9overnment o India or its

departments.

/he above acility may also be e&tended to autonomous bodies, including scientiic bodies'academic

institutions. #uch as Indian Institute o #cience'Indian Institute o /echnology etc. whose accounts are

audited by the Comptroller and Auditor 9eneral o India 6CA97. In these cases,a declaration rom the

auditor'C%5 o such institutions that their accounts are audited by CA9 be obtained.

23.Follo9 up #or Import E"ience

i. In case an importer does not urnish any documentary evidence o import, as re"uired , within ?

months rom the date o remittance involving oreign e&change e&ceeding )#* -,, the A*

Category > I banks should rigorously ollow(up or the ne&t ? months, including issue o registered

letters to the importer.

ii. Banks should orward to Reserve Bank a statement on hal(yearly basis as at the end o une G

*ecember o every year, in orm B%$ 6ormat as per anne&ure -7 urnishing details o import

transactions, e&ceeding )#* -, in respect o which importers have deaulted in submission o

appropriate document evidencing import within < months rom the date o remittance. /he said hal(

yearly statement should be submitted to the Regional 5ice o R.B.I. under whose ;urisdiction the A*

Category > I banks is unctioning, within -+ days rom the close o the hal year to which the statement

relates.

Banks need not ollow up submission o evidence o import involving amount o )#* -, or less

provided they are satisied about the genuineness o the transaction and the bonaides o the remitter.

A suitable policy may be ramed by the banks Board o *irectors and the A* Category(I banks may set


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their own internal guidelines to deal with such cases. Banks have laid down dierent threshold limits or

customers and non customers.

2+. Import o# E:uipments $% 7! Companies in Inia #or International Call Centre

Business process 5utsourcing 6B057 companies in India make remittances towards import and

installation o e"uipments at overseas sites in connection with setting up o their international callcentres. In such cases, the e"uipments are installed at overseas sites without physical import taking

place in India. As a result, the importers are unable to produce evidence o import, re"uiring speciic

permission rom the Reserve Bank. ence, it has been liberali3ed that banks may, allow B05

companies in India to make remittances towards the cost o e"uipment to be imported and installed at

their overseas sites in connection with the setting up o their International call centres, sub;ect to the

ollowing conditionsD

a. /he B05 should have obtained necessary approval rom the :inistry o Communications and

Inormation /echnology, 9overnment o India and other authorities concerned or setting up o

the International Call Centre.

b. /he remittance should be allowed based on the banks commercial ;udgment, the bonaides o

the transactions and strictly in terms o the contract.

c. /he remittance is made directly to the account o the overseas supplier.

d. Banks should also obtain a certiicate as evidence o import rom the Chie %&ecutive 5icer

6C%57 or auditor o the importer company that the goods or which remittance was made have

actually been imported and installed at overseas sites.

2,. ;anling o# Import &ocuments on collection $asis

*ue care should be e&ercised while handling import documents on collection basis on behal oimporter customers with reerence to their line o business, inancial standing, re"uency o import

etc. to establish the genuineness o the import. In case o bills involving large values, banks should

satisy themselves that the importer is known to be trading in items mentioned in the shipping

documents or that the items are re"uired or his actual use. In case o importers who are not their

constituents, banks should, at the time o acceptance o the documents'making payment, call or

detailed Certiicate(cum(Report rom their bankers in support o the genuineness o the imports.

2. &irect Receipt o# Import 7ills'&ocuments

Import bills and documents should be received rom the banker o the supplier by the banker o the

importer in India. !o remittances should thereore be made where documents have been received

directly by the importers rom the overseas supplier, e&cept in the ollowing cases.

i7 the value o import bill does not e&ceed )#* ?., sub;ect to the ollowing conditionsD

a. /he import would be sub;ect to the prevailing $oreign /rade 0olicy.

b. /he transactions are based on their commercial ;udgment and they are satisied about the

bonaides o the transactions.

c. /he importer is a customer o the bank and the customers account is ully complaint with e&tant

KYC'A:2 guidelines issued by the Reserve Bank.

d. Banks should do the due diligence e&ercise and should be ully satisied about the inancial

standing'status and track record o the importer customer.


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e. It is customary in that trade to receive import documents directly rom the 5verseas e&porter

. In case the bank has suspicions about the genuiness o the transaction, it should be reported

through the #uspicious /ransaction Report 6#/R7 to $inancial intelligence )nit in India

ii7 Import bills received by wholly owned Indian subsidiaries o oreign companies rom their principals.

iii7 Import bills received by #tatus holder e&porters as deined under the $oreign /rade 0olicy, -F%&port 5riented )nits')nits in $ree /rade Hones, 0ublic #ector )ndertakings and 2imited Companies.

iv7 Import bills received by all limited companies vi3. public limited, deemed public limited and private

limited companies.

v7 At the re"uest o importer clients, banks may receive bills direct rom the overseas supplier as above,

provided the bank is ully satisied about bonaides o the transaction and the inancial standing'status

and track record o the Importer customer. Beore e&tending the acility, bank should obtain a credit

report on each individual overseas supplier rom the overseas banker or reputed credit agency, where

the invoice value e&ceeds )#* ?,.

20. &irect receipt o# import $ills'ocuments-import o# rough iamons4

/he 9ems and ewellery %&port 0romotion Council 69%0C7 has represented that the restrictions

placed on non(status holder e&porters or direct receipt o import bills'documents adds to transaction

costs or small importers and have re"uested the Reserve Bank to consider rela&ing this condition or

import o rough diamonds by non(status holders. It has, thereore, been decided by RBI, as a sector

speciic measure, to keep the limit or direct receipt o import bills'documents at )#* ?, in the

case o import o rough diamonds. Accordingly, banks are permitted to allow remittance or imports up

to )#* ?, where the importer o rough diamonds has received the import bills'documents directly

rom the overseas supplier and the documentary evidence or import is submitted by the importer at thetime o remittance. Banks may undertake such transactions sub;ect to the ollowing conditionsD

6i7 /he import would be sub;ect to the prevailing $oreign /rade 0olicy.

6ii7 /he transactions are based on their commercial ;udgment and they are satisied about the bonaides

o the transactions.

6iii7 Banks should do the KYC and due diligence e&ercise and should be ully satisied about the

inancial standing'status and track record o the importer customer. Beore e&tending the acility, they

should also obtain a report on each individual overseas supplier rom the overseas banker or reputed

credit agency overseas.

2. !ostal Imports

Remittances against bills received or collection in respect o imports by post parcel made by banks,

provided the goods imported are such as are normally dispatched by post parcel. In these cases, the

relative parcel receipts must be produced as evidence o dispatch through the post and an undertaking

to submit 0ostal Appraisal $orm or Customs Assessment Certiicate as evidence o import within three

months rom the date o remittance should be urnished by importers. 4here the remittance is sent

subse"uent to receipt o the parcel, the 0ostal Appraisal $orm or Customs Assessment Certiicate

should be produced by the Importer. 4here goods to be imported are not o a kind normally imported

by post parcel or where the bank is not satisied about the bonaides o the application, the case may be


13/38

reerred to R.B.I. or prior approval with ull particulars together with relative parcel receipts'and 0ostal

Appraisal $orm or Customs Assessment Certiicate.

Banks may make remittances towards import o books by post parcel by book sellers ' publishers

against bills received or collection, irrespective o the amounts involved, without prior approval o R.B.I.

/hey may also make remittances even i import licences covering the imports have been issuedsubse"uent to the date o import sub;ect to endorsement on such import licences.

25. Import o# Gol'!latinum'(il"er $%


14/38

transactions banks should also make discreet en"uiries rom other banks to assess the actual

position. $urther, in order to establish audit trail o import'e&port transactions, all documents pertaining

to such transactions must be preserved or at least ive years.

v. Banks should ollow up submission o the evidence o import by the importers.

vi. Banks undertaking gold import transactions are re"uired to submit as per the ormat a monthlystatement to the /rade *ivision, $oreign %&change *epartment, Amar Building, Central 5ice, Reserve

Bank o India, #ir 0.:.Road, $ort, :umbai -.

31. Import o# Gol on Loan $asis

6i7 !ominated agencies'approved banks can import gold on loan basis or on lending to e&porters o

;ewellery under this scheme. 5n the other hand %5)s and unit sin #%H who are in the 9em and

ewellery sector can import gold on loan basis or manuacturing and e&port o ;ewellery on their own

account only.

6ii7 /he ma&imum tenor o gold loan would be as per the $oreign /rade 0olicy in orce, or as

notiied by the 9overnment o India rom time to time in this regard.

6iii7 Banks may open #tand by 2etters o Credit 6#B2C7 or import o gold on loan basis, where ever

re"uired, as per $%*AI guidelines dated April, -, @?. /he tenor o the #B2C should be in line with the

tenor o the gold loan. It may be noted that the #B2C can be opened only on behal o entitles

permitted to import gold on loan basis. Ei3. nominated agencies and -F %5)s'units in #%H, which

are in the 9em and ewellery sector. $urther, the #B2C should be in avour o internationally renowned

bullion banks only. All other e&isting instructions on import o gold and opening o 2etters o Credit will

continue to be applicable.

6iv7 Banks must maintain ade"uate documentation with them to uni"uely link all imports with thestandby 2etters o Credits issued or the import o gold on loan basis.

32. Import #actoring

Banks may enter into arrangements with international actoring companies o repute, preerably

members o $actors Chain International, without prior approval o R.B.I. owever, they have to ensure

compliance with the e&tant e&change control directions relating to imports, $oreign /rade 0olicy in orce

and any other guidelines'directives issued by R.B.I.in this regard.

33. Merchanting rae

Banks may take necessary precautions in handling merchanting trade transactions or intermediary

trade transactions to ensure thatD

a. 9oods involved in the transactions are permitted to be imported into India.

b. #uch transactions do not involve oreign e&change outlay or a period e&ceeding three months

and

c. All rules, regulations and directions applicable to e&port out o India 6e&cept %&port *eclaration

$orm7 are complied with in respect o the e&port leg and all rules, regulations and directions

applicable to import 6e&cept Bill o %ntry7 are complied with in respect o the import leg o

merchanting trade transactions. Banks are also re"uired to ensure timely receipt o payment

or the e&port leg o such transactions.


15/38

#hort(term credit either by way o suppliers credit or buyers credit is not available or merchanting

trade or intermediary trade transactions. 4hile undertaking bonaide merchanting trade

transactions on behal o their trader clients, banks should ensure that the terms o payment or the

import leg and the e&port leg o the transactions are such thatD

i. /he liability or the import leg o the transaction is e&tinguished by the payment received or the

e&port leg o the transaction, without any delay8 and

ii. the entire merchant trade transaction is completed within a period o < months.

3+. Issue o# 7an* Guarantee on $ehal# o# ser"ice importers

Banks are now permitted to issue guarantee on behal o their customers importing services,

providedD

a. /he guarantee amount does not e&ceed )#* +.

b. /he A* Category(I bank is satisied about the bonaides o the transaction.

c. /he A* Category(I bank ensures submission o documentary evidence or import o services in

the normal course, and

d. /he guarantee is to secure a direct contractual liability arising out o a contract between a

resident and a non resident.

In case o invocation o the guarantee, the bank is re"uired to submit to the Chie 9eneral :anager(

in(charge. $oreign %&change *epartment, $oreign Investments *ivision 6a6%0*7, Reserve Bank o

India, Central 5ice, :umbai( - a report on the circumstances leading to the invocation o

the guarantee.

((((((((((((((((((((((((((((((((((((((((((((((((((


16/38

FEMA Regulations = E>!R F G&( A


17/38

-7 Imported goods ound deective, or the purpose o their replacement by the oreign

suppliers'collaborators8

@7 9oods imported rom oreign suppliers'collaborators on loan basisD

?7 9oods imported rom oreign suppliers'collaborators ree o cost, ound surplus ater production

operations.

9oods listed at items 6-7, 6@7 and 6?7 o clause 6i7 to be re(e&ported by units in #pecial %conomic

Hones, under intimation to the *evelopment Commissioner o #pecial %conomic Hones'concerned

Assistant Commissioner or *eputy Commissioner o CustomsD

@) Replacement goods e&ported ree o charge in accordance with the provisions o %&im 0olicy in

orce, or the time being.

*) 9oods sent outside India or testing sub;ect to re(import into India.

l) *eective goods sent outside India or repair and re(import provided the goods are

accompanied by a certiicate rom an Authori3ed *ealer in India that the e&port is or repair and

re(import and that the e&port does not involve any transaction in oreign e&change.

m) %&ports permittedby RBI , sub;ect to the terms and conditions made

ii7 9it o goods e&ceeding Rupees $ive lakhs in value re"uires approval o the Reserve Bank.

iii7 Banks may consider re"uests or grant o 9R waiver rom e&porters or e&port o goods ree

o cost or e&port promotion up to @ percent o the average annual e&ports o the applicant

during the preceding three years sub;ect to a ceiling o Rs. + 2akhs. $or status holdere&porters, the limit as per the present $oreign /rade 0olicy is Rs. - 2akhs or @ percent o

the average annual e&port realisation during the preceding three licensing years 6Apr(

:arch7, whichever is higher.

iv7 %&port o goods not involving any oreign e&change transaction directly or indirectly

re"uires the waiver o 9R'00 0rocedure rom the Reserve Bank.

v7 /he importer(e&porter code number allotted by the *irector 9eneral o $oreign /rade under

#ection o the $oreign /rade 6*evelopment G Regulation7 Act, -==@ 6@@ o -==@7 shall be

indicated on all copies o the declaration orms submitted by the e&porter to the speciied

authority and in all correspondence o the e&porter with the bank or the Reserve Bank, as the

case may be.

3. GR Appro"al #or e/port

4ith a view to urther liberali3e the acilities available to e&porters and simpliy the procedure or

e&port, RBI has delegated powers to banks or grant o 9R approval in cases where goods are

being e&ported or re(import ater repairs'maintenance'testing'calibration, etc. Accordingly, banks

may, consider grant o 9R approval, in cases where goods are being e&ported or repairs,

maintenance, calibration, testing etc. and subse"uently re(imported ater necessary


18/38

repairs'maintenance'calibration'testing, etc. and subse"uently re(imported ater necessary

repairs'maintenance'calibration'testing etc. sub;ect to the condition that the e&porter shall produce

relative Bill o %ntry within one month o re(import o the e&ported item rom India.

.

+.


19/38

. Realisation an repatriation o# e/port procees 4

It is obligatory or e&porter to reali3e and repatriate ull value o goods or sotware to India within

a stipulated period rom the date o e&port as underD

)nits in #%H -@ months

#tatus holders -@ months-F%5)s -@ months

4arehouse outside India ma& -+ months rom date o shipment

In all other cases = months 6 w.e.. @.+.-? till ?.=.-?7

0. Foreign Currenc% Accounts

i) pening o# Foreign Currenc% Accounts

6a7 Reserve Bank may consider applications in $orm %$C rom e&porters having good track record

or opening oreign currency accounts with banks sub;ect to certain terms and conditions.

Applications or opening such an account with a branch o a bank in India may be submitted

through the branch at which the oreign currency account is to be maintained. I the oreign

currency account is to be maintained abroad, the application should be made by the e&porter

giving details o the bank with which the account will be maintained.

6b7 An Indian entity has also been permitted to open, hold and maintain in the name o its

oice'branch set up outside India, a oreign currency account with a bank outside by making

remittance or the purpose o normal business operations o the said oice'branch or

representative sub;ect to speciied conditions. /he banks may thereore allow remittances or

the purpose o normal business operations o the oice 6trading'non trading' branch orepresentative outside India as per the provisions o the Regulations in this regard sub;ect to

the ollowing terms and conditionsD

i7 /he overseas oice 6trading'non(trading'branch'representative should not create any

inancial liabilities contingent or otherwise or the head oice in India.

ii7 /he overseas oice 6trading'non(trading7'branch representative should not invest

surplus unds abroad without prior approval o Reserve Bank o India. Any unds rendered

surplus should be repatriated to India.

iii7 /he overseas oice'branch o sotware e&porter company'irm may repatriate to India

-F o the contract value o each 1o(site contract as also at least ?F o the contract

value o each 1onsite contract and may utili3e the balance amount 6F7 o the contract

value o 1on(site contracts or contract related e&penses including oice'branch e&penses

abroad. A duly audited yearly statement showing receipts under 1o(site and 1on(site

contracts undertaken by the overseas oice, e&penses and repatriation thereon may be

sent to the bank.

iv7 /he details o bank accounts opened in the overseas country should be promptly

reported to the Authorised *ealer.

c7 A unit located in a #pecial %conomic Hone 6#%H7 may be allowed to open, hold and

maintain a $oreign Currency Account with a bank outside or in India.


20/38

d7 A pro;ect'service e&porter may open and maintain a oreign currency account , sub;ect to the

standard terms and conditions in the :emorandum 0%:.

ii) &iamon &ollar Account

)nder the scheme o 9overnment o India, irms and companies dealing in purchase'sale o rough

or cut and polished diamonds'precious metal ;ewellery plain, minakari and'or studded with'withoutdiamond and'or other stones, with track record o at least three years in import or e&port o

diamonds'colured gemstones'diamond and coloured gemstones studded ;ewellery'plain gold

;ewellery, and having an average annual turnover o Rs. ? Crores or above during the preceding

three licensing years 6licensing year is rom April to :arch7 are permitted to transact their business

through *iamond *ollar Accounts and may be allowed to open not more than ive *iamond *ollar

Accounts with their banks. 4ith a view to liberali3ing the procedure, it has been decided by RBI to

delegate powers to banks to permit such irms and companies to open and maintain **A with A*

Category > - banks, sub;ect to the ollowing terms and conditions.

a. /he e&porter should comply with the eligibility criteria stipulated in the $oreign /rade

0olicy o the 9overnment o India, issued rom time to time.

b. /he **A shall be opened in the name o the e&porter and maintained in )# dollars

only.

c. /he account shall only be in the orm o current account and no interest should be paid

on the balance held in the account.

d. !o intra(account transer should be allowed between the **As maintained by the

account holder.

e. An e&porter irm ' company shall be permitted to open and maintain not more than +**As.

. /he balance held in the account shall be sub;ect to Cash Reserve Ratio 6CRR7 and

statutory 2i"uidity Ratio 6#2R7 re"uirements.

g. %&porter irms and companies maintaining oreign currency accounts, e&cluding %%$C

accounts, with banks in India or abroad, are not eligible to open *iamond *ollar

accounts.

h. /he transactions in the **A would be as underD

0ermissible Credits

Amount o pre(shipment and post(shipment inance availed in )#* Realisation o e&port proceeds rom shipments o rough, cut, polished diamonds anddiamond studded ;ewellery. Realisation in )# *ollars rom local sale o rough, cut and polished diamonds.

0ermissible *ebits

0ayment or import'purchase o rough diamonds rom overseas'local sources.

0ayment or purchase o cut and polished diamonds, coloured gemstones and plain gold

;ewellery rom local sources.

0ayment or import'purchase o gold rom overseas'nominated agencies and repayment o

)#* loans availed rom the Bank.

/ranser to rupee account o the e&porter.


21/38

i7 /he e&porter irm'company shall make an application in the prescribed ormat to the bank or

opening o the **A. /he bank should assess the track record o the irm'company at the end o

every licensing year 6April(:arch7' In case any irm'company ails to meet the eligibility criteria, the

account may be closed immediately.

iii) E/change Earners Foreign Currenc% EEFC) Accounti) A person resident in India may open, with a bank in India, an account in oreign currency

called the %&change %arners $oreign Currency 6%%$C7 Account.

ii) All categories oreign e&change earners are allowed to credit up to - per cent o the

oreign e&change earnings to their %%$C Accounts.

iii) /his account shall be maintained in the orm o non(interest bearing current account.

i") !o credit acilities either und(based or non(und based, should be permitted against the security o

balances held in %%$C accounts, by banks.

") /he eligible credits represent

6a7 Inward remittance received through normal banking channel, other than the remittance received

pursuant to any undertaking given to the Reserve Bank o which represents oreign currency

loan raised or investment received rom outside India or those received or meeting speciic

obligations by the account holder.

6b7 0ayments received in oreign e&change by a unit in *omestic /ari Area 6*/A7 or supplying

goods to a unit in #pecial %conomic Hone out o its oreign currency account.

6c7 Banks may permit their e&porter constituents to e&tend trade related loans'advances to

overseas'importers out o their %%$C balances without any ceiling, sub;ect to compliance o

provisions.6d7 Banks may permit e&porters to repay packing credit advances whether availed in Rupee or in

oreign currency rom balances in their %%$C A'c and'or rupee resources to the e&tent e&ports

have actually taken place.

. (etting up o##ices a$roa an Ac:uisition o# Immo"a$le propert% #or "erseas ##ices

a. Remittances #or initial e/penses4

A bank may allow remittances up to iteen per cent o the average annual sales'income or

turnover during the last two inancial years or up to twenty(ive per cent o the net worth,

whichever is higher.

$. Remittances #or Recurring e/penses4

A bank may allow remittance up to ten per cent o the average annual sales'income or turnover during

the last two inancial years or the purpose o normal business operations o the oice 6trading'non

trading7'branch or representative oice outside India as per the provisions o the Regulations in this

regard sub;ect to the ollowing terms and conditions that the overseas oice 6trading'non

trading7'branch'representative should notD

i7 Create any inancial liabilities contingent or otherwise or the head oice in India.

ii7 Invest surplus unds abroad without prior approval o Reserve Bank o India. Any unds rendered

surplus should be repatriated to India.


22/38


23/38

total period o three months in a year 6i.e. in a block o -@ months7 and the banks may pay interest at

the applicable rate. !o und based'or non(und based acilities would be permitted against the balances

in the %scrow Account.

ii7 Application or permission or opening an %scrow Account may be made by the overseas

e&porter'organisation through his bank to the concerned regional oice o the Reserve Bank.12. E/port o# Goos on LeaseB ;ireB etc.

%&port o machinery, e"uipment, etc. on lease, hire, etc. basis under agreement with the overseas

lessee against collection o lease rentals'hire charges and ultimate re(import re"uire prior approval o

the Reserve Bank. %&porters should apply or necessary permission, through their bank, to the

concerned regional oice o the Reserve Bank, giving ull particulars o the goods to be e&ported.

13. !articipation in rae Fairs A$roa

6a7 $irms'Companies and other organi3ations participating in /rade $air'%&hibition abroad are now

permitted to take'e&port goods or e&hibition and sale outside India without the prior approval o the

Reserve Bank o India.

6b7 )nsold e&hibit items may be sold outside the e&hibition'trade air in the same country or in al

third country. #uch sales at discounted value are also permissible.

c7 It would also be permissible to 1git unsold goods up to the value o )# + per e&porter per

e&hibition'trade air.

6d7 Banks may approve 9R $orm o e&port items or display or display(cum(sale in trade

airs'e&hibitions outside India sub;ect to the ollowing.

6i7 /he e&porter shall produce relative Bill o %ntry within one month o re(import into India o the

unsold items. 6ii7 /he sale proceeds o the items sold are repatriated to India.

6iii7 /he e&porter shall report to the bank the method o disposal o all items e&ported, as well as

the repatriation o proceeds to India.

#uch transactions will be sub;ect to -F audit by Banks internal inspectors'auditors.

6e7 0articipants in international e&hibition'trade air have been granted general permission or

opening a temporary oreign currency account abroad. %&porters may deposit the oreign e&change

obtained by sale o goods at the international e&hibition'trade air and operate the account during their

stay outside India provided that the balance in the account is repatriated to India within a period o one

month rom the date o closure o the e&hibition'trade air and ull details are submitted to the bank

concerned.

1+. !ro@ect E/ports an (er"ice E/ports

a7 %&port o engineering goods on deerred payment terms and e&ecution o turnkey pro;ects and

civil constructions contracts abroad are collectively reerred to as Mpro;ect %&ports. Indian e&porters

oering deerred payment terms to overseas buyers and those participating in global tenders or

undertaking

turnkey'civil construction contracts abroad are re"uired to obtain the approval o the bank'%&im

Bank'4orking 9roup at post(award stage beore undertaking e&ecution o such contracts. Regulations

relating to Mpro;ect %&ports and #ervice %&ports are laid down in the :emorandum on 0ro;ect %&port.


24/38

b7 0ure supply contacts 6contracts or e&port o goods7 where at least = percent o the e&port

value is reali3ed within the prescribed period i.e. si& months rom the date o e&port and the balance

amount within a ma&imum period o two years rom the date o e&port are not treated as deerred

payment e&ports, provided the e&porter does not re"uire'avail o any unded or non(unded acilities or

such e&ports rom banks.c7 %&porters desiring to submit bids or e&ecution o pro;ects abroad including service contracts

have been allowed issue corporate guarantee in lieu o Bid Bond 9uarantee, provided the amount o

such guarantee shall not e&ceed + percent o the contract value.

.

1,. Consignment e/ports

In the case o consignment e&ports, the bank, while orwarding documents, should instruct his

correspondent bank to deliver them against trust receipt'undertaking to deliver sales proceeds by a

speciied date. /he consignees can deduct normal e&penses towards, receipt, storage and sale o

goods and remit net proceeds. /he reight and marine insurance should be arranged in India. /he

Account sales received should be veriied by the Bank.

In the case o e&port o books on consignment basis, the e&porters may be allowed to abandon the

books which remain unsold at the e&piry o the period o the sale contract. Accordingly, the e&porters

may show the value o the unsold books as deduction rom the e&port proceeds in the Account #ales.

1. E/port on Elongate Creit erms

%&porters intending to e&port goods on elongated credit terms may submit their proposals giving ull

particulars through their banks or consideration to the Regional 5ice concerned o the Reserve Bank

.

10. Issue o# e:uit% shares against import o# capital goos4 )nits in #%Hs are permitted to issue

e"uity shares to non(residents against import o capital goods sub;ect to the ollowing.

i7 /he valuation should be veriied by a Committee consisting o *evelopment Commissioner and the

appropriate Customs oicials.

ii7 /he #%H units issuing e"uity in the above manner should report the particulars o the shared

issued in the orm $C(90R to the concerned Regional 5ice under whose ;urisdiction the #%H alls,

together with the copy o the valuation certiicate. A copy o the report may be orwarded to *epartment

o Industrial 0olicy and 0romotion 6*I007, :inistry o Commerce and Industry, 9overnment o India.

1. For#aiting

%&port(Import Bank o India 6%&im Bank7 and A* Category > I banks have been permitted to undertake

oraiting, or inancing o e&port receivables. It would be in order or the banks to allow remittance o

commitment ee'service charges, etc. payable by the e&porter as approved by the %&im Bank'the bank

concerned. #uch remittance may be permitted in advance in one lump sum or at monthly intervals as

approved by the agency concerned.

15. &isposal o# Copies o# E/port &eclaration Forms GR'!!'(FE> #orms)

%&port declaration orms should be disposed o as underD


25/38

GR Form

a79R orms should be completed by the e&porter in duplicate and both the copies submitted to the

Customs at the port o shipment along with the shipping bill.

b7Customs will give their running serial number on both the copies ater admitting the corresponding

shipping bill. /he customs serial number will have ten numerals denoting the code number o the porto shipment, the calendar year and a si& digit running serial number.

c7 Customs will certiy the value declared by the e&porter on both the copies o the 9R orm at the

space earmarked and will also record the assessed value. d7/hey will then return the duplicate copy o

the orm to the e&porter and retain the original or transmission to Reserve Bank.

e7 %&porters should submit the duplicate copy o the 9R orm again to customs along with the cargo to

be shipped.

7 Ater e&amination o the goods and certiying the "uantity passed or shipment on the duplicate copy,

Customs will return it to the e&porter or submission to the A* Category >I bank or negotiation or

collection o e&port bills.

g74ithin twenty(one days rom the date o e&port, e&porter should lodge the duplicate copy together

with relative shipping documents and an e&tra copy o the invoice with the A* Category > I bank named

in the 9R orm.

h7 Ater the documents have been negotiated'sent or collection, the A* Category > I bank should

report the transaction to Reserve Bank in statement %!C under cover o appropriate R(#upplementary

Return.

i7*uplicate copy o the orm together with a copy o invoice etc. will henceorth be retained by the A*

Category > I bank and may not be submitted to Reserve Bank.;)In the case o e&ports made under deerred credit arrangement or to ;oint ventures abroad against

e"uity participation or under rupee credit agreement, the number and date o Reserve Bank approval

and'or number and date o the relative RBI circular should be recorded at the appropriate place on the

9R orm

k77 4here duplicate copy o 9R orm is misplaced or lost, the bank may accept another copy o

duplicate 9R orm duly certiied by Customs.

(&F Form

5n account o introduction o %lectronic *ata Interchange 6%*I7 #ystem at certain customs oices

where shipping bills are processed electronically, the e&isting declaration in 9R orm is replaced by a

declaration in orm #*$ 6#tatutory *eclaration $orm7. /he procedure or disposal o #*$ is as under8

a7/he #*$ orm should be submitted in duplicate 6to be anne&ed to the relative shipping bill7 to the

Commissioner o Customs concerned.

b7 Ater veriying and authenticating the declaration in orm #*$, the Commissioner o Customs will

hand over to the e&porter, one copy o the shipping bill marked M%&changed control copyN in which orm

#*$ has been appended or being submitted to the bank within @- days

c7 Bank should accept the %&change Control 6%C7 copy o the shipping bill and orm #*$ appended

thereto, submitted by the e&porter or collection'negotiation o shipping documents.


26/38

d7 /he manner o disposal o %C copy o shipping Bill 6and orm #*$ appended thereto7 is the same as

that or 9R orms.

6e7 In cases where %C9C initially settles the claims o e&porters in respect o e&ports insured with

them and subse"uently receives the e&port proceeds rom the buyer'buyers country through

the eorts made by them, the share o e&porters in the amount so received is disbursed throughthe bank which had handled the shipping documents. In such cases, %C9C will issue a

certiicate to the bank which had handled the relevant shipping documents ater ull proceeds

have been received. /he certiicate will indicate the number o declaration orm, name o the

e&porter, name o the A* Category > I bank,. *ate o negotiation, bill number, invoice value and

the amount actually received by %C9C.

!! #orms

/he manner o disposal o 00 orms is the same as that or 9R orms. 0ostal Authorities will allow

e&port o goods by post only i the original copy o the orm has been countersigned by a bank.

/hereore, 00 orms should be irst presented by the e&porter to his bank or countersignature. /he

bank will countersign the orms and return the original copy to the e&porter, who should submit the

orm to the post oice with the parcel. /he duplicate copy o the 00 orm will be retained by the bank

to whom the e&porter should submit relevant documents together with an e&tra copy o invoice or

negotiation'collection, within the prescribed period o twenty(one days.

26. Counter (ignature on !! Forms

00 orms will be presented by the e&porter to the bank or counter signature. Banks should

countersign the 00 orms ater ensuring that the parcel is being addressed to their branch or

correspondent bank in the country o import. /he concerned overseas branch or correspondentshould be instructed to deliver the parcel to consignee against payment or acceptance o relative bill.

Banks may, however, countersign 00 orms covering parcels addressed direct to the consignees,

providedD

a. An irrevocable letter o credit or the ull value o the e&port has been opened in avour o the

e&porter and has been advised through the bank concerned or the ull value o the shipment

has been received in advance by the e&porter through the bank or the bank is satisied, on

the basis o the standing and track record o the e&porter and the arrangements made or

realisation o the e&port proceeds, that he could be so.

In such cases, particulars o advance payment'letter o credit'banks certiication o standing, etc., o

the e&porter should be urnished on the orm under proper authentication. Any alteration in the name

and address o consignee on the 00 orm should also be authenticated by the bank under his stamp

and signature.

21. erms o# !a%ment-In"oicing = (o#t9are)

6i7 In respect o long duration countracts involving series o transmissions, the e&porters should bill

their overseas clients periodically, i.e., at least once a month or on reaching the 1milestone as

provided in the contract entered into with the overseas client and the last invoice'bill should be raised

not later than -+ days rom the date o completion o the contract. It would be in order or the


27/38

e&porters to submit a combined #5$/%J orm or all the invoices raised on a particular overseas

client, including advance remittances received in a month.

6ii7 In respected o contracts involving only 1one shot operation, the invoice'bill should be raised within

-+ days rom the date o transmission.

6iii7 /he e&porter should submit declaration in $orm #5$/%J in triplicate in respect o e&port ocomputer sotware and audio ' video ' television sotware to the designated oicial concerned o the

9overnment o India at #/0I'%0H'$/H'#%H or valuation ' certiication not later than ? days rom the

date o invoice ' the date o last invoice raised in a month, as indicated above. /he designated oicials

may also certiy the #5$//%J $orms o %5)s which are registered with them.

6iv7 /he invoices raised on overseas clients as at 6i7 to 6iii7 above will be sub;ect to valuation o e&port

declared on #5$/%J orm by the designated oicial concerned o the 9overnment o India and

conse"uent amendment made in the invoice value, i necessary.

22. &isposal o# (FE> Forms

$or sotware e&porters with annual turnover above Rs - cr or submitting


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shipment was actually shut out, certiy the copy o the notice as correct and orward it to the Reserve

Bank together with unused duplicate copy o the 9R orm. In this case, the original 9R orm received

earlier rom Customs will be cancelled. I the shipment is made subse"uently, a resh set o 9R orm

should be completed.

2. Consoliation o# Air '(ea Cargo4here air cargo is shipped under consolidation, the airline companys :aster Airway Bill will be

issued to the Consolidating Cargo Agent who will in turn issue his own ouse Airway Bills 6A4Bs7 to

individual shippers. Banks may negotiate A4Bs only i the relative letter o credit speciically

provides or negotiation o these documents in lieu o Airway Bills issued by the airline company.

Banks may also accept $orwarders Cargo Receipts 6$CR7 issued by steamship companies or their

agents 6instead o 1IA/A approved agents7, in lieu o bills o landing, or negotiation ' collection o

shipping documents, o e&port transactions backed by letters o credit, only i the relative letter o

credit speciically provides or negotiation o this document, in lieu o bill o lading. $urther, relative

sale contract with the overseas buyer should also provide that $CR may be accepted in lieu o lading

as a shipping document.

20. E/ports $% 7arges'Countr% Cra#t'Roa ransport

$ollowing procedure should be adopted by e&porters or illing original copies o 9R'#*$ orms where

e&ports are made to neighbouring countries by road, rail or river transportD

a. In case o e&ports by barges'country crat'road transport, the orm should be presented by

e&porter or his agent at the Customs station at the border through which the vessel or vehicle

has to pass beore crossing over to the oreign territory. $or this purpose, e&porter may

arrange either to give the orm to the person in charge o the vessel or vehicle or orward it tohis agent at the border or submission to Customs.

b. As regards e&ports by rail, Customs sta has been posted at certain designated railway

stations or attending to Customs ormalities. /hey will collect the 9R'#*$ orms in respect o

goods loaded at these station so that the goods may move straight on to the oreign country

without urther ormalities at the border. /he list o designated railway stations is obtainable

rom the Railways. In respect o goods loaded at stations other than the designated station,

e&porters must arrange to present 9R'#*$ orms to the Customs 5icer at the Border 2and

Customs #tation where Customs ormalities are completed.

2. (crutin% o# e/port eclaration Form

A* Category(I bank Category(I Banks may ensure the ollowing while accepting the e&port declaration

orms 69R'#*$7D

i. /he number on the duplicate copy o a 9R orm presented to them is the same as that o

the original which is usually recorded on the Bill o 2ading'#hipping Bill and the duplicate

has been duly veriied and authenticated by appropriate Customs authorities.ii. In the case o #*$ orm, the #hipping Bill !o. #hould be the same as that appearing on

the Bill o 2ading.


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iii. Banks may accept the Bill o 2ading ' Airway Bill issued on 1reight prepaidN basis where

the sale contract is on $.5.B., $.A.# etc. basis provided the amount o reight has been

included in the invoice and the bill.iv. In the case o C.I.$., C G $ etc. contracts where the reight is sought to be paid at

destination, it should be ensured that the deduction made is only to the e&tent o reight

declared on 9R'#*$ orm or the actual amount o reight indicated on the Bill o 2ading '

Airway Bill, whichever is less.v. 2ikewise, where the marine insurance is taken by the e&porters on buyers account,

banks should veriy that the actual amount paid is received rom the buyer through invoice

and the bill.vi. /he documents submitted should not reveal any material inter se discrepancies in regard

to description o goods e&ported, e&port value or country o destination.vii. /o accept variation in value declared to customs authorities and that is relected in e&port

documents e.g /he e&port realisable value may be more than what was originally

declared to'accepted by the Customs on the 9R'#*$ orm in certain circumstance suchas where in c.i. or c G . contracts, part or whole o any reight increase taking place ater

the contract was concluded is agreed to be borne by buyers or where as a result o

subse"uent devaluation o the currency o the contract, buyers have agreed to an

increase in price.viii. Bank may accept, or negotiation or collection, shipping documents including invoice and

bill o e&change covering e&ports, rom his constituent who is not a person who has

signed the declaration 69R'00'#*$'#5$/%J7, provided that beore accepting such

documents or negotiation or collection, the Authorised *ealer shall re"uire the

constituent concerned also to sign such declaration and thereupon such constituent shall

be bound to comply with such re"uisition and such constituent signing the declaration

shall be considered to be the e&porter or the purposes o these Regulation to the e&tent

o the ull value shown in the documents being negotiated or sent or collection and shall

be governed by these Regulations.i/. &i##erences in ?alue ue to :ualit% anal%sis ' late shipment penalt%

In certain lines o e&port trade, the inal settlement o price may be dependent on the

results o "uality analysis o samples drawn at the time o shipment8 but the results o such

analysis will become available only ater the shipment has been made. #ometimes, contracts

may provide or payment o penalty or late shipment o goods in conormity with trade

practice concerning the commodity. In these cases, while e&porters declare to the Customs

the ull e&port value based on the contract price, invoices submitted along with shipping

documents or negotiation'collection may relect a dierent value arrived at ater taking

into account the results o analysis o samples or late shipment penalty, as the case may be.

As these variations stem rom the terms o contact, banks may accept them on production o

documentary evidence ater veriying the arithmetical accuracy o the calculations and on

conorming the terms o underlying contracts.

25. rae &iscount


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31/38


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i7 Banks should closely watch reali3ation o bills and in cases where bills remain outstanding,

beyond the due date or payment or twelve months rom the date o e&port, the matter should be

promptly taken up with the concerned e&porter. I the e&porter ails to arrange or delivery o the

proceeds, within twelve months or seek e&tension o time beyond twelve months the matter should be

reported to Reserve Bank stating, where possible the reason or the delay in reali3ing the proceeds.ii7/he duplicate copies o 9R'#*$ 00 $orms should, however, continue to be held by the bank until

the ull proceeds are reali3ed, e&cept in case o undrawn balances .

iii7Banks should ollow up e&port outstanding with e&porters systematically and vigorously so that

action against deaulting e&porters does not get delayed. Any la&ity in the ollow up o realisation o

e&port proceeds by banks will be viewed seriously by R.B.I leading to the invocation o the penal

provisions under $%:A -===.iv7/he stipulation o twelve months or e&tended period thereo or reali3ation o e&port proceeds is no

longer applicable or units located in #pecial %conomic Hones 6#%Hs7. /he units in #%Hs will however

continue to ollow the 9R'00'#5$/%J e&port procedure outlined.v7Banks should urnish to Reserve Bank, on hal(yearly basis, a consolidated stamen in $orm >(

giving details o all e&port bills outstanding beyond si& months rom the date o e&port as at the end o

une and *ecember every year. /he statement should be submitted in triplicate within iteen days

rom the close o the relative hal(year.

3. Reuction in In"oice ?alue on Account o# !repa%ment o# sance 7ills

5ccasionally, e&porters may approach banks or reduction in invoice value on account o cash

discount to overseas buyers or prepayment o the usance bills. In such cases banks may allow

cash discount to the e&tent o amount o proportionate interest on the une&pired period o usance,

calculated at the rate o interest stipulated in the e&port contract or at the 0rime rate'2IB5R o the

currency o invoice where rate o interest is not stipulated in the contract.

30. Reuction in ?alue

I, ater a bill has been negotiated or sent or collection, its amount thereo is desired to be

reduced or any reason, bank may approve such reduction, i satisied about genuineness o the

re"uest, providedD

a. /he reduction does not e&ceed @+F o invoice value,b. It does not relate to e&port o commodities sub;ect to loor price stipulations,c. /he e&porter is not on the e&porters caution list o Reserve Bank, and

d. /he e&porter is advised to surrender proportionate e&port incentives availed o, i any.

In the case o e&porters who have been in the e&port business or more than three years, reduction in

invoice value may be allowed, without any percentage ceiling, sub;ect to the above conditions as also

sub;ect to their track record being satisactory i.e., the e&port outstandings do not e&ceed +F o the

average annual e&port reali3ation during the preceding three calendar years. $or the purpose o

reckoning the percentage o e&port bills outstanding to the average e&port reali3ations during the

preceding three calendar years, outstanding o e&ports made to countries acing e&ternali3ation

problems may be ignored provided the payments have been made by the buyers in the local currency.

3. E/port Claims


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Banks may remit e&port claims on application, provided the relative e&port proceeds have already

been reali3ed and repatriated to India and the e&porter is not on the caution list o Reserve Bank. In

all such cases o remittances, the e&porter should be advised to surrender proportionate e&port

incentive, i any, received by him.

35. Change o# $u%er'consignee0rior approval o Reserve Bank is not re"uired i, ater goods have been shipped, they are to be

transerred to a buyer other than the original buyer in the event o deault by the latter, provided the

reduction in value, i any involved does not e&ceed @+F and the reali3ation o e&port proceeds is not

delayed beyond the period o twelve months rom the date o e&port.

+6. (el# 9rite-o##B Reuction in In"oice ?alue an E/tension o# ime

All e&porters 6including #tatus older7 have been allowed to8

6a7 4rite o 6including reduction in invoice value7 outstanding e&port dues and,6b7 %&tend the prescribed period o realisation beyond twelve months provided i7the aggregate

value o such e&port bills written(o 6including reduction in invoice value7 and bills e&tended orrealisation does not e&ceed - per cent o the e&port proceeds due during the inancial year and

ii7such e&port bills are not a sub;ect o investigation by %norcement *irectorate ' Central Bureau o

investigation or any other Investigating Agencies.6c7 %&porters dealing with more than one can avail o this acility through each bank, i.e., the limit

o - per cent or sel write(o 6including reduction in invoice value7 and e&tension o time or

realisation o e&port proceeds would be applicable or e&port bills lodged or realisation with that

particular bank.6d7 %&porters operating under a consortium o banks or with multiple banks will also have the

option o computing the - per cent limit on an aggregate basis with all the banks, provided the leadbank o the consortium or in case o multiple banking, a nodal bank, undertakes to veriy the

e&porters annual perormance on behal o all the banks.6e7 4ithin a month rom the close o the inancial year, e&porters should submit a statement as

per prescribed ormat, giving details o e&port proceeds due, realised and not reali3ed to the bank

concerned.67 /he bank will be re"uired to veriy the statement with their records and review the e&port

perormance o the e&porter during the inancial year to ascertain that in cases where the - per cent

limit o sel e&tension, write(o 6including reduction in invoice7 and non(realisation has been breached,

the e&porter has sought necessary approval or write(o, reduction invoice value or e&tension o time,

as the case may be, or the e&cess over the - per cent limit beore the end o the inancial year.6g7 In cases where e&porters have ailed to comply with the above re"uirement, banks may

promptly advise the e&porter concerned to seek e&tension o time'reduction in invoice value'write(o

in respect o non(realisation in e&cess o the - per cent limit, ailing which, the banks may inorm the

e&porter about the withdrawal o this acility o sel write(o ' e&tension o time, within a monthBunder

advice to the Regional 5ice concerned o the Reserve Bank.

+1. E/tension o# ime Limit In ther Cases

-. Reserve Bank o India has permitted banks to e&tend the period o realisation o e&port

proceeds beyond -@ months rom the date o e&port


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up to a period o si& months, at a time, irrespective o the invoice value o the e&port sub;ect to the

ollowing conditionsD

a. /he A* Category > I bank is satisied that the e&porter has not been able to reali3e

e&port proceeds or reasons beyond his control.b. /he e&porter submits a declaration that he will reali3e the e&port proceeds during the

e&tended period.c. /he e&port transactions covered by the invoices are not under investigation by

%norcement *irectorate ' Central Bureau o Investigation or other investigation

agencies.d. 4hile consideration e&tension beyond one year rom the date o e&port, the total

outstanding o the e&porter does not e&ceed )#* one million or - percent o the

average e&port realisations during the preceding three inancial years, whichever is

higher.e. All the e&port bills outstanding beyond si& months rom the date o e&port be reported

in J5# statement. /he date up to which e&tension has been granted is indicated in the 1Remarks

column o the J5# statementg. In cases where the e&porter has iled suits abroad against the buyer, e&tension may

be granted irrespective o the amount involved ' outstanding.

h. Cases which are not covered by the above instructions re"uire prior approval rom

the Regional 5ice o the Reserve Bank.

+2. (hipments Lost in ransit

4hen shipments rom India or which payment has not already been received either by negotiation o

bills under o bills under letters o credit or otherwise are lost in transit, the bank must ensure that

insurance claim is made as soon as the loss is known. /he duplicate copy o 9R'#*$'00 orm should

be orwarded to Reserve Bank with ollowing particularsD

a. Amount or which shipment was insured.

b. !ame and address o the insurance company,

c. 0lace where the claim is payable.

In cases where the claim is payable abroad, the bank must arrange to collect the ull amount o claim

due on the lost shipment, through the medium o his overseas branch'correspondent and release the

duplicate copy o 9R'#*$'00 orm only ater the amount has been collected. A certiicate or theamount o claim received should be urnished on the reverse o the duplicate copy.

#ometimes claim on shipments lost in transit are also partially settled directly by shipping

companies 'airlines under carriers liability. Banks should ensure that amounts o such claims i settled

abroad are also repatriated to India by e&porters.

+3. !a%ment o# Claims $% ECGC ' Insurance companies registere 9ith IR&A

Banks shall, on an application received rom the e&porter supported by documentary evidence rom

the %C9C ' insurance companies registered with IR*A conirming that the claim in respect o the

outstanding bills has been settled by them, write o the relative e&port bills and delete them rom the

J5# statement. #uch write(o will not be restricted to the limit o - percent . #urrender o incentives,

i any, in such cases will be as provided in the $oreign /rade 0olicy.


35/38

It is clariied that the claims settled in rupees by %C9C ' insurance companies should not be

construed as e&port reali3ation in oreign e&change.

++. 8rite o##D o# nrealie E/port 7ills

6i7 An e&porter who has not been able to reali3e the outstanding e&port dues despite best eorts, may

approach the bank, who had handled the relevant shipping documents, with appropriate supportingdocumentary evidence with a re"uest or write o o the unreali3ed portion.

2imits prescribed or write o o unreali3ed e&port bills are

#el write o by e&porter other than #tatus holder +F

#tatus older -F

4rite o By bank -F

6 o the total e&port proceeds reali3ed during the previous calendar year7

/he above write o is available sub;ect to the under noted conditionsD

a. /he relevant amount has remained outstanding or one year or more8

b. #atisactory documentary evidence is urnished in support o the e&porter having made all

eorts to reali3e the dues8

c. /he case alls under any o the under noted categories.

i. /he overseas buyer has been declared insolvent and a certiicate rom the oicial

li"uidator indicating that there is no possibility o recovery o e&port proceeds

produced.ii. /he overseas buyer is not traceable over a reasonably long period o time.

iii. /he goods e&ported have been auctioned or destroyed by the

0ort'Customs'ealth authorities in the importing country.iv. /he unreali3ed amount represents the balance due in a case settled through the

intervention o the Indian %mbassy, $oreign Chamber o Commerce or similar

5rganisation.v. /he cost o resorting to legal action would be disproportionate to the unreali3ed

amount o the e&port bill or where the e&porter even ater winning the Court case

against the overseas buyer could not e&ecute the Court *ecree due to reasons

beyond his control.

vi. Bills were drawn or the dierence between the letter o credit value and actual

e&port value or between the provisional and the actual reight charges but the

amount have remained unreali3ed conse"uent on dishonor o the bills by the

overseas buyer and there are no prospects o reali3ation.vii. /he case is not the sub;ect matter o any pending civil or criminal suit.viii. /he e&porter has not come to the adverse notice o the %norcement *irectorate

or the Central o Investigation or any such other law enorcement agency.i&. /he e&porter has surrendered proportionate e&port incentives, i any, availed o in

respect o the relative shipments. /he bank should obtain documents evidencing

surrender o e&port incentives availed o beore permitting the relevant bills to bewritten o. Banks are to put in place a system under which their internal


36/38

inspectors or auditors carry out random sample check'percentage check o

outstanding e&port bills written o.

6ii7 4here there is no urther amount to be reali3ed against the 9R'#*$'00 rom covered by the write

o, the bank should certiy the duplicate orm as under D

M4rite o OOOOO 6Amount in words and igures7 permitted interms o OOO. /o Authorised *ealers.N

#tamp G #ignature

5

*ate OOOOOOO.

@. It is clariied that the ollowing do not e"uality or the Mwrite oN acilityD

a. %&ports made to countries with e&ternali3ation problem i.e. where the overseas buyer has

deposited the value o e&port in local currency but that amount has not been allowed to be

repatriated by the central banking authorities o the country.b. 9R'#*$ orms which are under investigation by agencies like, enorcement *irectorate o

Revenue Intelligence, Central Bureau o Investigation, etc., as also the outstanding bills which

are sub;ect matter o civil' criminal suit.

?. Ater the M write o N has been permitted Authorised *ealer may certiy the duplicate orm as

underD(

M 4rite o o OOOOOOOOOO 6Amount in words and igures7

0ermitted in terms o OOOOOOOO..

*ateOOOOOOO.. #tamp G #ignature

Authorised *ealer

Banks may orward a statement in orm %B4 to the Regional oice o Reserve Bank under whose

;urisdiction they are unctioning, indicating details o write os etc.

+,. Return o# &ocuments to E/porters

/he duplicate copies o 9R'#*$'00 orms and shipping documents, once submitted to the banks or

negotiation, collection, etc., should not ordinarily be returned to e&porters, e&cept or rectiication o

errors and resubmission.

+. E/porters Caution List

Banks will also be advised whenever e&porters are cautioned in terms o provisions contained in

M%&port RegulationsN. /hey may approve 9R'#*$'00 orms o e&porters who have been placed on

caution list i the e&porters concerned produce evidence o having received an advance payment or

an irrevocable letter o credit in their avour covering the ull value o the proposed e&ports. #uch


37/38

approval may be given even in cases where usance bills are to be drawn or the shipment provided

the relative letter o credit covers the ul

fema regulations.doc.doc

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