Chapter

FEMA Regulations on Imports

1. General
All the Authorised dealers are to be governed by normal trade practices, while undertaking import
payments. In particular, Know Your Customer guidelines issued by Reserve Bank of India and
internally need to be followed scrupulously.
In respect of transactions with Nepal and Bhutan, which are required to be made in Indian rupees
only, transfers can be effected without specific reference to RBI.
Sale of Foreign Exchange for current account transactions with persons residents in Nepal and/or
Bhutan, or against import into these countries made by residents in India, is prohibited.
Imports which are financed in rupees and payment for 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, firms and companies for making payments, exceeding USD 5000 or its
equivalent, towards imports into India must be made on Form A-1. If the payment is made y means of
a cheque drawn on applicants bank, a letter with basic information such as name and address,
amount and purpose of remittance will be sufficient. These forms need not be sent to RBI.
3. Import Licenses
i) General
Authorised banks may freely open letters of credit and allow remittances for import of goods other
than in the negative list requiring license under the Foreign Trade Policy in force. In such cases,
licenses marked For Exchange Control purposes should be called for and the conditions attached to
such licenses adhered to.
ii) Endorsement on Import Licenses
Banks should endorse on the Exchange controls copy of import licenses, under their stamp and
signature, the details of letters of credit opened or forward contracts booked or remittances made in
foreign currency as also the amount of insurance and freight paid by the importer locally in rupees,
wherever licenses have been obtained by importers.
iii) Preservation of Import Licences
Exchange control copy of the import licence submitted by importer for opening of Letter of Credit or
making remittance, when fully utilized, should be preserved till its scrutiny by the internal auditors.
iv) Import Licences for C.I.F. value
a. Import licences are normally issued for the C.I.F. value of the goods to be imported. When
imports are F.O.B. terms, the full amount of import licence (of C.I.F. value) cannot be used;
allowance for insurance and freight to be paid in rupees need to be kept.
b. Imports are sometimes made even F.O.B. terms and Indian importers agreeing for
reimbursement of freight with the cost of the goods. In such cases, banks should before

making the remittance of freight charges, ascertain the actual freight amount paid with
reference to the relevant freight bill or the amount mentioned on the relative bill of lading.
v) Imports on C.I.F. basis by Government Departments/Public Sector Undertakings.
In cases where imports are made on C.I.F. terms and through ocean transport by Government
Departments/Public Sector Undertakings, they are required to obtain the approval of the Chartering
Wing of Ministry of Shipping for payment of imports on C.I.F. basis. Such approvals will not be
required by Public Sector Undertakings/Government Department, if the mode of transport is other
than ocean transport.
4. Manner of Rupee Payment
Payments for retirement of bills drawn under letters of credit as well as bills received from abroad for
collection against imports into India, must be received by the bank, irrespective of amount, by debit to
the account of the importer maintained with them or by means of a crossed cheque drawn by the
importer on his other bankers. Payments against bills should not be accepted in cash.
5. Letter of Authority holders/Agents of Importers
A bank can open letters of credit or make remittances where the Exchange Control copy of the
relative import licence has been issued in the name of a party other than the applicant. The
requirements are i) the applicant to give a letter of authority from the import licence holder in his
favour for opening letters of credit and/or make remittances for payment towards import under the
licence ii) subject to the terms and conditions, as per Foreign Trade Policy in force. In respect of
imports where licence is not required, the Foreign Trade Policy should permit imports through agents.
In all such cases, the responsibility for production of the Exchange control copy of the Bill of Entry,
wherever required, will be that of the agent.
6. Obligation of Purchaser of Foreign Exchange
(a) In terms of Section 10 (6) of the Foreign Exchange Management Act, 1999 (FEMA), any person
acquiring foreign exchange is permitted to use it either for the purpose mentioned in the declaration
made by him to the bank under Section 10 (5) of the Act or to use it for any other purpose for which
acquisition of exchange is permissible under the said Act, or Rules or Regulations .
(b) Where foreign exchange acquired has been utilized for import of goods into India the AD Category
I bank should ensure that importer furnishes an evidence of import viz. Exchange control copy of Bill
of Entry, Postal Appraisal form or Customs Assessment Certificate.
(c)

In cases payment for import is made by way of credit to resident account or a non resident

account of the overseas exporter maintained with a bank in India, the bank should ensure compliance
with the instructions contained above.
(d)

The directions contained in this paragraph are also applicable to payments for imports under

ACU mechanism.

7. Time Limit for Settlement of Import Payments

(i) In terms of the extant regulations, remittances against imports should be completed not later than
six months from the date of shipment

except in cases where amounts are withheld towards

guarantee of performance etc. Deferred payment arrangements including suppliers and buyers credit
providing for payments beyond a period of six months from date of shipment up to a period of less
than three years are treated as trade credits (Suppliers Credit and Buyers Credit) for which the
instructions for trade credits should be followed.
(ii)

The bank may permit settlement of import dues delayed due to disputes, financial difficulties

etc. Interest in respect of such delayed payments may be permitted for less than three years.
8. Time limit for import of books:
Remittances against import of books may be allowed without restriction as to time limit, provided,
interest payment, is not for more than three years.
9. Import of Foreign exchange/Indian Rupees
(i) Except as otherwise provided in the Regulations, no person shall, without the general or
special permission of the Reserve Bank, import or bring into India, any foreign currency.
Import of foreign currency, including cheques, is governed by clause (g) of sub-section (3) of
Section 6 of the Foreign Exchange Management Act 1999, and the Foreign Exchange
Management (Export and Import of Currency) Regulations 2000, made by Reserve Bank vide
Notifications No. FEMA6/RB-2000 dated May 3, 2000 as amended from time to time.
(ii) Reserve Bank may allow a person to bring into India currency notes of Government of India and/or
of Reserve Bank subject to such terms and conditions as the Reserve Bank may stipulate.
10. Import of foreign exchange into India
A person may
(i) Send into India without limit foreign exchange in any form other than currency notes, bank notes
and travelers cheques.
(ii) bring into India from any place outside India, without limit foreign exchange (other than unissued
notes), subject to the condition that such person makes, on arrival , a declaration to the Custom
Authorities in Currency Declaration Form (CDF) .It shall not be necessary to make such declaration
where the aggregate value of the foreign exchange in the form of currency notes, bank notes or
travelers cheques brought in by such person at any one time does not exceed USD 10,000 (US
dollars ten thousand) for its equivalent and/or the aggregate value of foreign currency notes brought in
by such person at any one time does not exceed USD 5,000 (US Dollars five thousand) or its
equivalent.
11 Import of Indian currency and currency notes
(i) 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 (other than from Nepal and Bhutan) currency notes
of Government of India and Reserve Bank notes up to an amount not exceeding Rs. 7,500/- per
person.
(ii) A person may bring into India from Nepal or Bhutan, currency notes of Government of India and
Reserve Bank notes other than notes of denominations of above Rs. 100 .

12. Interest on Import Bills

i) A bank may allow payment of interest on usance bills or overdue interest for a period of less than
three years from the date of shipment at the rates prescribed for trade credits 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 of the currency in which the goods have been invoiced, 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
currency of invoice.
13. Advance Remittances.
Advance remittance for import of goods may be allowed without any ceiling subject to the following
conditions.
(a)

i)

If the amount of advance remittance exceeds US 200.000 or its equivalent, an

unconditional, irrevocable standby Letter of Credit or a guarantee from an international bank of repute
situated outside India or a guarantee of an Authorized Dealer in India, if such a guarantee is issued
against the counter-guarantee of an international bank of repute situated outside India, is obtained.
ii)

In cases where the importer (other than a Public Sector Company or a

Department/Undertaking of the Government of India/State Governments) is unable to obtain bank

guarantee from overseas suppliers and the AD Category- I bank 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 upto USD 5,000,000 (US dollar five million). AD Category
I banks may frame their own internal guidelines to deal with such cases as per a suitable policy
framed by the banks Board of Directors.
iii)

A Public Sector Company or a Department/Undertaking of the Central/State Government/s

which is not in a position to obtain a guarantee from an international bank of repute against an
advance payment, it is required to obtain a specific waiver for the bank guarantee from the Ministry of
Finance, Government of India before making advance remittance exceeding USD 100.000.
(b)

All payments towards advance remittance for imports shall be subject to the other usual

conditions on KYC, bona fide nature, being in tune with contract and amount paid through customers
account.
( c ) Physical imports should be made within six months (three years in case of capital goods) from
the date of remittance and the importer should give an undertaking to furnish documentary evidence
of import, within fifteen days from the close of the relevant period.

d)

In the event of non-import of goods, the bank should ensure that the amount of advance

remittance is repatriated to India or is utilized for any other purposes for which release of exchange is
permissible under the Act, Rules or Regulations made there under.
14.

Advance Remittance for Import of Rough Diamonds

Based on the Recommendations of the Expert Committee on Gems and Jewellery Sector, constituted
by the Ministry of Finance, Government of India, and with a view to liberalizing the procedure further
and facilitate import of rough diamonds, banks are permitted to allow advance remittance without any
limit and without bank guarantee or standby letter of credit, by an importer (other than a Public Sector
Company or a Department/Undertaking of the Government of India/State Government/s), for import of
rough diamonds into India from the under noted mining companies, viz.
i)

De Beers UK Limited., UK,

ii)

RIO TINTO, UK

iii)

BHP Billiton, Australia

iv)

ENDIAMA, E.P. Angola,

v)

ALROSA, Russia,

vi)

GOKHARAN, Russia,

vii)

RIO TINTO, Belgium and

viii)

BHP Billiton, Belgium

ix)

Namibia Diamond Trading Company (PTY) Ltd. (NDTC)

While allowing the advance remittance, should ensure :

(i) The importer should be a recognized processor of rough diamonds as per a list be approved by
Gem and Jewellery Export Promotion Council in this regard and should have a good track record of
export realisation.
(ii) Banks should undertake the transaction based on their commercial judgment and after being
satisfied about the bonafides of the transaction.
(iii) Advance payments should be made strictly as per the terms of the sale contract and should be
made directly to the account of the company concerned, that is, to the ultimate beneficiary and not
through numbered accounts or otherwise. Further, due caution may be exercised to ensure that
remittance is not permitted for import of conflict diamonds:
(iv) KYC and due diligence exercise should be done by the banks for the Indian importer entity and
the overseas company; and
(v) Banks should follow up submission of the Bill of Entry/documents evidencing import of rough
diamonds into the country by the importer, in terms of the Act/Rules/Regulations/Directions issued in
this regard.

In case of an importer entity in the Public Sector or a Department/Undertaking of the Government of

India/State Government/s, AD Category I banks may permit advance remittance subject to the
above conditions and a specific waiver of bank guarantee from the Ministry of Finance, Government
of India where the advance payments is equivalent to or exceeds USD 100.000/- (USD one hundred
thousand only).
Banks are required to submit a report of all such advance remittances made without a bank guarantee
or standby letter of credit, where the amount of advance payment is equivalent to or exceeds USD
5,000,000/- (USD Five Million Only), to The Chief General Manager, Reserve Bank of India, Foreign
Exchange Department, Trade Division, Central Office, Mumbai, on a half yearly basis, as at the end of
September and March every year. The report should be sent within 15 calendar days from the close
of each half year.
15. Advance Remittance for Import of aircrafts/helicopters/other aviation related purchases
As a sector specific measure, airline companies which have been permitted by the Directorate
General of Civil Aviation to operate as a schedule air transport service, can make advance remittance
without bank guarantee, up to USD 50 million.
Accordingly,

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

unconditional, irrevocable standby Letter of Credit, up to USD 50 million, for direct import of each
aircraft, helicopter and other aviation related purchases. The remittances for the above transactions
shall be subject to the following conditions:
i.

To undertake the transactions based on their commercial judgment and after being satisfied

about the bonafide of the transactions. KYC and due diligence exercise should be done for the Indian
importer entity and the overseas manufacturer company as well.
ii.

Advance payments should be made strictly as per the terms of the sale contract and are

made directly to the account of the manufacturer (Supplier) concerned.

iii.

Banks to frame their own internal guidelines to deal with such cases, with the approval of their

Board of Directors.
iv.

In the case of a Public Sector Company or a Department/Undertaking of Central/State

Governments, the AD Category I bank shall ensure that the requirement of bank guarantee has
been specifically waived by the Ministry of Finance, Government of India for advance remittances
exceeding USD 100.000.
V.

Physical import of goods into India is made within six months (three years in case of capital

goods) from the date of remittance and the importer gives an undertaking to furnish documentary
evidence of import within fifteen days form the close of the relevant period. It is clarified that where

advance is paid as milestone payments, the date of last remittance made in terms of the contract will
be reckoned for the purpose of submission of documentary evidence of import.
vi.

Prior

to making the remittance, the bank to ensure that the requisite approval of the

Ministry of Civil Aviation / DGCA / other agencies in terms of the extant Foreign Trade Policy has been
obtained by the company for import.
vii.

In the event of non-import of aircraft and aviation sector related products, AD Category I

bank should ensure that the amount of advance remittance is immediately repatriated to India.
Prior approval of the concerned Regional Office of the Reserve Bank will be required in case of any
deviation from the above stipulations.
16. Remittances for Import of films on lease/rental basis.
Banks may allow remittance of rent, royalty, licence fee, profit etc. in connection with import of
cinematograph feature films and video films subject to the following conditions:
i)

A No Objection Certificate from Central Board of Film Certification, wherever required,

has been submitted.

ii)

A Chartered Accountants certificate is produced indicating that the payment to overseas

supplier is due and the amount sought to be remitted is in conformity with the terms of the
contract; and

iii)

An undertaking/certificate regarding payment of income-tax has been submitted.

17. Advance Remittances for Import of Services

Banks may allow advance remittance for import of services without any ceiling subject of the
following:
(a) Where the amount of advance exceeds USD 500.000 or its equivalent, a guarantee from a
bank of international repute situated outside India, or a guarantee from an AD Category I
bank in India, if such a guarantee is issued against the counter-guarantee of a bank of
international repute situated outside India, or a guarantee from an AD Category I bank in
India, if such a guarantee is issued against the counter-guarantee of a bank of international
repute situated outside India, should be obtained from the overseas beneficiary.
(b)

In respect of Government Department/PSUs , approval required for waiver of the above

condition for amounts exceeding USD 100,000

(c) Banks should also follow-up to ensure that the beneficiary of the advance remittance fulfils his
obligation under the contract or agreement with the remitter in India, failing which, the amount
should be repatriated to India.
18. Remittances for War Risk Insurance/Bunker/Congestion Surcharge/Premium for
Extended Insurance.
Banks may make remittances towards War Risk insurance premium, Bunker/Congestion
surcharge at foreign ports, and premia for extended insurance cover etc., which are incidental to
imports.
19. Remittances for Imports under Penalty
Banks may make remittances against goods imported without authority, but later allowed to be
cleared by the Customs Authorities against payment of penalty, to the extent of C.I.F. value of the
goods indicated on the relative Exchange Control copy of Bill of Entry evidencing import of goods
in to India.
20. Remittances against Replacement Imports
Where goods are short-supplied, damages, short-landed or lost in transit and the Exchange
Control copy of the import licence has already been utilized to cover the opening of a letter of
credit 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 banks and fresh remittance for replacement
imports permitted without reference to Reserve Bank, 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 licence.
21. Guarantees for Replacement Import
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, banks may issue guarantees at
the request of importer client for dispatch/return of the defective goods, according to their
commercial judgment.
22. Evidence of Import
i. In case of all imports, where value of foreign exchange remitted/paid for import into India
exceeds USD 100.000 or its equivalent, it is obligatory on the part of the bank through whom the
relative remittance was made, to ensure that the importer submits:
a. The Exchange Control copy of the Bill of Entry for home consumption, or

b. The Exchange Control copy of the Bill of Entry for warehousing, in case of 100% Export
Oriented Units 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.

Imports in Non-physical form : Where imports are made in non-physical form i.e. software or

data through internet/datacom channels and drawings and designs through e-mail/fax, a
certificate from a Chartered Accountant that the software/data/drawing/design has been received
by the importer, may be obtained.

III. Imports on D/A basis: In respect of imports on D/A basis, banks should insist on production of
evidence of import at the time of effecting remittance of import bill. 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.

banks may, if satisfied with the

genuiness of request, allow reasonable time, not exceeding three months from the date of
remittance, to the importer to submit the evidence of import.
Iv. Issuing acknowledgement: Banks should acknowledge receipt of evidence of import e.g.
Exchange Control copy of the Bill of Entry, Postal Appraisal Dorm or Customs Assessment
Certificate, etc., from importers by issuing acknowledgement slips containing all relevant
particulars such as:
a) Importers full name and address with code number;
b) Import licence number and date (wherever applicable)
c) Banks reference of letter of credit number, etc. if any:
d) Number and date of Exchange Control copy of Bill of Entry/Postal Appraisal Form or Customs
Assessment certificate and the amount of import, and
e) Particulars of goods imported.
v.

Verification by auditors: Internal inspectors or auditors (including external auditors appointed

by dealers) should carry out verification of the documents evidencing import e.g. Exchange
Control copies of Bills of Entry or Postal Appraisal Forms or Customs Assessment Certificates,
etc.
vi. Preservation of evidence of import:

Document evidencing import into India should be

preserved by banks for a period of one year from the date of its verification. However, in respect

of cases which are under investigation , the documents may be destroyed only after obtaining
clearance from the investigating agency concerned.
vii. Certificate from CEO/Auditor of the company as evidence of import:
Banks may accept either Exchange Control copy of Bill of Entry for home consumption or a
certificate from the Chief Executive Officer (CEO) or auditor of the company that the goods for which
remittance was made have actually been imported into India provided:a. The amount of foreign exchange remitted is less than USD 1,000,000 (USD one million) or its
equivalent,
b. The importer is a company listed on a stock exchange in India and whose net worth is not less
than Rs. 100 crores as on the date of its last audited balance sheet.
Or
c.

The importer is a public sector company or an undertaking of the Government of India or its
departments.

The above facility may also be extended to autonomous bodies, including scientific bodies/academic
institutions. Such as Indian Institute of Science/Indian Institute of Technology etc. whose accounts are
audited by the Comptroller and Auditor General of India (CAG). In these cases,a declaration from the
auditor/CEO of such institutions that their accounts are audited by CAG be obtained.
23. Follow up for Import Evidence
i.

In case an importer does not furnish any documentary evidence of import, as required , within 3

months from the date of remittance involving foreign exchange exceeding USD 100,000, the AD
Category I banks should rigorously follow-up for the next 3 months, including issue of registered
letters to the importer.
ii.

Banks should forward to Reserve Bank a statement on half-yearly basis as at the end of June &

December of every year, in form BEF (format as per annexure 1) furnishing details of import
transactions, exceeding USD 100,000 in respect of which importers have defaulted in submission of
appropriate document evidencing import within 6 months from the date of remittance. The said halfyearly statement should be submitted to the Regional Office of R.B.I. under whose jurisdiction the AD
Category I banks is functioning, within 15 days from the close of the half year to which the statement
relates.
Banks 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 banks Board of Directors and the AD Category-I banks may set

their own internal guidelines to deal with such cases. Banks have laid down different threshold limits for
customers and non customers.
24. Import of Equipments by BPO Companies in India for International Call Centre
Business process Outsourcing (BPO) companies in India make remittances towards import and
installation of equipments at overseas sites in connection with setting up of their international call
centres. In such cases, the equipments are installed at overseas sites without physical import taking
place in India. As a result, the importers are unable to produce evidence of import, requiring specific
permission from the Reserve Bank.

Hence, it has been liberalized that banks may, allow BPO

companies in India to make remittances towards the cost of equipment to be imported and installed at
their overseas sites in connection with the setting up of their International call centres, subject to the
following conditions:
a. The BPO should have obtained necessary approval from the Ministry of Communications and
Information Technology, Government of India and other authorities concerned for setting up of
the International Call Centre.
b. The remittance should be allowed based on the banks commercial judgment, the bonafides of
the transactions and strictly in terms of the contract.
c.

The remittance is made directly to the account of the overseas supplier.

d. Banks should also obtain a certificate as evidence of import from the Chief Executive Officer
(CEO) or auditor of the importer company that the goods for which remittance was made have
actually been imported and installed at overseas sites.
25. Handling of Import Documents on collection basis
Due care should be exercised while handling import documents on collection basis on behalf of
importer customers with reference to their line of business, financial standing, frequency of import
etc. to establish the genuineness of the import. In case of bills involving large values, banks should
satisfy themselves that the importer is known to be trading in items mentioned in the shipping
documents or that the items are required for his actual use. In case of importers who are not their
constituents, banks should, at the time of acceptance of the documents/making payment, call for
detailed Certificate-cum-Report from their bankers in support of the genuineness of the imports.
26. Direct 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. No remittances should therefore be made where documents have been received
directly by the importers from the overseas supplier, except in the following cases.
i)

the value of import bill does not exceed USD 300.000, subject to the following conditions:

a. The import would be subject to the prevailing Foreign Trade Policy.

b. The transactions are based on their commercial judgment and they are satisfied about the
bonafides of the transactions.
c.

The importer is a customer of the bank and the customers account is fully complaint with extant
KYC/AML guidelines issued by the Reserve Bank.

d. Banks should do the due diligence exercise and should be fully satisfied about the financial
standing/status and track record of the importer customer.

e.

It is customary in that trade to receive import documents directly from the Overseas exporter

f.

In case the bank has suspicions about the genuiness of the transaction, it should be reported
through the Suspicious Transaction Report (STR) to Financial intelligence Unit in India

ii) Import bills received by wholly owned Indian subsidiaries of foreign companies from their principals.
iii) Import bills received by Status holder exporters as defined under the Foreign Trade Policy, 100%
Export Oriented Units/Units in Free Trade Zones, Public Sector Undertakings and Limited Companies.
iv) Import bills received by all limited companies viz. public limited, deemed public limited and private
limited companies.
v) At the request of importer clients, banks may receive bills direct from the overseas supplier as above,
provided the bank is fully satisfied about bonafides of the transaction and the financial standing/status
and track record of the Importer customer. Before extending the facility, bank should obtain a credit
report on each individual overseas supplier from the overseas banker or reputed credit agency, where
the invoice value exceeds USD 300,000.
27. Direct receipt of import bills/documents-import of rough diamonds:
The Gems and Jewellery Export Promotion Council (GJEPC) has represented that the restrictions
placed on non-status holder exporters for direct receipt of import bills/documents adds to transaction
costs for small importers and have requested the Reserve Bank to consider relaxing this condition for
import of rough diamonds by non-status holders. It has, therefore, been decided by RBI, as a sector
specific measure, to keep the limit for direct receipt of import bills/documents at USD 300,000 in the
case of import of rough diamonds. Accordingly, banks are permitted to allow remittance for imports up
to USD 300,000 where the importer of rough diamonds has received the import bills/documents directly
from the overseas supplier and the documentary evidence for import is submitted by the importer at the
time o f remittance. Banks may undertake such transactions subject to the following conditions:
(i) The import would be subject to the prevailing Foreign Trade Policy.
(ii) The transactions are based on their commercial judgment and they are satisfied about the bonafides
of the transactions.
(iii) Banks 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
credit agency overseas.
28. Postal Imports
Remittances against bills received for collection in respect of 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 of dispatch through the post and an undertaking
to submit Postal Appraisal Form or Customs Assessment Certificate as evidence of import within three
months from the date of remittance should be furnished by importers. Where the remittance is sent
subsequent to receipt of the parcel, the Postal Appraisal Form or Customs Assessment Certificate
should be produced by the Importer. Where goods to be imported are not of a kind normally imported
by post parcel or where the bank is not satisfied about the bonafides of the application, the case may be

referred to R.B.I. for prior approval with full particulars together with relative parcel receipts/and Postal
Appraisal Form or Customs Assessment Certificate.
Banks may make remittances towards import of books by post parcel by book sellers / publishers
against bills received for collection, irrespective of the amounts involved, without prior approval of R.B.I.
They may also make remittances even if import licences covering the imports have been issued
subsequent to the date of import subject to endorsement on such import licences.
29. Import of Gold/Platinum/Silver by Nominated Banks/Agencies
Under the liberalized policy for import, Government of India has permitted import of gold by certain
nominated agencies viz. MMTC, HHEC, STC, SBI and other leading banks and other agencies
authorized by R.B.I. for sale to jewellery manufacturers, exporters, NRIs, holders of special import
licences and domestic users. At present these nominated agencies/banks are permitted to import gold
on Documents against Payment basis only. If the import is under a letter of credit,100% cash margin
should be obtained.
29.2. Import on consignment basis
Platinum and Silver may be imported by the nominated agencies/banks on consignment basis where
the ownership will remain with the supplier and the importer (Consignee) will be acting as an agent of
the supplier (Consignor). Remittances towards the cost of import shall be made as and when sales take
place and in terms of the provisions of agreement entered into between the overseas supplier and
nominated agency/bank.
Gold can be imported on consignment basis only to meet the genuine needs of exporters of gold
jewellery.
29.3. Import of gold on unfixed price basis
The nominated agency/bank may import gold on outright purchase basis subject to the condition that
although ownership of the gold shall be passed on to the importer at the time of import itself, the price of
gold shall be fixed later, as and when the importer sells the gold to the users.
30. Direct Import of Gold
Banks can open letters of Credit and allow remittances on behalf of EOUs units in SEZs in the Gem &
Jewellery sector and nominated agencies, for direct import of gold, subject to the following:i.

The import of gold should be strictly in accordance with the Foreign Trade Policy.

ii.

Suppliers and Buyers credit, including the usance period of LCs opened for direct import of

gold, should not exceed 90 days.

iii.

Bankers prudence should be strictly exercised for all transactions pertaining to import of gold.

Banks should ensure that due diligence is undertaken and all Know-Your-Customer (KYC) norms and
the Anti-Money-Laundering guidelines, issued by RBI are adhered to while undertaking such
transactions. Any large or abnormal increase in the volume of business of the Importer should be
closely examined to ensure that the transactions are bonafide trade transactions.
iv.

Banks should closely monitor such transactions in addition to carrying out the normal due

diligence exercise. The credentials of the supplier should also be ascertained before opening of LCs.
The financial standing, line of business sand the net worth of the importer customer should be
commensurate with the volume of business turnover.

Apart from the above, in case of such

transactions banks should also make discreet enquiries from other banks

to assess the actual

position. Further, in order to establish audit trail of import/export transactions, all documents pertaining
to such transactions must be preserved for at least five years.
v.

Banks should follow up submission of the evidence of import by the importers.

vi. Banks undertaking gold import transactions are required to submit as per the format a monthly
statement to the Trade Division, Foreign Exchange Department, Amar Building, Central Office, Reserve
Bank of India, Sir P.M.Road, Fort, Mumbai 400001.
31.

Import of Gold on Loan basis

(i) Nominated agencies/approved banks can import gold on loan basis for on lending to exporters of
jewellery under this scheme. On the other hand EOUs and unit sin SEZ who are in the Gem and
Jewellery sector can import gold on loan basis for manufacturing and export of jewellery on their own
account only.
(ii)

The maximum tenor of gold loan would be as per the Foreign Trade Policy in force, or as

notified by the Government of India from time to time in this regard.

(iii)

Banks may open Stand by Letters of Credit (SBLC) for import of gold on loan basis, where ever

required, as per FEDAI guidelines dated April, 1, 2003. The tenor of the SBLC should be in line with the
tenor of the gold loan. It may be noted that the SBLC can be opened only on behalf of entitles
permitted to import gold on loan basis. Viz. nominated agencies and 100% EOUs/units in SEZ, which
are in the Gem and Jewellery sector. Further, the SBLC should be in favour of internationally renowned
bullion banks only. All other existing instructions on import of gold and opening of Letters of Credit will
continue to be applicable.
(iv) Banks must maintain adequate documentation with them to uniquely link all imports with the
standby Letters of Credits issued for the import of gold on loan basis.
32.

Import factoring

Banks may enter into arrangements with international factoring companies of repute, preferably
members of Factors Chain International, without prior approval of R.B.I. However, they have to ensure
compliance with the extant exchange control directions relating to imports, Foreign Trade Policy in force
and any other guidelines/directives issued by R.B.I.in this regard.
33.

Merchanting Trade

Banks may take necessary precautions in handling merchanting trade transactions or intermediary
trade transactions to ensure that:
a. Goods involved in the transactions are permitted to be imported into India.
b. Such transactions do not involve foreign exchange outlay for a period exceeding three months
and
c.

All rules, regulations and directions applicable to export out of India (except Export Declaration
Form) are complied with in respect of the export leg and all rules, regulations and directions
applicable to import (except Bill of Entry) are complied with in respect of the import leg of
merchanting trade transactions. Banks are also required to ensure timely receipt of payment
for the export leg of such transactions.

Short-term credit either by way of suppliers credit or buyers credit is not available for merchanting
trade or intermediary trade transactions.

While undertaking bonafide merchanting trade

transactions on behalf of their trader clients, banks should ensure that the terms of payment for the
import leg and the export leg of the transactions are such that:
i.

The liability for the import leg of the transaction is extinguished by the payment received for the
export leg of the transaction, without any delay; and

ii.

the entire merchant trade transaction is completed within a period of 6 months.

34. Issue of Bank Guarantee on behalf of service importers

Banks are now permitted to issue guarantee on behalf of their customers importing services,
provided:
a. The guarantee amount does not exceed USD 500.000
b. The AD Category-I bank is satisfied about the bonafides of the transaction.
c.

The AD Category-I bank ensures submission of documentary evidence for import of services in
the normal course, and

d. The guarantee is to secure a direct contractual liability arising out of a contract between a
resident and a non resident.
In case of invocation of the guarantee, the bank is required to submit to the Chief General Managerin-charge. Foreign Exchange Department, Foreign Investments Division (a(EPD), Reserve Bank of
India, Central Office, Mumbai-400 001 a report on the circumstances leading to the invocation of
the guarantee.

--------------------------------------------------

FEMA Regulations EXPORT OF GOODS AND SERVICES

1. General
i)

Banks may conduct export transactions in conformity with Foreign Trade policy and rules
framed by Government of India and the directions of RBI. These are called Export
regulations and as amended from time to time are applicable to export business.

ii)

Banks are permitted to issue guarantees on behalf of their exporter clients

iii)

There is no restriction on invoicing of export contracts in Indian Rupees However export

proceeds should be realized in freely convertible currency. In certain cases, payments from
convertible vostro account are permitted.

iv)

Any reference to Reserve Bank should be made to the regional office of the Foreign
Exchange Department situated in the jurisdiction where the applicant person, firm or
company resides or functions, unless otherwise indicated. If for any particular reason, a firm
or company desires to deal with a different office of the Foreign Exchange Department, it
may approach the regional office of its jurisdiction for necessary approval.

2. Exemptions from Declarations

i)The requirement of declaration of export of goods and software in the prescribed form will not apply to
the cases indicated below.
a) Trade samples of goods and publicity material supplied free of payment.
b) Personal effects of travelers, whether accompanied or unaccompanied;
c) Ships stores, trans-shipment cargo and goods supplied under the orders of Central
Government or of such officers as may be appointed by the Central Government in this behalf
or of the military, naval or air force authorities in India for military, naval or air force
requirements,
d) Goods or software accompanied by a declaration by the exporter that they are not more than
USD 25000 in value or its equivalent. The exporters shall however, be liable to realize and
repatriate export proceeds as per FEMA Regulations. Banks should not report all exports of
value up to USD 25000 or its equivalent in the XOS half yearly statements.
e) By way of gift of goods accompanied by a declaration by the exporter that they are not more
than five lakhs rupees in value.
f)

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.

g) Goods imported free of cost on re-export basis

h) Goods not exceeding U.S. $ 1000 or its equivalent in value per transaction exported to
Myanmar under the Barter Trade Agreement between the Central Government and the
Government of Myanmar.
i)

The following goods which are permitted by the Development Commissioner of the Export
Processing Zones, Electronic Hardware Technology Parks, Electronic Software Technology
Parks or Free Trade Zones to be re-exported, namely:

1) Imported goods found defective, for the purpose of their replacement by the foreign
suppliers/collaborators;
2) Goods imported from foreign suppliers/collaborators on loan basis:
3) Goods imported from foreign suppliers/collaborators free of cost, found surplus after production
operations.
Goods listed at items (1), (2) and (3) of clause (i) to be re-exported by units in Special Economic
Zones, under intimation to the Development Commissioner of Special Economic Zones/concerned
Assistant Commissioner or Deputy Commissioner of Customs:
j)

Replacement goods exported free of charge in accordance with the provisions of Exim Policy in
force, for the time being.

k) Goods sent outside India for testing subject to re-import into India.
l)

Defective goods sent outside India for repair and re-import provided the goods are
accompanied by a certificate from an Authorized Dealer in India that the export is for repair and
re-import and that the export does not involve any transaction in foreign exchange.

m) Exports permittedby RBI , subject to the terms and conditions made

ii)

Gift of goods exceeding Rupees Five lakhs in value requires approval of the Reserve Bank.

iii)

Banks may consider requests for grant of GR waiver from exporters for export of goods free
of cost for export promotion up to 2 percent of the average annual exports of the applicant
during the preceding three years subject to a ceiling of Rs. 5 Lakhs. For status holder
exporters, the limit as per the present Foreign Trade Policy is Rs. 10 Lakhs or 2 percent of
the average annual export realisation during the preceding three licensing years (AprMarch), whichever is higher.

iv)

Export of goods not involving any foreign exchange transaction directly or indirectly
requires the waiver of GR/PP Procedure from the Reserve Bank.

v)

The importer-exporter code number allotted by the Director General of Foreign Trade under
Section 7 of the Foreign Trade (Development & Regulation) Act, 1992 (22 of 1992) shall be
indicated on all copies of the declaration forms submitted by the exporter to the specified
authority and in all correspondence of the exporter with the bank or the Reserve Bank, as the
case may be.

3. GR Approval for export

With a view to further liberalize the facilities available to exporters and simplify the procedure for
export, RBI has delegated powers to banks for grant of GR approval in cases where goods are
being exported for re-import after repairs/maintenance/testing/calibration, etc. Accordingly, banks
may, consider grant of GR approval, in cases where goods are being exported for repairs,
maintenance,

calibration,

testing

etc.

and

subsequently

re-imported

after

necessary

repairs/maintenance/calibration/testing, etc. and subsequently re-imported after necessary

repairs/maintenance/calibration/testing etc. subject to the condition that the exporter shall produce
relative Bill of Entry within one month of re-import of the exported item from India.
.
4. Numbering of Forms
GR,

PP

and

SOFTEX

forms

will

bear

specific

identification

numbers.

In

all

applications/correspondence with the Reserve Bank, this identification number should invariably be
cited. In the case of declarations made on SDF form, the port code number and shipping bill
number should be cited.
5. Manner of Payment
(i)

The amount representing the full export value of the goods exported shall be received
through an AD Category I bank in the manner specified in the Foreign Exchange
Management (Manner of Receipt & Payment) Regulations, 2000 notified vide Notification
No. FEMA 14/2000-RB dated May 3, 2000. Re-import into India, within the period specified
for realisation of the export value, is deemed to be realisation of full export value of such
goods.

(ii)

Payment for export may also be received by the exporter in the following manner.
a. Bank draft, pay order, bankers or personal cheques.
b. Foreign currency notes/foreign currency travelers cheques from the buyer during his
visit to India.
c.

Payment out of funds held in the FCNR/NRE account maintained by the Buyer.

d. International Credit Cards; when payment, in respect of goods sold to overseas buyers
during their visits is received in this manner the GR/SDF (duplicate) should be released
by banks only on receipt of funds is their Nostro account or if the bank concerned is
not the Credit Card servicing bank, on production of a certificate by the exporter from
the Credit Card servicing bank in India to the effect that it has received the equivalent
amount in foreign exchange, banks may also receive payment for exports made out of
India by debit to the credit card of an importer where the reimbursement from the card
issuing bank/organisation will be received in foreign exchange.
e. All transactions between a person resident in India and a person resident in Nepal may
be settled in Indian Rupees. However, in case of export of goods to Nepal, where the
importer has been permitted by the Nepal Rastra Bank to make payment in free foreign
exchange, such payments shall be routed through the ACU mechanism.
f.

Precious metals i.e. Gold/Silver/Platinum by the Germ & Jewellery units in SEZs and
EOUs in equivalent to value of jewellery exported on the condition that the sale contract
provides for the same and the approximate value of the precious metals is indicated in
the relevant GR/SDF/PP Forms.

g. Processing of export related receipts through online payment Gateway Service.

Effective 11th June 2013,this facility is available for exports not exceeding USD 10,000

6. Realisation and repatriation of export proceeds :

It is obligatory for exporter to realize and repatriate full value of goods or software to India within
a stipulated period from the date of export as under:
Units in SEZ

12 months

Status holders
100%EOUs

12 months
12 months

Warehouse outside India

In all other cases

max 15 months from date of shipment

9 months ( w.e.f. 20.5.13 till 30.9.13)

7. Foreign Currency Accounts

i)

Opening of Foreign Currency Accounts

(a) Reserve Bank may consider applications in Form EFC from exporters having good track record
for opening foreign currency accounts with banks subject to certain terms and conditions.
Applications for opening such an account with a branch of a bank in India may be submitted
through the branch at which the foreign currency account is to be maintained. If the foreign
currency account is to be maintained abroad, the application should be made by the exporter
giving details of the bank with which the account will be maintained.
(b) An Indian entity has also been permitted to open, hold and maintain in the name of its
office/branch set up outside India, a foreign currency account with a bank outside by making
remittance for the purpose of normal business operations of the said office/branch or
representative subject to specified conditions. The banks may therefore allow remittances for
the purpose of normal business operations of the office (trading/non trading/ branch of
representative outside India as per the provisions of the Regulations in this regard subject to
the following terms and conditions:
i)

The overseas office (trading/non-trading/branch/representative should not create any

financial liabilities contingent or otherwise for the head office in India.

ii)

The overseas office (trading/non-trading)/branch representative should not invest

surplus funds abroad without prior approval of Reserve Bank of India. Any funds rendered
surplus should be repatriated to India.

iii)

The overseas office/branch of software exporter company/firm may repatriate to India

100% of the contract value of each off-site contract as also at least 30% of the contract
value of each onsite contract and may utilize the balance amount (70%) of the contract
value of on-site contracts for contract related expenses including office/branch expenses
abroad.

A duly audited yearly statement showing receipts under off-site and on-site

contracts undertaken by the overseas office, expenses and repatriation thereon may be
sent to the bank.
iv)

The details of bank accounts opened in the overseas country should be promptly
reported to the Authorised Dealer.

c)

A unit located in a Special Economic Zone (SEZ) may be allowed to open, hold and

maintain a Foreign Currency Account with a bank outside or in India.

d) A project/service exporter may open and maintain a foreign currency account , subject to the
standard terms and conditions in the Memorandum PEM.
ii)

Diamond Dollar Account

Under the scheme of Government of India, firms and companies dealing in purchase/sale of rough
or cut and polished diamonds/precious metal jewellery plain, minakari and/or studded with/without
diamond and/or other stones, with track record of at least three years in import or export of
diamonds/colured gemstones/diamond and coloured gemstones studded jewellery/plain gold
jewellery, and having an average annual turnover of Rs. 3 Crores or above during the preceding
three licensing years (licensing year is from April to March) are permitted to transact their business
through Diamond Dollar Accounts and may be allowed to open not more than five Diamond Dollar
Accounts with their banks. With a view to liberalizing the procedure, it has been decided by RBI to
delegate powers to banks to permit such firms and companies to open and maintain DDA with AD
Category 1 banks, subject to the following terms and conditions.
a. The exporter should comply with the eligibility criteria stipulated in the Foreign Trade
Policy of the Government of India, issued from time to time.
b. The DDA shall be opened in the name of the exporter and maintained in US dollars
only.
c.

The account shall only be in the form of current account and no interest should be paid
on the balance held in the account.

d. No intra-account transfer should be allowed between the DDAs maintained by the

account holder.
e. An exporter firm / company shall be permitted to open and maintain not more than 5
DDAs.
f.

The balance held in the account shall be subject to Cash Reserve Ratio (CRR) and
statutory Liquidity Ratio (SLR) requirements.

g. Exporter firms and companies maintaining foreign currency accounts, excluding EEFC
accounts, with banks in India or abroad, are not eligible to open Diamond Dollar
accounts.
h. The transactions in the DDA would be as under:
Permissible Credits
Amount of pre-shipment and post-shipment finance availed in USD
Realisation of export proceeds from shipments of rough, cut, polished diamonds and
diamond studded jewellery.
Realisation in US Dollars from local sale of rough, cut and polished diamonds.
Permissible Debits
Payment for import/purchase of rough diamonds from overseas/local sources.
Payment for purchase of cut and polished diamonds, coloured gemstones and plain gold
jewellery from local sources.
Payment for import/purchase of gold from overseas/nominated agencies and repayment of
USD loans availed from the Bank.
Transfer to rupee account of the exporter.

i) The exporter firm/company shall make an application in the prescribed format to the bank for
opening of the DDA. The bank should assess the track record of the firm/company at the end of
every licensing year (April-March)/ In case any firm/company fails to meet the eligibility criteria, the
account may be closed immediately.
iii)

Exchange Earners Foreign Currency (EEFC) Account

(i)

A person resident in India may open, with a bank in India, an account in foreign currency
called the Exchange Earners Foreign Currency (EEFC) Account.

(ii)

All categories foreign exchange earners are allowed to credit up to 100 per cent of the
foreign exchange earnings to their EEFC Accounts.

(iii)

This account shall be maintained in the form of non-interest bearing current account.

(iv) No credit facilities either fund-based or non-fund based, should be permitted against the security of
balances held in EEFC accounts, by banks.
(v)

The eligible credits represent

(a) Inward remittance received through normal banking channel, other than the remittance received
pursuant to any undertaking given to the Reserve Bank of which represents foreign currency
loan raised or investment received from outside India or those received for meeting specific
obligations by the account holder.
(b) Payments received in foreign exchange by a unit in Domestic Tariff Area (DTA) for supplying
goods to a unit in Special Economic Zone out of its foreign currency account.
(c) Banks may permit their exporter constituents to extend trade related loans/advances to
overseas/importers out of their EEFC balances without any ceiling, subject to compliance of
provisions.
(d) Banks may permit exporters to repay packing credit advances whether availed in Rupee or in
foreign currency from balances in their EEFC A/c and/or rupee resources to the extent exports
have actually taken place.
8. Setting up offices abroad and Acquisition of Immovable property for Overseas Offices
a. Remittances for initial expenses:
A bank may allow remittances up to fifteen per cent of the average annual sales/income or
turnover during the last two financial years or up to twenty-five per cent of the net worth,
whichever is higher.
b. Remittances for Recurring expenses:
A bank may allow remittance up to ten per cent of the average annual sales/income or turnover during
the last two financial years for the purpose of normal business operations of the office (trading/non
trading)/branch or representative office outside India as per the provisions of the Regulations in this
regard subject to the following terms and conditions that the overseas office (trading/non
trading)/branch/representative should not:
i) Create any financial liabilities contingent or otherwise for the head office in India.
ii) Invest surplus funds abroad without prior approval of Reserve Bank of India. Any funds rendered
surplus should be repatriated to India.

The details of bank accounts opened in the overseas country should be promptly reported to the bank.
c. Repatriation of contract value by overseas office of software export company:
In addition to the above, 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.
In respect of on-site contracts, the profits of on-site contract after the completion of the said contract
should be repatriated. A duly audited yearly statement showing receipts under off-site and on-site
contracts undertaken by the overseas office, expenses and repatriation thereon may be sent to the
bank.
9.Advance payment against exports
When an exporter receives advance payment, he is under an obligation to ensure that
i)

shipment is made within one year

ii)

rate of interest is not more than LIBOR + 100 bp

iii)

documents are routed through the same bank, through which advance
remittance was received

Banks may allow exporters to receive advance for export of good which may take more than one year if
the export agreement provides for the same and subject to the following conditions
i)

KYC and due diligence is complete

ii)

The transaction is bona fide and advance is used for executing export order

iii)

Progress payment if any to be received directly

iv)

Rate of interest should not be more than LIBOR+100 bp

v)

There should not have been instance of refund of advance payment of more than 10% in
last three years

Purchase of foreign exchange from the market for refunding advance payment credited to EEFC
account may be allowed only after utilising the entire balances held in the exporters EEFC
accounts maintained at different branches/bank.
10. Acquisition of immovable property:
Banks may now allow remittances by a company incorporated in India having overseas offices, within
the above limits for initial and recurring expenses, to acquire immovable property outside India for its
business and for residential purpose of its staff.
11.

Counter-Trade Arrangement

i) Counter trade proposals involving adjustment of value of goods imported into India against value of
goods exported from India in terms of an arrangement voluntarily entered into between the Indian party
and the overseas party through an Escrow Account opened in India in U.S. dollar will be considered by
the Reserve Bank. All imports and exports under the arrangement should be at international prices in
conformity with the Foreign Trade Policy and Foreign Exchange Management Act, 1999 and the Rules
and Regulations made there under. No interest will be payable on balances standing to the credit of the
Escrow Account but the funds temporarily rendered surplus may be held in a short-term deposit up to a

total period of three months in a year (i.e. in a block of 12 months) and the banks may pay interest at
the applicable rate. No fund based/or non-fund based facilities would be permitted against the balances
in the Escrow Account.
ii)

Application for permission for opening an Escrow Account may be made by the overseas

exporter/organisation through his bank to the concerned regional office of the Reserve Bank.
12. Export of Goods on Lease, Hire, etc.
Export of machinery, equipment, etc. on lease, hire, etc. basis under agreement with the overseas
lessee against collection of lease rentals/hire charges and ultimate re-import require prior approval of
the Reserve Bank.

Exporters should apply for necessary permission, through their bank, to the

concerned regional office of the Reserve Bank, giving full particulars of the goods to be exported.
13. Participation in Trade Fairs Abroad
(a) Firms/Companies and other organizations participating in Trade Fair/Exhibition abroad are now
permitted to take/export goods for exhibition and sale outside India without the prior approval of the
Reserve Bank of India.
(b)

Unsold exhibit items may be sold outside the exhibition/trade fair in the same country or in al

third country. Such sales at discounted value are also permissible.

c)

It would also be permissible to gift unsold goods up to the value of US $ 5000 per exporter per

exhibition/trade fair.
(d)

Banks may approve GR Form of export items for display or display-cum-sale in trade

fairs/exhibitions outside India subject to the following.

(i)

The exporter shall produce relative Bill of Entry within one month of re-import into India of the

unsold items.
(ii)

The sale proceeds of the items sold are repatriated to India.

(iii)

The exporter shall report to the bank the method of disposal of all items exported, as well as

the repatriation of proceeds to India.

Such transactions will be subject to 100% audit by Banks internal inspectors/auditors.
(e)

Participants in international exhibition/trade fair have been granted general permission for

opening a temporary foreign currency account abroad.

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 that the balance in the account is repatriated to India within a period of one
month from the date of closure of the exhibition/trade fair and full details are submitted to the bank
concerned.
14. Project Exports and Service Exports
a)

Export of engineering goods on deferred payment terms and execution of turnkey projects and

civil constructions contracts abroad are collectively referred to as project Exports. Indian exporters
offering deferred payment terms to overseas buyers and those participating in global tenders for
undertaking
turnkey/civil construction contracts abroad are required to obtain the approval of the bank/Exim
Bank/Working Group at post-award stage before undertaking execution of such contracts. Regulations
relating to project Exports and Service Exports are laid down in the Memorandum on Project Export.

b)

Pure supply contacts (contracts for export of goods) where at least 90 percent of the export

value is realized within the prescribed period i.e. six months from the date of export and the balance
amount within a maximum period of two years from the date of export are not treated as deferred
payment exports, provided the exporter does not require/avail of any funded or non-funded facilities for
such exports from banks.
c)

Exporters desiring to submit bids for execution of projects abroad including service contracts

have been allowed issue corporate guarantee in lieu of Bid Bond Guarantee, provided the amount of
such guarantee shall not exceed 5 percent of the contract value.
.
15. Consignment exports
In the case of consignment exports, the bank, while forwarding documents, should instruct his
correspondent bank to deliver them against trust receipt/undertaking to deliver sales proceeds by a
specified date. The consignees can deduct normal expenses towards, receipt, storage and sale of
goods and remit net proceeds. The freight and marine insurance should be arranged in India. The
Account sales received should be verified by the Bank.
In the case of export of books on consignment basis, the exporters may be allowed to abandon the
books which remain unsold at the expiry of the period of the sale contract. Accordingly, the exporters
may show the value of the unsold books as deduction from the export proceeds in the Account Sales.
16. Export on Elongated Credit Terms
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
.
17. Issue of equity shares against import of capital goods: Units in SEZs are permitted to issue
equity shares to non-residents against import of capital goods subject to the following.
i) The valuation should be verified by a Committee consisting of Development Commissioner and the
appropriate Customs officials.
ii)

The SEZ units issuing equity in the above manner should report the particulars of the shared

issued in the form FC-GPR to the concerned Regional Office under whose jurisdiction the SEZ falls,
together with the copy of the valuation certificate. A copy of the report may be forwarded to Department
of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India.
18. Forfaiting
Export-Import Bank of India (Exim Bank) and AD Category I banks have been permitted to undertake
forfaiting, for financing of export receivables. It would be in order for the banks to allow remittance of
commitment fee/service charges, etc. payable by the exporter as approved by the Exim Bank/the bank
concerned. Such remittance may be permitted in advance in one lump sum or at monthly intervals as
approved by the agency concerned.
19. Disposal of Copies of Export Declaration Forms (GR/PP/SOFTEX forms)
Export declaration forms should be disposed of as under:

GR Form
a)GR forms should be completed by the exporter in duplicate and both the copies submitted to the
Customs at the port of shipment along with the shipping bill.
b)Customs will give their running serial number on both the copies after admitting the corresponding
shipping bill. The customs serial number will have ten numerals denoting the code number of the port
of shipment, the calendar year and a six digit running serial number.
c) Customs will certify the value declared by the exporter on both the copies of the GR form at the
space earmarked and will also record the assessed value. d)They will then return the duplicate copy of
the form to the exporter and retain the original for transmission to Reserve Bank.
e) Exporters should submit the duplicate copy of the GR form again to customs along with the cargo to
be shipped.
f) After examination of the goods and certifying the quantity passed for shipment on the duplicate copy,
Customs will return it to the exporter for submission to the AD Category I bank for negotiation or
collection of export bills.
g)Within twenty-one days from the date of export, exporter should lodge the duplicate copy together
with relative shipping documents and an extra copy of the invoice with the AD Category I bank named
in the GR form.
h) After the documents have been negotiated/sent for collection, the AD Category I bank should
report the transaction to Reserve Bank in statement ENC under cover of appropriate R-Supplementary
Return.
i)Duplicate copy of the form together with a copy of invoice etc. will henceforth be retained by the AD
Category I bank and may not be submitted to Reserve Bank.
j)In the case of exports made under deferred credit arrangement or to joint ventures abroad against
equity participation or under rupee credit agreement, the number and date of Reserve Bank approval
and/or number and date of the relative RBI circular should be recorded at the appropriate place on the
GR form
k)) Where duplicate copy of GR form is misplaced or lost, the bank may accept another copy of
duplicate GR form duly certified by Customs.
SDF Form
On account of introduction of Electronic Data Interchange (EDI) System at certain customs offices
where shipping bills are processed electronically, the existing declaration in GR form is replaced by a
declaration in form SDF (Statutory Declaration Form). The procedure for disposal of SDF is as under;
a)The SDF form should be submitted in duplicate (to be annexed to the relative shipping bill) to the
Commissioner of Customs concerned.
b) After verifying and authenticating the declaration in form SDF, the Commissioner of Customs will
hand over to the exporter, one copy of the shipping bill marked Exchanged control copy in which form
SDF has been appended for being submitted to the bank within 21 days
c) Bank should accept the Exchange Control (EC) copy of the shipping bill and form SDF appended
thereto, submitted by the exporter for collection/negotiation of shipping documents.

d) The manner of disposal of EC copy of shipping Bill (and form SDF appended thereto) is the same as
that for GR forms.
(e) In cases where ECGC initially settles the claims of exporters in respect of exports insured with
them and subsequently receives the export proceeds from the buyer/buyers country through
the efforts made by them, the share of exporters in the amount so received is disbursed through
the bank which had handled the shipping documents.

In such cases, ECGC will issue a

certificate to the bank which had handled the relevant shipping documents after full proceeds
have been received. The certificate will indicate the number of declaration form, name of the
exporter, name of the AD Category I bank,. Date of negotiation, bill number, invoice value and
the amount actually received by ECGC.
PP forms
The manner of disposal of PP forms is the same as that for GR forms. Postal Authorities will allow
export of goods by post only if the original copy of the form has been countersigned by a bank.
Therefore, PP forms should be first presented by the exporter to his bank for countersignature. The
bank will countersign the forms and return the original copy to the exporter, who should submit the
form to the post office with the parcel. The duplicate copy of the PP form will be retained by the bank
to whom the exporter should submit relevant documents together with an extra copy of invoice for
negotiation/collection, within the prescribed period of twenty-one days.
20. Counter Signature on PP Forms
PP forms will be presented by the exporter to the bank for counter signature. Banks should
countersign the PP forms after ensuring that the parcel is being addressed to their branch or
correspondent bank in the country of import. The concerned overseas branch or correspondent
should be instructed to deliver the parcel to consignee against payment or acceptance of relative bill.
Banks may, however, countersign PP forms covering parcels addressed direct to the consignees,
provided:
a. An irrevocable letter of credit for the full value of the export has been opened in favour of the
exporter and has been advised through the bank concerned or the full value of the shipment
has been received in advance by the exporter through the bank or the bank is satisfied, on
the basis of the standing and track record of the exporter and the arrangements made for
realisation of the export proceeds, that he could be so.
In such cases, particulars of advance payment/letter of credit/banks certification of standing, etc., of
the exporter should be furnished on the form under proper authentication. Any alteration in the name
and address of consignee on the PP form should also be authenticated by the bank under his stamp
and signature.
21. Terms of Payment-Invoicing (Software)
(i) In respect of long duration countracts involving series of transmissions, the exporters should bill
their overseas clients periodically, i.e., at least once a month or on reaching the milestone as
provided in the contract entered into with the overseas client and the last invoice/bill should be raised
not later than 15 days from the date of completion of the contract. It would be in order for the

exporters to submit a combined SOFTEX form for all the invoices raised on a particular overseas
client, including advance remittances received in a month.
(ii) In respected of contracts involving only one shot operation, the invoice/bill should be raised within
15 days from the date of transmission.
(iii) The exporter should submit declaration in Form SOFTEX in triplicate in respect of export of
computer software and audio / video / television software to the designated official concerned of the
Government of India at STPI/EPZ/FTZ/SEZ for valuation / certification not later than 30 days from the
date of invoice / the date of last invoice raised in a month, as indicated above. The designated officials
may also certify the SOFTTEX Forms of EOUs which are registered with them.
(iv) The invoices raised on overseas clients as at (i) to (iii) above will be subject to valuation of export
declared on SOFTEX form by the designated official concerned of the Government of India and
consequent amendment made in the invoice value, if necessary.
22. Disposal of SOFTEX Forms
For software exporters with annual turnover above Rs 1000 cr or submitting 600 softex forms, facility
of submitting the forms through excel sheet to STPI on monthly basis is available. Export realisations
also can be submitted in soft and hard copies to the bank concerned.
Softex numbers will be allotted by RBI annually( max 200000) to an exporter to be used in invoices
individually or in a group of invoices for a particular customer
As for disposal of SOFTEX forms, the procedure indicate in Regulation 6 of Export Regulations is to be
observed. However, the duplicate copy of the form together with a copy of invoice etc. will henceforth be
retained by the bank and may not be submitted to Reserve Bank.
23. Random checking
The bank should ensure by random check of the relevant duplicate forms by their internal
/concurrent auditors to confirm that non-realisation or short realisation allowed, if any, is within the
powers

delegated to them or has been duly approved by Reserve Bank, wherever

necessary.
24. Credit to EEFC
Where a part of the export proceeds are credited to an EEFC account, the export declaration (duplicate)
form may be certified as under:
Proceeds amounting to representing ..% of the export realisation credited to
the EEFC account maintained by the exporter with..
25.Shut out Shipments and Short Shipments
(i) When part of a shipment covered by a GR form already filed with Customs is short-shipped, the
exporter must give notice of short-shipment to the Customs in the form and manner prescribed. In
case of delay in obtaining certified short-shipment notice from the Customs, the exporter should give
an undertaking to the bank to the effect that he has filed the short-shipment notice with the Customs
and that he will furnish it as soon as it is obtained.
(ii) Where a shipment has been entirely shut out and there is delay in making arrangements to re-ship,
the exporter will give notice in duplicate to the Customs in the form and manner prescribed, attaching
thereto the unused duplicate copy of GR form and the shipping bill. The Customs will verify that the

shipment was actually shut out, certify the copy of the notice as correct and forward it to the Reserve
Bank together with unused duplicate copy of the GR form. In this case, the original GR form received
earlier from Customs will be cancelled. If the shipment is made subsequently, a fresh set of GR form
should be completed.
26. Consolidation of Air /Sea Cargo
Where air cargo is shipped under consolidation, the airline companys Master Airway Bill will be
issued to the Consolidating Cargo Agent who will in turn issue his own House Airway Bills (HAWBs) to
individual shippers. Banks may negotiate HAWBs only if the relative letter of credit specifically
provides for negotiation of these documents in lieu of Airway Bills issued by the airline company.
Banks may also accept Forwarders Cargo Receipts (FCR) issued by steamship companies or their
agents (instead of IATA approved agents), in lieu of bills of landing, for negotiation / collection of
shipping documents, of export transactions backed by letters of credit, only if the relative letter of
credit specifically provides for negotiation of this document, in lieu of bill of lading. Further, relative
sale contract with the overseas buyer should also provide that FCR may be accepted in lieu of lading
as a shipping document.
27. Exports by Barges/Country Craft/Road Transport
Following procedure should be adopted by exporters for filling original copies of GR/SDF forms where
exports are made to neighbouring countries by road, rail or river transport:
a. In case of exports by barges/country craft/road transport, the form should be presented by
exporter or his agent at the Customs station at the border through which the vessel or vehicle
has to pass before crossing over to the foreign territory. For this purpose, exporter may
arrange either to give the form to the person in charge of the vessel or vehicle or forward it to
his agent at the border for submission to Customs.
b. As regards exports by rail, Customs staff has been posted at certain designated railway
stations for attending to Customs formalities. They will collect the GR/SDF forms in respect of
goods loaded at these station so that the goods may move straight on to the foreign country
without further formalities at the border. The list of designated railway stations is obtainable
from the Railways. In respect of goods loaded at stations other than the designated station,
exporters must arrange to present GR/SDF forms to the Customs Officer at the Border Land
Customs Station where Customs formalities are completed.

28. Scrutiny of export declaration Form

AD Category-I bank Category-I Banks may ensure the following while accepting the export declaration
forms (GR/SDF):
i.

The number on the duplicate copy of a GR form presented to them is the same as that of
the original which is usually recorded on the Bill of Lading/Shipping Bill and the duplicate

ii.

has been duly verified and authenticated by appropriate Customs authorities.

In the case of SDF form, the Shipping Bill No. Should be the same as that appearing on
the Bill of Lading.

iii.

Banks may accept the Bill of Lading / Airway Bill issued on freight prepaid basis where
the sale contract is on F.O.B., F.A.S etc. basis provided the amount of freight has been

iv.

included in the invoice and the bill.

In the case of C.I.F., C & F etc. contracts where the freight is sought to be paid at
destination, it should be ensured that the deduction made is only to the extent of freight
declared on GR/SDF form or the actual amount of freight indicated on the Bill of Lading /

v.

Airway Bill, whichever is less.

Likewise, where the marine insurance is taken by the exporters on buyers account,
banks should verify that the actual amount paid is received from the buyer through invoice

vi.

and the bill.

The documents submitted should not reveal any material inter se discrepancies in regard

vii.

to description of goods exported, export value or country of destination.

To accept variation in value declared to customs authorities and that is reflected in export
documents e.g The export realisable value may be more than what was originally
declared to/accepted by the Customs on the GR/SDF form in certain circumstance such
as where in c.i.f or c & f. contracts, part or whole of any freight increase taking place after
the contract was concluded is agreed to be borne by buyers or where as a result of
subsequent devaluation of the currency of the contract, buyers have agreed to an

viii.

increase in price.
Bank may accept, for negotiation or collection, shipping documents including invoice and
bill of exchange covering exports, from his constituent who is not a person who has
signed the declaration (GR/PP/SDF/SOFTEX), provided that before accepting such
documents for negotiation or collection, the Authorised Dealer shall require the
constituent concerned also to sign such declaration and thereupon such constituent shall
be bound to comply with such requisition and such constituent signing the declaration
shall be considered to be the exporter for the purposes of these Regulation to the extent
of the full value shown in the documents being negotiated or sent for collection and shall

ix.

be governed by these Regulations.

Differences in Value due to quality analysis / late shipment penalty
In certain lines of export trade, the final settlement of price may be dependent on the
results of quality analysis of samples drawn at the time of shipment; but the results of such
analysis will become available only after the shipment has been made. Sometimes, contracts
may provide for payment of penalty for late shipment of goods in

conformity with trade

practice concerning the commodity. In these cases, while exporters declare to the Customs
the full export value based on the contract price, invoices submitted along with shipping
documents for negotiation/collection may reflect a different value arrived at after taking
into account the results of analysis of samples or late shipment penalty, as the case may be.
As these variations stem from the terms of contact, banks may accept them on production of
documentary evidence after verifying the arithmetical accuracy of the calculations and on
conforming the terms of underlying contracts.
29. Trade Discount

Bills for exports by sea or air which fall short of the value declared on GR/SDF forms on
account of trade discount may be accepted for negotiation or collection only if the discount
has been declared by the exporter on relative GR/SDF form at the time of shipment and
accepted by Customs.
30. Part Drawing
In certain lines of export trade, it is the practice to leave a small part of the invoice value undrawn for
payment after adjustment due to difference in weight, quality, etc. to be ascertained after arrival for
inspection, or analysis of the goods. In such cases, Banks may negotiate the bills, provided :
a. The amount of undrawn balance is considered normal in the particular line of export
trade, subject to a maximum of 10 per cent of the full export value.
b. An undertaking is obtained from the exporter on the duplicate of GR/SDF/PP forms that
he will surrender/account for the balance proceeds of the shipment within the period
prescribed for realisation.
In cases where the exporter has not been able to arrange for repatriation of the undrawn balance in
spite of best efforts, banks, on being satisfied with the bona fides of the case, should ensure that the
exporter has realised at least the value for which the bill was initially drawn (excluding undrawn
balances) or 90% of the value declared on GR/PP/SDF form, whichever is more and a period of one
year has elapsed from the date of shipment.
31. Opening / Hiring Warehouses Abroad :
Banks may consider the applications received from exporters and grant permission for opening /
hiring warehouses abroad subject to the following conditions:
a) Applicants export outstanding does not exceed 5 per cent of exports made during the
b)
c)
d)
e)

previous year.
Applicant has a minimum export turnover of USD 100,000 during the last year.
Period of realisation should be as applicable.
All transactions should be routed through the designated branch of the bank.
The above permissions may be granted to the exporters initially for a period of one year
and their renewals may be considered subject to the applicant satisfying the requirement

f)

at (a) above.
Banks granting such permission / approvals should maintain a proper record of the
approvals granted.

32. Direct Despatch of Shipping Documents

(i)

While

banks

should

normally

despatch

shipping

documents

to

their

overseas

branches/correspondents expeditiously,they may also despatch shipping documents direct to the

consignees or their agents resident in the country of final destination of goods in the following cases :
(a) Where an advance payment has been received for the full value of the export shipment
and the underlying sale contract provides for

dispatch of documents direct to the consignee or his

agent resident in the country of final destination of goods. Or

(b) Where an irrevocable letter of credit has been received for the full value of the export
shipment and the underlying letter of credit provides for dispatch of documents direct to the
consignee or his agent resident in the country of final destination of goods.

(c) In cases not covered by (a) and (b) above also, banks may accede to the request of the
exporter, for dispatch of documents for whatever reason, direct to the consignee / agent provided the
exporter is a regular customer and the bank is satisfied, on the basis of standing and track record of
the exporter and the arrangements made for realisation of export proceeds, that the request can be
acceded to.
(d) Documents in respect of goods or software which are accompanied with a declaration by
the exporter that they are not more than Rupees Twenty Five Thousand in value and not declared on
GR/SDF/PP/SOFTEX from, may be directly sent by the exporter to the consignee.
(e)Banks may permit Status Holder Exporters (as defined in the Foreign Trade Policy), and
units in Special Economic Zones (SEZ) to dispatch the export documents to the consignees outside
India subject to the terms and conditions that :
i). The export proceeds are repatriated through the bank named in the GR From.
ii) The duplicate copy of the GR form is submitted to the bank for monitoring purposes, by
the exporters within 21 days from the date of export.
(f) With view to further liberalise the facilities available to the exporters and to simplify the procedure,
it has been decided by RBI to allow banks, to 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 million or its equivalent, per export shipment, subject to the following conditions:
i)The export proceeds have been realized in full.
ii)The exporter is a regular customer of the bank for a period of at least six months
iii)The exporters account with the Bank is fully compliant with Reserve Banks extant KYC /
AML guidelines.
iv)The bank is satisfied about the bona fides of the transaction.
In case of doubt, the bank may consider filing Suspicious Transaction Report (STR) with
Financial intelligence Unit in India.
33. Handing Over Negotiable Copy of Bill of Lading to Master of Vessel / Trade Representative
Banks may deliver one negotiable copy of the Bill of Lading to the Master of the Carrying
vessel or trade representative for exports to certain landlocked countries if the shipment is
covered by an irrevocable letter of credit and the documents conform strictly to the terms of
the Letter of Credit which, inter alia, provides for such delivery.
34. Export Bills Register
i)Banks should maintain Export Bills Register in

physical

or electronic form. Details of

GR/SDF/PP form number, due date of payment, the fortnightly period of R Supplementary Return
with which the ENC statement covering the transaction was sent to R.B.I should be available.
ii)Banks should ensure that all types of export transactions are entered in the Export Bills
Register and are given bill numbers on calendar year basis (i.e. January to December).
iii) The bill numbers should be recorded in ENC statement and other relevant returns submitted to
Reserve Bank.
35. Follow up Of Overdue Bills

i)

Banks should closely watch realization of bills and in cases where bills remain outstanding,

beyond the due date for payment or twelve months from the date of export, the matter should be
promptly taken up with the concerned exporter. If the exporter fails to arrange for delivery of the
proceeds, within twelve months or seek extension of time beyond twelve months the matter should be
reported to Reserve Bank stating, where possible the reason for the delay in realizing the proceeds.
ii)The duplicate copies of GR/SDF PP Forms should, however, continue to be held by the bank until
the full proceeds are realized, except in case of undrawn balances .
iii)Banks should follow up export outstanding with exporters systematically and vigorously so that
action against defaulting exporters does not get delayed. Any laxity in the follow up of realisation of
export proceeds by banks will be viewed seriously by R.B.I leading to the invocation of the penal
provisions under FEMA 1999.
iv)The stipulation of twelve months or extended period thereof for realization of export proceeds is no
longer applicable for units located in Special Economic Zones (SEZs). The units in SEZs will however
continue to follow the GR/PP/SOFTEX export procedure outlined.
v)Banks should furnish to Reserve Bank, on half-yearly basis, a consolidated stamen in Form XOS
giving details of all export bills outstanding beyond six months from the date of export as at the end of
June and December every year. The statement should be submitted in triplicate within fifteen days
from the close of the relative half-year.
36. Reduction in Invoice Value on Account of Prepayment of Usance Bills
Occasionally, exporters may approach banks for reduction in invoice value on account of cash
discount to overseas buyers for prepayment of the usance bills. In such cases banks may allow
cash discount to the extent of amount of proportionate interest on the unexpired period of usance,
calculated at the rate of interest stipulated in the export contract or at the Prime rate/LIBOR of the
currency of invoice where rate of interest is not stipulated in the contract.
37. Reduction in Value
If, after a bill has been negotiated or sent for collection, its amount thereof is desired to be
reduced for any reason, bank may approve such reduction, if satisfied about genuineness of the
request, provided:
a.
b.
c.
d.

The reduction does not exceed 25% of invoice value,

It does not relate to export of commodities subject to floor price stipulations,
The exporter is not on the exporters caution list of Reserve Bank, and
The exporter is advised to surrender proportionate export incentives availed of, if any.

In the case of exporters who have been in the export business for more than three years, reduction in
invoice value may be allowed, without any percentage ceiling, subject to the above conditions as also
subject to their track record being satisfactory i.e., the export outstandings do not exceed 5% of the
average annual export realization during the preceding three calendar years. For the purpose of
reckoning the percentage of export bills outstanding to the average export realizations during the
preceding three calendar years, outstanding of exports made to countries facing externalization
problems may be ignored provided the payments have been made by the buyers in the local currency.
38. Export Claims

Banks may remit export claims on application, provided the relative export proceeds have already
been realized and repatriated to India and the exporter is not on the caution list of Reserve Bank. In
all such cases of remittances, the exporter should be advised to surrender proportionate export
incentive, if any, received by him.
39. Change of buyer/consignee
Prior approval of Reserve Bank is not required if, after goods have been shipped, they are to be
transferred to a buyer other than the original buyer in the event of default by the latter, provided the
reduction in value, if any involved does not exceed 25% and the realization of export proceeds is not
delayed beyond the period of twelve months from the date of export.
40. Self write-off, Reduction in Invoice Value and Extension of Time
All exporters (including Status Holder) have been allowed to;
(a) Write off (including reduction in invoice value) outstanding export dues and,
(b) Extend the prescribed period of realisation beyond twelve months provided i)the aggregate
value of such export bills written-off (including reduction in invoice value) and bills extended for
realisation does not exceed 10 per cent of the export proceeds due during the financial year and
ii)such export bills are not a subject of investigation by Enforcement Directorate / Central Bureau of
investigation or any other Investigating Agencies.
(c) Exporters dealing with more than one can avail of this facility through each bank, i.e., the limit
of 10 per cent for self write-off (including reduction in invoice value) and extension of time for
realisation of export proceeds would be applicable for export bills lodged for realisation with that
particular bank.
(d) Exporters operating under a consortium of banks or with multiple banks will also have the
option of computing the 10 per cent limit on an aggregate basis with all the banks, provided the lead
bank of the consortium or in case of multiple banking, a nodal bank, undertakes to verify the
exporters annual performance on behalf of all the banks.
(e) Within a month from the close of the financial year, exporters should submit a statement as
per prescribed format, giving details of export proceeds due, realised and not realized to the bank
concerned.
(f)
The bank will be required to verify the statement with their records and review the export
performance of the exporter during the financial year to ascertain that in cases where the 10 per cent
limit of self extension, write-off (including reduction in invoice) and non-realisation has been breached,
the exporter has sought necessary approval for write-off, reduction invoice value or extension of time,
as the case may be, for the excess over the 10 per cent limit before the end of the financial year.
(g) In cases where exporters have failed to comply with the above requirement, banks may
promptly advise the exporter concerned to seek extension of time/reduction in invoice value/write-off
in respect of non-realisation in excess of the 10 per cent limit, failing which, the banks may inform the
exporter about the withdrawal of this facility of self write-off / extension of time, within a month, under
advice to the Regional Office concerned of the Reserve Bank.

41. Extension of Time Limit In Other Cases

1. Reserve Bank of India has permitted banks to extend the period of realisation of export
proceeds beyond 12 months from the date of export

up to a period of six months, at a time, irrespective of the invoice value of the export subject to the
following conditions:
a.

The AD Category I bank is satisfied that the exporter has not been able to realize

b.

export proceeds for reasons beyond his control.

The exporter submits a declaration that he will realize the export proceeds during the

c.

extended period.
The export transactions covered by the invoices are not under investigation by
Enforcement Directorate / Central Bureau of Investigation or other investigation

d.

agencies.
While consideration extension beyond one year from the date of export, the total
outstanding of the exporter does not exceed USD one million or 10 percent of the
average export realisations during the preceding three financial years, whichever is

e.

higher.
All the export bills outstanding beyond six months from the date of export be reported

f.

in XOS statement
The date up to which extension has been granted is indicated in the Remarks

g.

column of the XOS statement

In cases where the exporter has filed suits abroad against the buyer, extension may
be granted irrespective of the amount involved / outstanding.

h.

Cases which are not covered by the above instructions require prior approval from
the Regional Office of the Reserve Bank.

42. Shipments Lost in Transit

When shipments from India for which payment has not already been received either by negotiation of
bills under of bills under letters of credit or otherwise are lost in transit, the bank must ensure that
insurance claim is made as soon as the loss is known. The duplicate copy of GR/SDF/PP form should
be forwarded to Reserve Bank with following particulars:
a. Amount for which shipment was insured.
b. Name and address of the insurance company,
c. Place where the claim is payable.
In cases where the claim is payable abroad, the bank must arrange to collect the full amount of claim
due on the lost shipment, through the medium of his overseas branch/correspondent and release the
duplicate copy of GR/SDF/PP form only after the amount has been collected. A certificate for the
amount of claim received should be furnished on the reverse of the duplicate copy.
Sometimes claim on shipments lost in transit are also partially settled directly by shipping
companies /airlines under carriers liability. Banks should ensure that amounts of such claims if settled
abroad are also repatriated to India by exporters.
43. Payment of Claims by ECGC / Insurance companies registered with IRDA
Banks shall, on an application received from the exporter supported by documentary evidence from
the ECGC / insurance companies registered with IRDA confirming that the claim in respect of the
outstanding bills has been settled by them, write off the relative export bills and delete them from the
XOS statement. Such write-off will not be restricted to the limit of 10 percent . Surrender of incentives,
if any, in such cases will be as provided in the Foreign Trade Policy.

It is clarified that the claims settled in rupees by ECGC / insurance companies should not be
construed as export realization in foreign exchange.
44. Write off of Unrealized Export Bills
(i) An exporter who has not been able to realize the outstanding export dues despite best efforts, may
approach the bank, who had handled the relevant shipping documents, with appropriate supporting
documentary evidence with a request for write off of the unrealized portion.
Limits prescribed for write off of unrealized export bills are
Self write off by exporter other than Status holder

5%

Status Holder

10%

Write off By bank

10%

( of the total export proceeds realized during the previous calendar year)
The above write off is available subject to the under noted conditions:
a. The relevant amount has remained outstanding for one year or more;
b. Satisfactory documentary evidence is furnished in support of the exporter having made all
efforts to realize the dues;
c.

The case falls under any of the under noted categories.

i.

The overseas buyer has been declared insolvent and a certificate from the official
liquidator indicating that there is no possibility of recovery of export proceeds

ii.
iii.

produced.
The overseas buyer is not traceable over a reasonably long period of time.
The goods exported have been auctioned or destroyed by

iv.

Port/Customs/Health authorities in the importing country.

The unrealized amount represents the balance due in a case settled through the

the

intervention of the Indian Embassy, Foreign Chamber of Commerce or similar

v.

Organisation.
The cost of resorting to legal action would be disproportionate to the unrealized
amount of the export bill or where the exporter even after winning the Court case
against the overseas buyer could not execute the Court Decree due to reasons
beyond his control.

vi.

Bills were drawn for the difference between the letter of credit value and actual
export value or between the provisional and the actual freight charges but the
amount have remained unrealized consequent on dishonor of the bills by the

vii.
viii.

overseas buyer and there are no prospects of realization.

The case is not the subject matter of any pending civil or criminal suit.
The exporter has not come to the adverse notice of the Enforcement Directorate

ix.

or the Central of Investigation or any such other law enforcement agency.

The exporter has surrendered proportionate export incentives, if any, availed of in
respect of the relative shipments. The bank should obtain documents evidencing
surrender of export incentives availed of before permitting the relevant bills to be
written off. Banks are to put in place a system under which their internal

inspectors or auditors carry out random sample check/percentage check of

outstanding export bills written off.
(ii) Where there is no further amount to be realized against the GR/SDF/PP from covered by the write
off, the bank should certify the duplicate form as under :
Write

off

(Amount

in

words

and

figures)

permitted

in

terms of . To Authorised Dealers.

Stamp & Signature
Of
Date .
2. It is clarified that the following do not equality for the write off facility:
a. Exports made to countries with externalization problem i.e. where the overseas buyer has
deposited the value of export in local currency but that amount has not been allowed to be
repatriated by the central banking authorities of the country.
b. GR/SDF forms which are under investigation by agencies like, enforcement Directorate of
Revenue Intelligence, Central Bureau of Investigation, etc., as also the outstanding bills which
are subject matter of civil/ criminal suit.
3. After the write off has been permitted Authorised Dealer may certify the duplicate form as
under: Write off of (Amount in words and figures)
Permitted in terms of ..
Date..

Stamp & Signature

Authorised Dealer

Banks may forward a statement in form EBW to the Regional office of Reserve Bank under whose
jurisdiction they are functioning, indicating details of write offs etc.
45. Return of Documents to Exporters
The duplicate copies of GR/SDF/PP forms and shipping documents, once submitted to the banks for
negotiation, collection, etc., should not ordinarily be returned to exporters, except for rectification of
errors and resubmission.
46. Exporters Caution List
Banks will also be advised whenever exporters are cautioned in terms of provisions contained in
Export Regulations. They may approve GR/SDF/PP forms of exporters who have been placed on
caution list if the exporters concerned produce evidence of having received an advance payment or
an irrevocable letter of credit in their favour covering the full value of the proposed exports. Such

approval may be given even in cases where usance bills are to be drawn for the shipment provided
the relative letter of credit covers the full export value and also permits such drawings and the
usance bill mature within six months from the date of shipment.
47. Remittance of Agency Commission on Exports
(i) Banks may allow payment of commission, either by remittance or by deduction from invoice
value, on application submitted by the exporter. The remittance on agency commission may be
allowed subject to the following conditions:
a. Amount of commission has been declared on GR/SDF/PP/SOFTEX form and accepted by
the Customs authorities or Ministry of Information Technology, Government of India/ EPZ authorities
as the case may be. In cases where the commission has not been declared on
GR/SDF/PP/SOFTEX form, remittance may be allowed after satisfying the reasons adduced by the
exporter for not declaring commission on Export Declaration Form, provided a valid agreement /
written understanding between the exporter and / or beneficiary for payment of commission exists.
b. The relative shipment has already been made.
(ii) Banks may allow payment of commission by Indian exporters, in respect of their exports covered
under counter trade arrangement through Escrow Accounts designated in U.S. Dollar, Subject to the
following conditions:
a. The payment of commission satisfies the conditions as at (a) and (b) stipulated in paragraph
above.
b. The commission is not payable to Escrow Account holders themselves.
c. The commission should not be allowed by deduction from the invoice value.
iii)

Payment of commission is prohibited on exports made by Indian Partners towards equity

participation in an overseas joint venture / wholly owned subsidiary as also exports under Rupee
Credit Route except for tea & tobacco. In case of export of tea and tobacco to Russia under Rupee
Credit Route,banks may permit payment of commission in free foreign exchange upto 10 percent of
invoice value.
48. Refund of Export proceeds
Banks, through whom the export proceeds were originally realised, may consider requests for refund
of export proceeds of goods exported from India and being re-imported into India on account of poor
quality. While permitting such transactions, banks are required to :
i. exercise due diligence regarding the track record of the exporter.
ii. Verify the bonafides of the transactions.
iii. obtain from the exporter a certificate issued by DGFT/ Custom authorities that no
incentives have been availed by the exporter against the relevant export or the proportionate
incentives availed, if any, for the relevant export have been surrendered;
iv. obtain an undertaking from the exporter that the goods will be reimported within three months
from the date of remittance ; and
v.

ensure that all procedures as applicable to normal imports are adhered to.

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