Salient Features of from Master Circular on Export of Goods and Services RBI/2007-2008/25 Master Circular No/ 09 /2007-08 July 2, 2007

Salient Features of from Master Circular on Export of Goods and Services RBI/2007-2008/25 Master Circular No/ 09 /2007-08 July 2, 2007

The circular is organized into five parts as under:
Part 1 : Introduction
Part 2 : General guidelines for exports
Part 3 : Operational guidelines for the AD Banks.
Part 4 : Annex (notifications and the forms for exports)
Foreign Exchange Management (Current Account Transactions) Rules, 2000
Notification No.FEMA 23 /2000-RB dated 3rd May 2000
Forms
Part 5 : List of all circulars consolidated in the master circular.

Issued with sunset clause of one year.

· The Directorate General of Foreign Trade (DGFT) regulates export trade.
· AD Banks may conduct export transactions in conformity with the Foreign Trade Policy in vogue and the Rules framed by the Government of India and the Directions issued by Reserve Bank from time to time.
· Notification No. FEMA 23/2000-RB dated May 3, 2000 on Foreign Exchange Management (Export of Goods and Services) Regulations, 2000
· Rules notified by the Government of India, Ministry of Finance, vide Notification No.G.S.R.381 (E) dated May 3, 2000
· Regulation 4 of the Foreign Exchange Management (Guarantees) Regulations, 2000, notified vide Notification No. FEMA-8/2000-RB dated 3rd May 2000,
· There is no restriction on invoicing of export contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act 1999.
· Para 2.40 of the Foreign Trade Policy states “All export contracts and invoices shall be denominated either in freely convertible currency or in Indian Rupees but export proceeds shall be realized in freely convertible currency.

GR Exemption: Regulation 4 of Notification No. FEMA 23/2000-RB dated May 3, 2000
Grant of GR waiver export of goods free of cost, for export promotion up to 2 per cent of the annual average Max 5 lakhs (Rs 10 lac for status holders )
Export of goods not involving any foreign exchange transaction directly or indirectly requires the waiver of GR/PP procedure from the Reserve Bank.

Full export value of the goods exported shall be received through an AD Banks 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

However, in case of export of goods to Nepal, where the importer has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange, such payments shall be routed through the ACU mechanism.

Participants in international exhibition/trade fair have been granted general permission vide Regulation 7(7) of the Foreign Exchange Management (Foreign Currency Account by a Person Resident in India) Regulations, 2000 notified under Notification No. FEMA 10/2000-RB dated May 3, 2000 for opening a temporary foreign currency account abroad.

Reserve Bank may consider applications in Form EFC from exporters having good track record for opening a foreign currency account with banks in India and outside India

An Indian entity can also open, hold and maintain a foreign currency account with a bank outside India, in the name of its overseas office/branch, by making remittance for the purpose of normal business operations of the said office / branch or representative subject to conditions stipulated in Regulation 7 of Notification No. FEMA 10/2000-RB dated May 3rd, 2000

A unit located in a Special Economic Zone (SEZ) may open, hold and maintain a Foreign Currency Account with an AD Banks in India subject to conditions stipulated in Regulation 6 (A) of Notification No. FEMA 10/2000

Project / service exporter may open, hold and maintain foreign currency account with a bank outside or in India, subject to the standard terms and conditions in the Memorandum PEM issued vide AP (Dir Series) Circular No. 32 dated October 28, 2003.

A person resident in India may open with, an AD Banks in India, an account in foreign currency called the Exchange Earners’ Foreign Currency (EEFC) Account, in terms of Regulation 4 of the Foreign Exchange Management (Foreign Currency Account by a Person Resident in India) Regulations, 2000 notified under Notification No. FEMA 10/2000-RB dated May 3, 2000 as amended from time to time
All categories of foreign exchange earners are allowed to credit up to 100 per cent of their foreign exchange earnings to their EEFC Accounts,
Account maintained only in the form of non-interest bearing current account and no credit facilities, either fund-based or non-fund based, shall be permitted against the security of balances held
Eligible credits represent inward remittance received through normal banking channel, other than the remittance received pursuant to any undertaking given to the Reserve Bank or which represents foreign currency loan raised or investment received from outside India or those received for meeting specific obligations by the account holder, 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.
Exporters may extend trade related loans / advances to overseas importers out of their EEFC balances without any ceiling subject to compliance of provisions of Notification No. FEMA 3/2000-RB
Exporters may repay packing credit advances whether availed in rupee or in foreign currency from balances in their EEFC account and / or rupee resources to the extent exports have actually taken place.

Setting up Offices Abroad and Acquisition of Immovable Property for
Overseas Offices AD Banks may allow remittances towards initial expenses 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 and For recurring expenses, remittances up to ten per cent of the average annual sales/income, subject to certain terms conditions and obligations. Remittances also allowed to acquire immovable property outside India for its business and for residential purpose of its staff
Software exporter company/firm may repatriate to India 100 per cent of the contract value of each ‘off-site’ contract.
In case of companies taking up on site contracts, they should repatriate the profits of such on site contracts after the completion of the said contracts.
An audited yearly statement showing receipts expenses and repatriation thereon may be sent to the AD Banks.

Advance Payments against Exports Regulation 16 of FEMA 23 dated May 3, 2000, where an exporter receives advance payment (with or without interest), from a buyer outside India, the exporter shall ensure that, shipment of goods is made within one year from the date of receipt, interest, if any, payable on the advance payment does not exceed LIBOR+ 100 basis points, documents covering the shipment are routed through the AD Bank through whom the advance payment is received;
Provided that in the event of the exporter's inability to make the shipment, partly or fully, within one year from the date of receipt of advance payment, no remittance towards refund of unutilised portion of advance payment or towards payment of interest, shall be made after the expiry of the said period of one year, without the prior approval of the Reserve Bank.
Where the export agreement provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment, the exporter shall require the prior approval of the Reserve Bank.
Allowed to purchase of foreign exchange from the market for refunding advance payment credited to EEFC account only after utilising the entire balances held in the exporter’s EEFC accounts maintained at different branches/banks.
Guarantees for Export Advance. Is subject to DBOD No.DirBC.72/13.03.00/06-07

GR Approval for Trade Fair :Organisations participating in Trade Fair/Exhibition abroad can take/export goods for exhibition and sale outside India without the prior approval of the Reserve Bank of India.
Permissible to `gift' unsold goods up to the value of USD 5000 per exporter, per
exhibition/trade fair.
Exporter shall produce relative Bill of Entry within one month of re-import into India of the unsold items.
Sale proceeds of the items sold are repatriated to India in accordance with the Foreign Exchange Management ( Realisation, Repatriation, and Surrender
of Foreign Exchange) Regulations, 2000.
Exporter shall report to the AD Banks the method of disposal of all items exported, as well as the repatriation of proceeds to India.
Such Transactions are subject to 100 per cent audit by the Bank’s internal inspectors/auditors.

GR approval for Export of Goods for re-imports. AD Banks may grant GR approval in cases where goods are being exported for re-import after repairs / maintenance / testing / calibration 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, and if destroyed during testing, AD banks may obtain a certificate issued by the testing agency that the goods have been destroyed during testing,

Part Drawings / Undrawn balances. If it is the practice to leave a small part of the invoice value undrawn for payment after adjustment due to differences in weight, quality, etc. to be ascertained after arrival for inspection, or
analysis of the goods. In such cases, AD Banks may negotiate the bills, provided:
undrawn balance is up to a maximum of 10 per cent of the full export value,
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.
AD Banks, exporter should ensure repatriation of at least 90 per cent of the value declared on GR/PP/SDF form, or the amount for which the bill was drawn whichever is more within a period of one year from the date of shipment.

Consignment Exports
AD Banks, while forwarding shipping documents to his overseas branch/correspondent, should instruct the latter to deliver them only against trust receipt/undertaking to deliver sale proceeds by a specified date within the period prescribed for realization of proceeds of the export, even if, a bill for part of the estimated value is drawn in advance against the exports.
Agents/consignees may deduct from sale proceeds of the goods expenses normally incurred towards receipt, storage and sale of the goods, such as landing charges, warehouse rent, handling charges, etc. and remit the net proceeds
account sales received from the Agent/Consignee should be verified by the AD Banks. Deductions in Account Sales should be supported by bills/receipts in
original except in case of petty items like postage/cable charges, stamp duty, etc
Freight and marine insurance must be arranged in India.
Banks may approve export of books on consignment basis allowing for realisation of export proceeds up to 360 days from the date of shipment.
Reserve Bank will permit a longer period up to twelve months for realisation of export proceeds for exports on consignment basis made to CIS countries and East European countries financed in any permitted currency.

Opening/Hiring of Ware houses abroad
AD Banks may grant permission for opening / hiring warehouses abroad, initially for a period of one year, subject to:
Export outstanding does not exceed 5 per cent of exports made during the previous financial year. Minimum export turnover of USD 100,000/- during the last financial year. Period of realisation should be 180 days for non-status holder exporters and 12 months for status holder
All transactions should be routed through the designated branch of the AD Bank
AD Banks granting such permission/approvals should maintain a proper record of the approvals granted.

Direct dispatch of documents by the exporter
AD Banks should dispatch shipping documents to their overseas branches / correspondents expeditiously.
May dispatch shipping documents direct to the consignees or their agents where:
Advance payment or an irrevocable letter of credit has been received for the full value of the export shipment and the underlying sale contract/letter of credit provides for dispatch of documents direct to the consignee
The exporter is a regular customer and the AD Banks is satisfied, of standing and track record, arrangements made for realisation of export proceeds,
Documents if accompanied with a declaration by the exporter that they are not more than Rs. 25,000/- in value and not declared on GR/SDF/PP/SOFTEX form.
AD Banks may also 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 provided ., proceeds are repatriated through the AD Banks named in the GR Form. duplicate copy of the GR form is submitted to the AD Banks for monitoring purposes, by the exporters within 21 days from shipment.

Invoicing of Software Exports
For long duration contracts 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 , and last invoice / bill should be raised not later than 15 days from the date of completion of the contract
Contracts involving only ‘one-shot operation’, the invoice/bill should be raised within 15 days from the date of transmission.
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.
Designated officials may also certify the SOFTEX Forms of EOUs

Shut out Shipments and Short Shipments
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 case of delay in obtaining certified short-shipment notice from the Customs,
exporter should give an undertaking to the AD, along copy of short shipment notice filed with customs, that he will furnish it as soon as received.
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 attaching thereto the unused duplicate copy of GR form and the shipping bill. Customs will certify the copy of the notice as correct and forward it to the Reserve Bank together with unused duplicate copy of the GR form. 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.

Counter-Trade Arrangement
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 requires approval of Reserve Bank
imports and exports under the arrangement should be at international prices in conformity with the Foreign Trade Policy Application for permission for opening an Escrow Account may be made by the overseas exporter/organisation through his AD. 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. No fund based / or non-fund based facilities would be permitted against the balances in the Escrow Account.

Export of Goods on Lease, Hire, etc
Prior approval of the Reserve Bank is required for 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.

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 RBI

Export of goods by units in SEZs
Units in SEZ are permitted to undertake job work abroad and export goods from that country itself subject to : Processing / manufacturing charges are suitably loaded in the export price and are borne by the ultimate buyer ; exporter has made satisfactory arrangements for realisation of full export
Banks may permit units in DTA to purchase foreign exchange for making payment for goods supplied to them by units in SEZ

Project Exports . Service Exports .
Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad are collectively referred to as ‘Project Exports’.
exporters offering deferred payment terms to overseas buyers and undertaking turnkey/civil construction contracts abroad are required to obtain the approval of the AD Banks/ Exim Bank/Working Group at post-award stage before ndertaking execution as per Memorandum on Project Exports October 2003 and A.P.(DIR Series) No.26 dated January 8,2007
Exporters may use the machinery / equipment for performing any other contract secured by them in any country subject to the satisfaction of the sponsoring AD
Exporters may open, maintain and operate one or more foreign currency account/s in a currency/currencies of their choice with inter-project transferability of funds in any currency or country.
Project / Service exporters may deploy their temporary cash surpluses, generated outside India, in investments in short-term paper abroad including treasury bills and other monetary instruments rated at least A-1/AAA
by S&P with a maturity or remaining maturity of one year or less, or deposits with branches / subsidiaries outside India of an AD
Software exporter repatriate the profits on-site contract after completion of the contract as per AP DIR Circular No.33 dated February 28, 2007

Export of Currency
Any export of Indian currency of value exceeding Rs.5000/- except to the extent permitted under any general permission granted under the Regulations, will require prior RBI permission as per Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 notified vide Notification No. FEMA 6/RB-2000 dated 3rd May 2000

Forfaiting
Exim Bank and ADs have been permitted to undertake forfaiting, for financing of export receivables. Remittance of commitment fee / service charges, etc., payable by the exporter may be done in advance in one lump sum or at monthly intervals

Exports to neighboring countries by Road, Rail or River
Procedure filing original copies of GR/SDF forms where exports are by road, rail or river transport:
In case of exports by barges/country craft/road transport, 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 should present the form. Customs staff has been posted at certain designated railway stations will collect the GR/SDF forms for goods loaded at these stations so that the goods may move straight on to the foreign country without further formalities at the border. Or exporters must arrange to present GR/SDF forms to the Customs Officer at the Border Land Customs Station

Border Trade with Myanmar
As per Agreement on Border Trade between India and Myanmar People living along both sides of the India-Myanmar border are permitted to exchange certain
specified locally produced commodities under the barter trade arrangement or in in freely convertible currency AP.DIR (Series) Circular No.17 dated October 16, 2000.

Repayment of State Credits
Export of goods and services against repayment of state credits granted by erstwhile USSR will continue to be governed by the extant directions issued by Reserve Bank, as amended from time to time.
Counter trade proposals Romania involving adjustment of value of exports from India against value of imports made into India require RBI approval

GR/SDF/PP/SOFTEX procedure
Regulation 6 of Foreign Exchange Management (Export of Goods and Services)
Regulations, 2000 notified vide Notification No. FEMA.23/2000-RB dated 3rd May 2000
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.
Customs will give the number having ten numerals denoting the code number of the port of shipment, the calendar year and a six digit running number and certify the value declared by the exporter on both the copies of the GR form and will also record the assessed value and return the duplicate copy of the form to the exporter and retain the original for transmission to RBI . Exporters should submit the duplicate copy of the GR form again to Customs along with the cargo to be shipped, After examination of the goods and certifying the quantity passed , Customs will return it to the exporter for submission to the AD
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 Banks named in the GR form.
After the documents have been negotiated / sent for collection, the AD Banks should report the transaction to Reserve Bank in statement ENC under cover of appropriate R-Supplementary Return
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.
Where Duplicate copy of GR form is misplaced or lost, AD Banks may accept another copy of duplicate GR form duly certified by Customs.

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 an AD. Banks will countersign the forms after
ensuring that the parcel is being addressed to their branch or correspondent bank in the country of import.

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/ buyer’s 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 Banks, date of negotiation, bill number, invoice value and the amount actually received by ECGC.

Random verification
AD Banks should ensure, by random check of the relevant duplicate GR /SDF /PP forms by their internal / concurrent auditors, 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.

Certification for EEFC Credits
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 ….. per cent of the export realisation credited to the EEFC account maintained by the exporter with ….. "

Consolidation of Air Cargo
Airline company’s Master Airway Bill will be issued to the Consolidating Cargo Agent. The Cargo agent in turn will 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 accept Forwarder’s Cargo Receipts
(FCR) issued by steamship companies or their agents (instead of 'IATA' approved agents), in lieu of bills of lading, for negotiation / collection of
shipping documents, only if the relative letter of credit specifically provides for negotiation of this document, in lieu of bill of lading.

Delay in submission of shipping documents by exporters
where exporters present documents pertaining to exports after the prescribed period of twenty-one days from date of export, Authorised Dealers Banks may handle them without prior approval of Reserve Bank, provided they are satisfied with the reasons for the delay.

Check-list for Scrutiny of Forms Banks to ensure :
The number on the duplicate copy of a GR form is the same as that recorded on the Bill of Lading/Shipping Bill and the duplicate has been duly verified and authenticated by appropriate Customs authorities.
Shipping Bill No. on the SDF form should be the same as on the Bill of Lading
In the case of CIF /CFR contracts where the freight is sought to be paid at destination, 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/Airway Bill, whichever is less.
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 included in the invoice and the bill.
Documents submitted do not reveal any material inter se discrepancies in regard to description of goods exported, export value or country of destination.
Where the marine insurance is taken by the exporters on buyer’s account to verify, that the actual amount paid is received from the buyer through invoice and the bill.
Negotiate the documents, if presented by a person other than the exporter who has signed GR/PP/SDF /SOFTEX Form for the export consignment concerned, after ensuring compliance with Regulation 12 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000
To accept the variations in the value declared to the customs authorities and that is reflected on the export documents which stem from the terms of contract, on production of documentary evidence after verifying the arithmetical accuracy of the calculations and on conforming the terms of underlying contracts due to freight increase, quality analysis of samples, penalty for late shipment,
To accept for negotiation or collection the bills for exports by sea or air, which fall short of the value, declared on GR/SDF forms on account of trade discount, only if it has been declared on relative GR/SDF form and accepted by Customs.

Return of Documents to Exporters
The duplicate copies of GR/SDF/PP forms and shipping documents, once submitted to the AD Banks for negotiation, collection, etc., should not ordinarily be returned to exporters, except for rectification of errors and resubmission.

Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade
Representative
AD 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.

Export Bills Register
Banks should maintain for all types of export Transactions, Export Bills Register, in physical or electronic form, and are given bill numbers on a financial
year basis. 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 Reserve Bank, should be available.



Follow-up of Overdue Bills
Banks should closely watch realisation of bills and in cases where bills remain outstanding, beyond the due date for payment or six months from the date of export, the matter should be promptly taken up with the concerned exporter.
If the exporter fails to realize or within six months or seek extension the matter should be reported to the RO concerned of the Reserve Bank stating, where possible, the reason for the delay in realising the proceeds.
Banks should follow up export outstandings with exporters systematically and vigorously so that action against defaulting exporters does not get delayed. Any laxity will be viewed seriously by RBI leading to the invocation of the penal provision under FEMA
Exporters who have been certified as `Status Holder' in terms of Foreign Trade Policy , 100 per cent Export Oriented Units (EOUs) and units set up under Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Biotechnology Parks (BTPs) are permitted to realise and repatriate the full value of export proceeds within a period of 12 months from the date of shipment
Twelve months or extended period thereof for realisation of export proceeds is no longer applicable for units located in Special Economic Zones
Banks should furnish to the RO concerned of the Reserve Bank, on half-yearly basis, a consolidated statement in Form XOS giving details of all export bills outstanding beyond six months from the date of export. submitted in triplicate within fifteen days from the close of the relative half-year.

Reduction in Value
Reduction in Invoice Value on Account of Prepayment of Usance Bills- Occasionally, exporters may approach AD Banks for reduction in invoice value on account of cash discount to overseas buyers for prepayment of the usance bills. 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
If, after a bill has been negotiated or sent for collection, its amount is to be reduced for any reason, AD Banks may approve such reduction, if satisfied about genuineness of the request, provided: reduction does not exceed 25 per cent
of invoice, does not relate to export of commodities subject to floor price stipulations, exporter is not on the exporters’ caution list of Reserve Bank, exporter is advised to surrender proportionate export incentives availed of, if any.
If customer is in export business for more than three years, reduction in invoice value may be allowed, without any percentage ceiling if the export outstandings do not exceed 5 per cent of the average annual export realization during the preceding three financial years

Export Claims
AD Banks may remit export claims on application, provided the relative export proceeds have already been realised and repatriated to India and the exporter is not on the caution list of Reserve Bank and the exporter should be advised to surrender proportionate export incentive

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 per cent and the realisation of export proceeds is not delayed beyond the period of six months

Extension of time and Self write-off by the exporters
For export proceeds due within the prescribed period during a financial year all exporters (other than Status Holder exporters) have been allowed to write off
(including reduction in invoice value) outstanding export dues and extend the prescribed period of realisation beyond 180 days or further period as applicable, provided aggregate value of such export bills written-off (including reduction in invoice value) and bills extended for realization does not exceed 10 per cent of the export proceeds due during the financial year and not a subject of investigation by Regulatory / Investigating Agencies. Within a month from the lose of the financial year, exporters should submit a statement (Annex 3), giving details of export proceeds due, realised and not realised to the AD Banks concerned.

Banks will be required to verify and satisfy that in cases where the 10 per cent limit of self extension, write-off (including reduction in invoice value) and non-realisation has been breached, the exporter has sought necessary approval for write-off, reduction in 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, failing which, the AD 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.

Extension of Time by AD Bank
where an exporter has not been able to realise proceeds of a shipment made within the period prescribed, for reasons beyond his control, but expects to be able to realise proceeds if extension of the period is allowed to him, necessary application (in duplicate) should be made to the Regional Office concerned of Reserve Bank in form ETX through his AD Banks with appropriate documentary evidence

ADs permited to extend the period of realisation of export proceeds beyond 6 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.
Export transactions covered by the invoices are not under investigation, AD is satisfied that the exporter has not been able to realise export proceeds for reasons beyond his control, exporter submits a declaration that the export proceeds will be realised during the extended period, While considering extension beyond one year from the date of export, the total outstanding of the exporter does not exceed USD one million or 10 per cent of the average export realizations during the preceding three financial years,
All the export bills outstanding beyond six months from the date of export may be reported in XOS statement. date up to which extension has been granted may be indicated in the 'Remarks' column.

Write off by AD Banks
If not been able to realise the outstanding export dues despite best efforts, may
approach the AD Banks, who had handled the relevant shipping documents, with appropriate supporting documentary evidence with a request for write off of the
unrealised portion, provided, relevant amount has remained outstanding for one year or more; aggregate amount of write off allowed by the AD Banks during a financial year does not exceed 10 per cent of the total export proceeds realized by the concerned exporter through the concerned AD, Satisfactory documentary evidence is furnished by exporter having made all efforts to realize, case is not the subject matter of any pending civil or criminal suit. exporter has not come to the adverse notice of the Enforcement Directorate, exporter has surrendered proportionate export incentives,
OR overseas buyer has been declared insolvent and a certificate from the official liquidator or buyer is not traceable over a reasonably long period or goods exported have been auctioned or destroyed by the Port/Customs/Health authorities Or unrealised amount represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organisation. Or represents the undrawn balance of an export bill (not exceeding 10 per cent of the invoice value) remained outstanding and turned out to be unrealizable or cost of resorting to legal action would be disproportionate to the unrealised amount or 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 unrealised consequent on dishonour of the bills by the overseas buyer

“In terms of A. P. (DIR Series) Circular No.30 dated April 4, 2001." Banks should certify the duplicate form as under: "Write off of ……… (Amount in words and figures) permitted in terms of extant Directions to AD Banks." Date , Stamp & Signature of AD Banks Where there is no further amount to be realized against the GR/SDF/PP form

Status holders exporters, as defined under in the Foreign Trade Policy, and manufacturer exporters exporting more than 50 per cent of their production,and recognised as such by DGFT, may be permitted to " write off" outstanding export dues, cumulatively , to the extent of 5 per cent of their average annual realisation during the preceding three financial years or 10 per cent of the export proceeds due during the financial year, whichever is higher
The exporter should submit Chartered Accountant’s certificate indicating, export realisation in the preceding three financial years and also the amount of "write off" already availed of during the year, if any. relevant GR/SDF Nos. to be written off, Bill No., invoice value, commodity exported, country of Export, export benefits, if any, availed of by the exporter have been surrendered.

The following do not qualify for the "write off" facility:
Exports made to countries with externalization problem i.e. where the overseas buyer has deposited the value of export in local currency but the amount has not been allowed to be repatriated GR/SDF forms which are under investigation by agencies like, Enforcement Directorate, Directorate of Revenue Intelligence, Central Bureau of Investigation, etc.

Banks may forward a statement in form EBW to the Regional Office of Reserve Bank every half year indicating details of write offs etc.
Banks are to put in place a system under which their internal inspectors or auditors carryout random sample check of outstanding export bills written off.

Write off in cases of Payment of Claims by ECGC
Banks shall, on an application received from the exporter supported by documentary evidence from the ECGC 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, not be restricted to the limit of 10 per cent, but claims settled in rupees by ECGC should not be construed as export realisation

Write off in other cases
Cases which are not covered by the above instructions will require prior approval from RBI

Shipments Lost in Transit
When shipments from India for which payment has not been received either by negotiation of bills under letters of credit or otherwise are lost in transit, the AD Banks 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.
Where the claim is payable abroad, the AD Banks 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 certificate for the amount of claim received should be furnished on the reverse of the duplicate copy.
Banks should ensure that amounts of claims on shipments lost in transit which are partially settled directly by shipping companies/airlines under carrier’s liability abroad are also repatriated to India by exporters.

'Netting off' of export receivables against import payments - Units in Special Economic Zones (SEZs)
Banks may allow requests received from exporters for 'netting off' of export receivables against import payments for SEZ units
The 'netting off' of export receivables against import payments is in respect of the same Indian entity and the overseas buyer / supplier (bilateral netting) and the netting may be done as on the date of balance sheet of the unit in SEZ.
The details of export of goods are documented in GR (O) forms / DTR as the case may be while details of import of goods / services are recorded through A1 / A2 form as the case may be.
Both the transactions of sale and purchase in 'R' Returns under FET-ERS are reported separately
The relative GR / SDF forms will be treated as complete by the designated AD Banks only after the entire proceeds are adjusted / received.
The export / import transactions with ACU countries are kept outside the arrangement.
All the relevant documents are submitted to the concerned AD Banks who should comply with all the regulatory requirements relating to the transactions.

Agency Commission on Exports
Banks may allow payment of commission, either by remittance or by deduction from invoice value subject to 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. and after satisfying the reasons adduced by the exporter for not declaring commission on Export Declaration Form, provided a valid agreement / written understanding between the exporters and/or beneficiary for payment of commission exists. And relative shipment has already been made.

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 , commission is not payable to Escrow. Account holders themselves and commission should not be allowed by deduction from the invoice value.

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 commission up to 10 per cent of invoice value of exports of tea & tobacco.

Refund of Export Proceeds
Banks may allow refund of export proceeds of goods exported from India and being re-imported into India on account of poor quality.

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 / have been surrendered , undertaking from the exporter that the goods will be re-imported within three months, procedures as applicable to normal imports are adhered

Exporters’ Caution List
Banks will also be advised whenever exporters are cautioned in terms of provisions contained in Regulation 17 of "Export Regulations". Notification No.FEMA 23 /2000-RB dated 3rd May 2000
Exporters concerned to 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 only then banks may approve GR/SDF/PP forms and 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.
Banks should obtain prior approval of the Reserve Bank for issuing guarantees for caution-listed exporters.

Salient Features of from Master Circular on Import of Goods and Services

Salient Features of from Master Circular on Import of Goods and Services
RBI/2007-2008/24 Master Circular No. / 08 /2007-08 July 2, 2007

The circular is organised into five parts as under :
Part I : Introduction
Part II : General guidelines for imports.
Part III: Operational guidelines for imports.
Part IV : Annex (notifications and the forms for imports)
Part V : List of all circulars consolidated in the Master Circular.

And will stand withdrawn on July 1, 2008

Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry
imports into India are in conformity with the
Foreign Trade Policy
Foreign Exchange Management (Current Account Transactions) Rules, 2000
Government of India Notification No. G.S.R.381 (E) dated May 3, 2000
Provisions of Uniform Customs and Practices for Documentary Credits (UCPDC), for LCs
Provisions of Research & Development Cess Act, 1986 may be ensured for import of drawings and designs.
Compliance with the provisions of Income Tax Act, wherever applicable.
adhere to "Know Your Customer" (KYC) guidelines issued by Reserve Bank (Department of Banking Operations & Development)

Form A-1
Applications by persons, firms and companies for making payments, exceeding USD 500 or its equivalent, towards imports into India must be made on the appropriate Form A-1.
Remittances not involving movement of goods will be covered by A-2

Import Licenses
Excepting for goods included in the negative list requiring licence under the Foreign Trade Policy no Licence is required
While opening letters of credit, the ‘For Exchange Control purposes’ copy of the licence should be called for and special conditions, if any, attached to such licences should be adhered to.
Banks preserve the Licence copies for verification by the internal auditors or inspectors.

Obligation of Purchaser of Foreign Exchange
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 an AD bank under Section 10(5) of the Act or to use it for any other purpose for which acquisition of foreign exchange is permissible under the said Act
Where foreign exchange acquired has been utilised for import of goods into India, the AD should ensure that the importer furnishes evidence of import viz., Exchange Control copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment Certificate, etc., and that value of goods are equivalent to the value of remittance.
Payment for import can also be made by way of credit to non-resident account of the overseas exporter maintained with a bank in India and as per Notification No.FEMA14/2000-RB dated 3rd May 2000,

Time Limit for Settlement of Import Payments

· 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, banks may permit settlement of import dues delayed due to disputes, financial difficulties,
· 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 for which the procedural guidelines laid down in the Master Circular for External Commercial Borrowings and Trade Credits may be followed.
· Remittances against import of books may be allowed without restriction as to time limit,
· Bank may allow payment of interest on usance bills or overdue interest at maximum of 6 months LIBOR 50 / 125 basis points


Import of Foreign Exchange / Indian Rupees
No person shall, without the general or special permission of the Reserve Bank, import or bring into India, any foreign currency. Importing 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 and Notification No. FEMA 6/RB- 2000 dated May 3, 2000

Import of Indian currency and currency notes
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.5,000/- per person.
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 in either case.

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), which shall be subject to the condition that such person makes, on arrival in India, a declaration to the Custom authorities in Currency Declaration Form (CDF) (shall not be necessary to make such Declaration by such person if aggregate value of the foreign exchange at any one time does not exceed USD10,000 and/or the aggregate value of foreign currency does not exceed USD 5,000 )


PART III Operational Guidelines for Imports

Advance Remittance for import of goods:
bank may allow advance remittance for import of goods without any ceiling subject to
If the amount of advance remittance exceeds USD 100,000 or its equivalent, an unconditional, irrevocable standby Letter of Credit or a guarantee from an international bank of repute
situated outside India guarantee of AD bank in India, issued against the counter-guarantee
of an international bank
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 A D bank is satisfied about the track record and bonafides of the importer, bank guarantee / standby Letter of Credit banks may frame their own internal guidelines to deal with such cases and may not be insisted upon for advance remittances up to USD 1,000,000
A Public Sector Company or a Department/Undertaking of the Government of India / State Government/s which is not in a position to obtain a guarantee from an international bank of
repute against an advance payment, is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance for remittance exceeding USD 100, 000.
The remittance is made directly to the supplier or manufacturer of the goods and not to any third party or to a numbered account.
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 from the close of the relevant period
In the event of non-import of goods, AD bank should ensure that the amount of advance remittance is repatriated to India or is utilised for any other purposes for which release of exchange is permissible under the FEMA,

Advance Remittance for Import of Rough Diamonds
AD bank 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. a) Diamond Trading Company Pvt. Ltd., UK, b) RIO TINTO, UK, c) BHP Billiton, Australia, d) ENDIAMA, E. P. Angola, e) ALROSA, Russia, and f) GOKHARAN, Russia, provided., importer should be a recognized processor of rough diamonds as per a list to be approved by Gems and Jewellery Export Promotion Council, bank should undertake the transaction based on their commercial judgment and after being satisfied about the bonafides of the transaction; 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, KYC and due diligence exercise should be done by the AD bank for the Indian importer entity and the overseas company; AD bank should follow up submission of the Bill of Entry / documents evidencing import of rough diamonds into the country by the importer, AD 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, Amar Bhawan, Sir. P. M. Road, Fort, Mumbai – 400 001, on a half yearly basis,


Advance Remittance for Import of Aircrafts, Helicopters and other Aviation Related purchases
Airline companies whom the Directorate General of Civil Aviation has permitted to operate as a schedule air transport service, can make advance remittance without bank guarantee, up to USD 50 million for direct import of each aircraft, helicopter and other aviation related purchases, banks should undertake the transactions based on their commercial judgment and after being satisfied about the bonafides of the transaction, KYC and due diligence exercise for Indian importer entity and the overseas manufacturer. bank may frame their own internal guidelines to deal with such cases, with the approval of their Board of Directors. 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. 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. Bank 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
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.

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.

Interest on Import Bills
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 prescribed rates. The current all-in-cost
ceilings, over 6 months LIBOR of respective currency of credit , are as under: Maturity period Up to one year 50 basis points and Maturity period More than one year but less than three years 125 basis points
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. remittances may be allowed after deducting the proportionate interest for the
unexpired portion of usance at the prevailing LIBOR

Remittances against Replacement Imports
Where goods are short-supplied, damaged, short-landed or lost in transit and the Exchange Control copy of the import licence has already been utilised 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 the AD bank and fresh remittance for replacement imports may be permitted without reference to Reserve Bank, provided the insurance claim relating to the lost goods has been settled in favour of the importer and ensure that the consignment being replaced is shipped within the validity period of the licence.

Guarantee 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, AD banks may issue guarantees at the request of importer client for dispatch/return of the defective goods


Import of Equipment by Business Process Outsourcing (BPO) Companies for their overseas sites
Banks may allow 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 (ICCs) subject to : BPO company should have obtained necessary approval from the Ministry of Communications and InformationTechnology, remittance should be allowed based on commercial judgment, the bonafides of the transactions and strictly in terms of the contract, remittance is made directly to overseas supplier, 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.

Receipt of import documents by the importer directly from overseas suppliers
Import bills and documents should be received from the banker of the supplier by the banker of the importer in India.
AD should not, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases: value of import bill does not exceed USD 100,000, bills received by wholly-owned Indian subsidiaries of foreign companies from their principals. bills received by Status Holder Exporters, Export Oriented Units / Units in Free Trade Zones, Public Sector Undertakings and Limited Companies

Receipt of import documents by the AD Bank directly from overseas suppliers
At the request of importer clients, AD bank may receive bills directly from the overseas supplier, provided the AD is fully satisfied about the financial standing/status and track record of the importer customer. AD bank should obtain a report on each individual overseas supplier from the overseas banker or a reputed credit agency. (Need not be obtained in cases where the invoice value does not exceed USD 100,000)

Evidence of Import - Physical Imports
Where value of foreign exchange remitted / paid for import into India exceeds USD 100,000 or its equivalent, it is obligatory for AD, to ensure that the importer submits; Exchange Control copy of the Bill of Entry for home consumption, Exchange Control copy of the Bill of Entry for warehousing, in case of 100% Export Oriented Units, Customs Assessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities
In respect of imports on D/A basis, AD should insist on production of evidence of import at the time of effecting remittance of import bill. 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., bank may, allow reasonable time, not exceeding three months from the date
of remittance, to the importer to submit the evidence of import.

Evidence of import in lieu of Bill of Entry
AD bank may accept, in lieu of Exchange Control copy of Bill of Entry for home consumption, 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 ; amount remitted is less than USD 1,000,000 , company listed on a stock exchange in India and whose net worth is Rs.100 crores + , importer is a public sector company or an undertaking of the Government, 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).

Evidence of Import - Non Physical Imports
For 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, and importers to keep Customs
Authorities informed of the imports made.

Issue of acknowledgement
bank should acknowledge receipt of evidence of import e.g. Exchange Control copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment Certificate, etc., from importers by issuing acknowledgement slips containing all relevant particulars relating to the import transactions.

Verification & Preservation
Internal inspectors or auditors (including external auditors appointed by AD bank) 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, and preserved by bank for a period of one year from the date of its verification or if applicable till clearance from the investigating agency concerned.

Follow up for Import Evidence
If Documentary evidence of import not submitted within 3 months from the date of remittance involving foreign exchange exceeding USD100, 000, the AD bank should rigorously follow-up for the next 3 months, including issuing registered letters to the importer.
Bank should forward a statement on half-yearly basis in form BEF (Annex 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, to the Regional Office of Reserve Bank
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, based on suitable policy framed by the bank's Board of Directors

Issue of Bank Guarantee
Banks are permitted to issue guarantee on behalf of their importer customers in terms of Notification No. FEMA 8/2000-RB dated May 3, 2000,

Import Gold/Platinum/Silver by Nominated Banks/Agencies on consignment basis
Gold, 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

Import Gold/Platinum/Silver by Nominated Banks/Agencies on unfixed price basis
The nominated agency/bank may import gold, platinum and silver 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.

Direct Import of Gold/Platinum/Silver by Nominated Banks/Agencies
Bank 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, strictly in accordance with the Foreign Trade Policy. , Suppliers’ and Buyers’ Credit, including the usance period, should not exceed 90 days, Banker's prudence should be strictly exercised for all transactions, due diligence is undertaken and all Know-Your-Customer (KYC) norms and the Anti- Money-Laundering guidelines, the credentials of the supplier should also be ascertained before opening the LCs and The financial standing, line of business and the net worth of the importer customer should be commensurate with the volume of business turnover and all documents pertaining to such transactions must be preserved for at least five years.
Banks undertaking gold import transactions are required to submit as per the format , a monthly statement thereof, to the Trade Division, FED RBI Mumbai

Gold Loans
Nominated agencies / approved banks can import gold on loan basis for on lending to exporters of jewellery under this scheme.
EOUs and units in 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.
The maximum tenor of gold loan would be as per the Foreign Trade Policy (I year)
bank may open Standby Letters of Credit (SBLC), for import of gold on loan basis, where ever required, as per FEDAI guidelines dated April 1, 2003.
SBLC can be opened only on behalf of entities permitted to import gold on loan basis and in favour of internationally renowned bullion banks only.
Banks must maintain adequate documentation with them to uniquely link all imports with the SBLC issued for the import of gold on loan basis


Import factoring
bank may enter into arrangements with international factoring companies of repute, preferably members of Factors Chain International and have to ensure compliance with the extant foreign exchange and any other guidelines/directives

Merchanting Trade
bank may take necessary precautions in handling bonafides merchanting trade transactions or intermediary trade transactions to ensure that: goods involved in the transactions are permitted to be imported into India, all rules, regulations and directions applicable to export (except Export Declaration Form) and import (except Bill of Entry) are complied with for the export leg and import leg, respectively, the entire merchant trade transaction is completed within a period of 6 months, do not involve foreign exchange outlay for a period exceeding three months. And Where the payment for export leg of the transaction precedes banks should ensure that the liability for the import leg of the transaction is extinguished by the payment received for the export leg.
Short-term credit either by way of suppliers' credit or buyers' credit is not available for merchanting trade or intermediary trade transactions.