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EXIM 15
INDIA newsletter Mumbai, Thursday, May 2, 2024
Meet our expert
Mr Ajit Shah, Consultant, will answer your
questions related to export and import business
every week.
Q 374: What are banking rules and regula- He has published many articles on ex-im
tions regarding foreign exchange for exports? policy and procedures.
He is faculty giving training in a number of
A: 1. Since export deals with foreign exchange, the
transaction is subject to Rules & Regulations framed by institutes, Export Promotion Councils, banks,
logistics companies, exporters and importers,
the Government of India/RBI. Mr Ajit Shah
Chambers of Commerce, etc.
2. The Foreign Exchange Management Act 1999 Readers are requested to send their questions by email to
(FEMA) is the relevant enactment. eximquestion@gmail.com along with contact details.
3. You are requested to refer FED Master Direction No. 9. If after a bill has been negotiated or sent for collec-
16/2015-16 Dated 1st January, 2016, regarding Export of tion, its amount is to be reduced for any reason, bank may
Goods and Services, for better understanding of this subject. approve such reduction if satisfied about genuineness of
the request, provided:
4. The exporter will be liable to realise and repatriate
export proceeds. A The reduction does not exceed 25% of invoice
value.
5. 3rd party payment is allowed subject to the following:
B It does not relate to export of commodities subject
to floor price.
A Firm irrevocable order backed by a tripartite
agreement. C The exporter is not on the exporters’ caution list of
B Bank should be satisfied with the bonafides of the RBI.
the transaction. D The exporter has to surrender proportionate export
C Bank should consider the Financial Action Task incentives.
Force – FATF - country. For exporters who have been in the export business
D Third party payment should be routed through for more than 3 years, reduction in invoice value may be
banking channel only. allowed, without any percentage ceiling, subject to the
E The exporter should declare the third party remit- above conditions. The exporter’s track record should be
tance in the Export Declaration Form / Shipping satisfactory, i.e. the exports outstanding do not exceed
Bill.
5% of the average annual export realisation during the
6. EEFC Account facility is available to exporters for preceding 3 financial years.
100% amount. An exporter may open EEFC Account with 10. Prior approval of the RBI is not required if, after
a bank in India. It will be non-interest bearing current ac- goods have been shipped, they are to be transferred to a
count. No credit facilities shall be permitted. The sum total buyer other than the original buyer in the event of default
of the accruals in the account during a calendar month by the latter, provided the reduction in value, if any, in-
should be converted into rupees on or before the last day volved does not exceed 25% of the invoice value, and the
of the succeeding calendar month. realisation of export proceeds is not delayed beyond the
7. Where an exporter receives an advance payment period of 9 months from the date of export.
from the overseas buyer, he will be under an obligation to 11. As per Circular No. 37 dated 20.11.2014, the pe-
export the goods within 1 year. The documents covering riod of realisation and repatriation of export proceeds shall
the shipment are routed through the bank through whom be 9 months from the date of export for all exporters.
the advance payment is received. If exporter is unable to
ship the goods within said 1 year, no remittance towards 12. The RBI has permitted banks to extend the period
refund of unutilised portion of advance payment shall be of realisation of export proceeds up to 6 months at a time
made after the expiry of 1 year, without the prior approval irrespective of the invoice value of the export, subject to
of the RBI. the following conditions:
8. EDPMS is a platform to monitor the forex. The Ship- A The export transactions covered by the invoices
ping Bill data in EDPMS is captured from Customs/EDI. are not under investigation by ED/CBI or other in-
The detail of forex realised for exports is reported by the vestigating agencies.
bank. Any outstanding payment beyond permissible time B The bank is satisfied that the exporter has not
limit is reflected in this system. All the overdue export been able to realise export proceeds for reasons
advances will reflect into the system. Exporters would be beyond his control.
caution listed based on EDPMS data. Details of all ex- C The exporter submits a declaration that the export
port outstanding bills can be obtained by the exporter from proceeds will be realised during the extended pe-
the EDPMS through its bank. riod.
