FEMA/RBI updates

1. Export of Goods and Services - Receipt of advance payment for export of goods Involving shipment (manufacture and ship) beyond one year

2. Release of Foreign Exchange for Imports - Further Liberalisation

 

Export of Goods and Services - Receipt of advance payment for export of goods Involving shipment (manufacture and ship) beyond one year

RESERVE BANK OF INDIA

Foreign Exchange Department

Central Office

Mumbai - 400 001

RBI/2011-12/ 403                                           February 21, 2012
A.P. (DIR Series) Circular No.81

To
All Category – I Authorised Dealer Banks

Madam / Sir,

Export of Goods and Services -

Receipt of advance payment for export of goods

Involving shipment (manufacture and ship) beyond one year

1.Attention of Authorised Dealer Category – I (AD Category I) banks is invited to the sub-regulation (2) of Regulation 16 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, notified vide Notification No.FEMA.23/RB-2000, dated 3rd May 2000, as amended from time to time, in terms of which prior approval of the Reserve Bank is required to be obtained by an exporter for receipt of advance where the export agreement provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment.

2. With a view to liberalizing the procedure, it has been decided to permit AD Category- I banks to allow exporters to receive advance payment for export of goods which would take more than one year to manufacture and ship and where the 'export agreement' provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment subject to the following conditions:-

i) the KYC and due diligence exercise has been done by the AD Category –I bank for the overseas buyer;

ii) compliance with the Anti Money Laundering standards has been ensured;

iii) the AD Category-I bank should ensure that export advance received by the exporter should be utilized to execute export and not for any other purpose i.e., the transaction is a bona-fide transaction;

iv) progress payment, if any, should be received directly from the overseas buyer strictly in terms of the contract;

v) the rate of interest, if any, payable on the advance payment shall not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points;

vi) there should be no instance of refund exceeding 10% of the advance payment received in the last three years;

vii) the documents covering the shipment should be routed through the same authorised dealer bank; and

viii) in the event of the exporter's inability to make the shipment, partly or fully, no remittance towards refund of unutilized portion of advance payment or towards payment of interest should be made without the prior approval of the Reserve Bank.

3. Necessary amendments to the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, wherever necessary, are being issued separately.

4. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any law.

Yours faithfully,

(Rashmi Fauzdar)

Chief General Manager

Release of Foreign Exchange for Imports - Further Liberalisation

RESERVE BANK OF INDIA

Foreign Exchange Department

Central Office

Mumbai - 400 001

RBI/2011-12/404                                       February 21, 2012
A.P. (DIR Series) Circular No. 82

To
All Authorised Dealers in Foreign Exchange

Madam / Sir,

Release of Foreign Exchange for Imports – Further Liberalisation

1.Attention of all the Authorised Dealers (ADs) in foreign exchange is invited to the A.P.(DIR Series) Circular No. 106 dated June 19, 2003 in terms of which applications by persons, firms and companies for making payments, exceeding USD 500 or its equivalent towards imports into India must be made in Form A-1.

2. Based on suggestions received from the various stake holders, the said limit has been reviewed and it has been decided as a measure of liberalization to raise the above limit for foreign exchange remittance towards imports without any documentation formalities, from USD 500 or its equivalent to USD 5000 or its equivalent, with immediate effect.

3. It is clarified that the ADs need not obtain any document, including Form A-1, except a simple letter from the applicant containing the basic information viz., the name and the address of the applicant, name and address of the beneficiary, amount to be remitted and the purpose of remittance, as long as the exchange being purchased is for a current account transaction (and is not included in the Schedules I and II of the Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by Government of India vide Notification No. G.S.R.381 (E) dated May 3, 2000, as amended from time to time, the amount does not exceed USD 5000 or its equivalent and the payment is made by a cheque drawn on the applicant's bank account or by a Demand Draft.

4. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Rashmi Fauzdar)

Chief General Manager