regulatory guidelines of exports

8/13/2019 Regulatory Guidelines of Exports

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Baroda Academy


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Advance payment against exports

Consignment exports

Direct Despatch of Documents to exporter

Extension of Time by Bank

Follow up of over Due Bills GR waiver

Reduction in Value

Self write off by the exporter

Write off by Bank

Setting up of Office Abroad.

Opening / hiring of ware houses


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The requirement of declaration of export of goods & software inthe prescribe form will not apply

1. Trade sample of goods and publicity materials supplied free ofcost 2 per cent of the average annual exports of the applicant

during the preceding three financial years subject to a ceiling ofRs.5 lakhs.

2. Goods supplied under the order of Central Government or military, naval or air force supply

3. Goods or software accompanied by a declaration that they are not

more than $ 250004. Gift of Goods accompanied by declaration that they are not more

than 500,000 rupees in value.

5. Goods import free of cost on re export basis.


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Firm & companies participating in Trade fair/Exhibition, can sellunsold exhibits in that country or other country at discountedprice .

Unsold gift items can be use as gift item up to value of USD 5000

per exporter, per exhibition, bank can approve GR form of exportitems subject to

Exporter shall produce BOE with in one month of re-import if re-impotrted the unsold goods.

Sale proceeds are repatriated to India

Exporter shall report to bank the method of disposal of all items Such transactions approved by bank is subject to 100% audit


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The amount representing the full export value of the goodsexported shall be received through an AD Bank :

a) Bank draft, pay order, banker's or personal cheques.

b) Foreign currency notes/foreign currency travellerschequesfrom the buyer during his visit to India.

c) Payment out of funds held in the FCNR/NRE accountmaintained by the buyer

d) International Credit Cards of the buyer.

All transactions between a person resident in India and aperson resident in Nepal or Bhutan may be settled in IndianRupees.


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By Units in Special Economic Zones (SEZs): No specific timeperiod has been stipulated

By Status Holder Exporters as defined in the Foreign TradePolicy : Within a period of twelve months from the date ofexport

By 100 % Export Oriented Units (EOUs) and units set upunder Electronic Hardware Technology Parks (EHTPs),Software Technology Parks (STPs) and Biotechnology Parks(BTPs) schemes

Goods exported to a warehouse established outside India : As

soon as it is realised and in any case within fifteen monthsfrom the date of shipment of goods


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Banks have been allowed to offer the facility of repatriationof export related remittances by entering intostanding arrangements with Online Payment Gateway ServiceProviders

This facility shall only be available for export of goods and

services of value not exceeding USD 3000 Where the exporters availing of this facility are required to

open notional accounts with the OPGSP

It shall be ensured that no funds are allowed to be retained insuch accounts and all receipts should be automatically swept

and pooled into the NOSTRO collection account opened bythe AD Category-I bank.


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Exporters may deposit the foreign exchange obtained by saleof goods at the international exhibition/trade fair and operatethe account during their stay outside India provided that thebalance in the account is repatriated to India through normalbanking channels within a period of one month from the dateof closure of the exhibition trade fair

Reserve Bank may consider applications in Form EFC (Annex6) from exporters having good track record for opening aforeign currency account with banks in India and outside

India subject to certain terms and conditions.


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Firms and companies dealing in purchase / sale of rough orcut and polished diamonds / precious metal jewellery plain,minakari and / or studded with / without diamond and / orother stones.

Track record of at least 2 years in import / export of

diamonds / coloured gemstones / diamond and colouredgemstones studded jewellery / plain gold jewellery andhaving an average annual turnover of Rs. 3 crores or aboveduring the preceding three licensing years

Firms are not allow to open not more than five Diamond

Dollar Accounts Banks are required to submit quarterly reports to the

Foreign Exchange Department, Reserve Bank of India, CentralOffice, Trade Division, Mumbai


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The facility of EEFC scheme is intended to enable exchangeearners to save on conversion/transaction costs whileundertaking forex transactions in future.

, EEFC account holders will be permitted to access the forexmarket for purchasing foreign exchange only after utilising

fully the available balances in the EEFC accounts. Banks may permit their exporter constituents to extend trade

related loans / advances to overseas importers out of theirEEFC balances without any ceiling subject to compliance ofprovisions

Banks may permit exporters to repay packing credit advanceswhether availed in Rupee or in foreign currency from balancesin their EEFC account and / or Rupee resources to the extentexports have actually taken place


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Ministry of Finance put certain restrictions on drawal of foreignexchange from EEFC account. Prior approval from RBI is requiredfor making remittance for the following transactions:

1. Payment for securing insurance for health from a company abroad

2. Remittance for membership of P & I Club3. Gift remittance exceeding $ 5000 per remittance/per donor

4. Donation exceeding $ 5000 per remittance / per donor

5. Commission to agent abroad for sale of residential flat /commercial plot in India, exceeding 5% of Inward remittance

6. Remittance for use &/or purchase of trademark/franchise in India7. Remittance exceeding $ 100,000 by an entity in India by way of

reimbursement of pre- incorporation expenses.


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AD Category I banks may allow remittances towards initialexpenses up to fifteen per cent of the average annualsales/income or turnover during the last two financial years orup to twenty-five per cent of the net worth, whichever is higher.

For recurring expenses, remittances up to ten per cent of

the average annual sales/income or turnover during the lasttwo financial yearsmay be sent for the purpose of normalbusiness operations of the office Subject to :

The overseas branch/office has been set up or representative isposted overseas for conducting normal business activities of the

Indian entity The overseas branch/office/representative shall not enter into

any contract or agreement in contravention of the Act, Rules orRegulations made there under


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The overseas office (trading / non-trading) / branch /representative should not create any financial liabilities,contingent or otherwise, for the head office in India and also notinvest surplus funds abroad without prior approval of the ReserveBank. Any funds rendered surplus should be repatriated to India.

The details of bank accounts opened in the overseas countryshould be promptly reported to the AD Bank.

AD Category I banks may also allow remittances by a companyincorporated in India having overseas offices, within the abovelimits for initial and recurring expenses, to acquire immovable

property outside India for its business and for residential purposeof its staff.


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On receipt of advance payment1. The shipment of goods is made with in one year from date

of receipt of Advance payment2. Rate of interest , if payable , on advance payment should

not exceed LIBOR + 100 bps

3. The document covering the shipment should routed throughthe bank by which the exporter received payment

4. Prior approval of RBI is necessary, if shipment of goodsrequire more than 1 year time

5. On refund of Advance payment, bank should ensure that

entire balance of EEFC has utilized6. No remittance towards refund of unutilized portion ofadvance payment or towards payment of interest, shall bemade after the expiry of the said period of one year,without the prior approval of the Reserve Bank.


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Direct despatch can be made by Exporters , where

1. Advance payment received in full value of export

2. Irrevocable LC put a condition to despatch documents directly toconsignee or his agent .

3. Documents in respect of goods & software are accompanied with a

declaration by exporter that value of goods is not more than USD25,000 & not declared on GR/SDF/PP/SOFTEX

4. Bank can allow Status holder Exporters or Units of SEZ when exportproceeds are repatriated through the Bank name appeared in GR ANDduplicate copy of GR is submitted to bank within 21 days formonitoring purpose.

RBI has simplified the procedure by allowing direct despatch ofshipping documents up to USD 1 million or equivalent ,if exportproceed have fully realized , exporter is regular customer for a periodof atleast 6 months and fully KYC/AML complied.


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Bank are now are permitted to extend the period of realisationbeyond 12 months from the date of export , up to a period of 6months , at a time irrespective of Value of Invoice. Provided

1. The invoices not under investigation of ED or CBI etc

2. Reason in beyond the control of Exporter

3. The exporter will submit declaration that export proceed would realisedduring extended period

4. While extending , total o/s export does not exceed 1 million or 10% ofaverage export realisation during preceding 3 financial year, which ever ishigher.

5. All export bill o/s beyond 6 months from the date of export may be

reported to XOS statement6. In case where exporter has filed suit abroad against buyer , extension can

be granted irrespective of amount involve.

7. Prior Approval of RBI required through ETX form, which is not covered byabove instructions.


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Reduction in invoice value due to prepayment of Usance bill mayallow cash discount equivalent to interest on unexpired Usanceperiod.

In other cases , Bank can allow subject to satisfaction

1. Reduction does not exceed 25% of Invoice value

2. Export commodity does not relates to floor price stipulations

3. Exporter not in Caution list of RBI

4. Exporter is advice to surrender proportionate incentives

In case , Exporter in export business more than 3 years and exporto/s does not exceed 5% of av. Annual export of preceding 3 years ,without any percentage ceiling.


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All Exporter except the Status holder exported are allowed toWrite off outstanding export dues provided

1. The aggregate value of such export bills written off includingreduction in invoice not exceed 10% export proceeds due duringthe financial year.

2. Such export bill a subject of investigation by ED or CBI

3. Exporters dealing with different AD can avail this from each AD

4. In case of consortium , this 10% can be work out on AggregateValue of export proceeds and Lead bank will monitor it.

5. With in a month from closing a financial year , exporter shouldsubmit a prescribe statement giving details of export proceed due, realised and not realised and that will verify by AD.


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Exporter , unable to realize dues can approach to bank who hadhandled the export documents with appropriate documents with acertificate from the foreign Mission of India

1. Relevant amount has remain o/s for 01 year or more

2. Aggregate amount of write off allowed by AD in a financial year does

not exceed 10% of total export realised3. Satisfactory documentary evidence for all efforts exhausted

4. Case come under any of category Buyer become Insolvent & due is not recoverable by liquidator

Buyer is not traceable over a reasonable time

Goods were auctioned or destroyed by Port/ Customs

Unrealised amount inspite of intervention of Embassy

Unrealised amount not exceeding 10% of Invoice value

The cost of legal action is disproportionate & decree cantbe executed due toreason beyond control.


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The case is not subject matter of any pending civil or criminal suit

The exporter has not come to the adverse notice of enforcementdirectorate or CBI

The exporter has surrendered proportionate export incentives, if

any, availed of in respect of the relative shipments Where there is no further amount to be realised against the

GR/SDF/PP . The bank should certify

Write off of(Amount in words and figures) permitted in terms

of extent Directions to AD category I Banks

Write off in case of Payment of claims by ECGC and PrivateInsurance Companies settled ,


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Bank through whom the export proceeds were originally realisedmay consider request for refund of export proceeds goods againstre-import to India due to poor quality, subject to

Exercise due diligence regarding the track record of the exporter

Verify the bonafides of the transactions Obtain certificate from Exporter ,issued by DGFT that no

incentives have been availed by the exporter

Obtain an undertaking from the exporter that goods will be re-imported with in 3 months from the remittances

Ensure that all procedures as applicable to normal import areadhere to.


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When shipments from India for which payment has notbeen received either by negotiation of bills under LCor otherwise are lost in transit, the banks must ensurethat insurance claim is made as soon as the loss is

known. In cases where the claim is payable abroad, the bank

must arrange to collect the full amount of and releasethe duplicate copy of GR/SDF/PP form only after the

amount has been collected claim A certificate for the amount of claim received should

be furnished on the reverse of the duplicate copy.


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(iii)The account sales received from the Agent/Consigneeshould be verified by the AD Category I banks. Deductionsin Account Sales should be supported by bills/receipts inoriginal except in case of petty items like postage/cablecharges, stamp duty, etc.

(iv)In case of goods exported on consignment basis,freight and marine insurance must be arranged inIndia

(v)AD CategoryI banks may allow the exporters to abandonthe books, which remain unsold at the expiry of the period of

the sale contract. Accordingly, the exporters may show thevalue of the unsold books as deduction from the exportproceeds in the Account Sales


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AD Category I banks may consider the applications receivedfrom exporters and grantpermission for opening / hiringwarehouses abroad subject to the following conditions:

Applicant's export outstanding does not exceed 5% ofexports made during the previous financial year

Applicant has a minimum export turnover of USD 100,000/-

during the last financial year Period of realisation should be as applicable All transactions should be routed through the designated

branch of the AD Banks The above permission may be granted to the exporters

initially for a period of one year and renewal may beconsidered subject to the applicant satisfying therequirement above

AD Category I banks granting such permission/approvalsshould maintain a proper record of the approvals granted


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(i) When part of a shipment covered by a GR form already filed withCustoms is short-shipped,the exporter must give notice of short-shipment to the Customs in the form and manner prescribed. Incase of delay in obtaining certified short-shipment notice from theCustoms,the exporter should give an undertaking to the AD banksto the effect that he has filed the short-shipment notice with theCustoms and that he will furnish it as soon as it is obtained

(ii) Where a shipment has been entirely shut out and there is delayin making arrangements to re-ship, the exporter will give notice induplicate to the Customs in the form and manner prescribed,attaching thereto the unused duplicate copy of GR form and theshipping 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 ofGR form should be completed


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