Advanced payment system for exporters liberalised
The Reserve Bank of India (RBI), on Tuesday, said it has now allowed banks to permit exporters to receive advance payment for shipment of goods which would take more than one year to manufacture, a step which will reduce transaction time.
In a notification, issued on its website, RBI said: “With a view to liberalising 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.”
Among some of the conditions, RBI said the rate of interest, if any, payable on the advance payment should not exceed London Inter-Bank Offered Rate (LIBOR) plus 100 basis points. Also, there should be no instance of refund exceeding 10 per cent of the advance payment received in the last three years, it added.
The apex made it clear that in the event of the exporter’s inability to make the shipment, partly or fully, no remittance towards refund of unutilised portion of advance payment or towards payment of interest should be made without the prior approval of RBI.
Meanwhile, the RBI raised the limit for foreign exchange remittance towards imports without any documentation formalities to US$5,000 from the existing US$500.
“Based on suggestions received from the various stake holders, the said limit has been reviewed and it has been decided as a measure of liberalisation to raise the limit for foreign exchange remittance towards imports without any documentation formalities, from US$500 or its equivalent to US$5,000 or its equivalent, with immediate effect,” the apex bank said in a circular.
As per old rules, for any payment exceeding US$500, the concerned entity had to fill a document known as Form A-1.
For amount not exceeding US$5,000, the RBI said, “It is clarified that the authorised dealers 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.”
