Now Start Getting the Approvals Directly From Your Bank

In order to make the banks more powerful and provide them with all sorts of authorities, the RBI or the Reserve Bank of India has provided the AD category–1 banks with authorities to deal with the cases of set-off of export receivable against the import payables. Prior to this, each and every one bank needed to get a nod for this set off.

The RBI also stated in its release that it has been allowing the requests from the exporters for the set off only if they come through their AD category–1 bank. However, there were some conditions applicable before prior approvals. Now, the RBI has decided to delegate this power to all the banks.

There are certain guidelines that have been laid in the circular number 47 as of the 17th November 2011. In order to approve the request by the AD category–1 banks, the import should have been done in accordance to the foreign trade guidelines and the importer mandatorily has to submit all the critical paper works to the bank.

Some of the important documents that are needed to be submitted by the importers are:

  • Invoices
  • Bills of lading
  • Airway bills
  • Exchange control copies of bills of entry

It has been made very clear while laying down the circular that the set off of export receivables should be in the interest of overseas buyers and vendors. Another important factor, which needs to be taken care of, is that the payment should be clearly mentioned in the accounts books of the importers.

The requestor will get the GR forms by the bank only after all the export proceeds are received or adjusted. There is one small exemption in the new policy, all the imports or the exports transactions made with ACU countries have been spared as per this arrangement. By now, you would have got a clear idea about the concept and its advantages.

In order to avail the benefits of this arrangement, every importer or exporter can merely follow the below mentioned conditions:

  • All the imports should be strictly as per the foreign trade policy
  • Both the…

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