Advance remittance for import of goods – liberalization
April 30, 2011
Members of the Council
Sub : Advance remittance for import of goods – liberalization
The Reserve Bank of India has issued a Circular No. 56 dated 29th April 2011 (copy enclosed) liberalising the regulations with regard to advance payment for import of goods. The details are given below.
- As per existing regulations, banks are required to obtain an unconditional, irrevocable standby Letter of Credit (LC) or a guarantee from an international bank of repute situated outside India or a guarantee of an AD Category – I bank in India, if such a guarantee is issued against the counter guarantee of an international bank of repute situated outside India, for an advance remittance exceeding USD 100,000 or its equivalent made by importers.
- With a view to liberalising the procedure, it has been decided to enhance the aforesaid limit of USD 100,000 to USD 200,000 or its equivalent, with immediate effect for importers (other than a Public Sector Company or a Department/Undertaking of Central/State Governments where the requirement of bank guarantee is to be specifically waived by the Ministry of Finance, Government of India for advance remittances exceeding USD 100,000 or its equivalent).
- All the other instructions including the facility to waive the requirement of the standby LC/ bank guarantee for advance remittance up to USD 5,000,000 or its equivalent, where the AD Category – I bank is satisfied about the track record and bonafides of the importer based on their internal Board approved policy, contained in A.P. (DIR Series) Circular No. 09 dated August 21, 2008, shall remain unchanged.
Members may kindly note the above.
Ali Ahmed Khan
COUNCIL FOR LEATHER EXPORTS