Settlement of Export / Import transactions in currencies not having a direct exchange rate
28 June 2016
SUB: Settlement of Export / Import transactions in currencies not having a direct exchange rate
Members of the Council
Reserve Bank of India, Mumbai has issued a Circular No.42, dated: 4, February 2016 on the subject so as to simplify the procedure for filing returns (on export shipments) on a single platform and for better monitoring through integrating the returns relating to a) handling of shipping bills for caution listed exporters b) delayed utilization of advances received for exports and c) exports outstanding with Export Data Processing and Monitoring System (EDPMS) which has been in operation since March 1, 2014.
1) To further liberalize the procedure and facilitate settlement of export and import transactions where the invoicing is in a freely convertible currency and the settlement takes place in the currency of the beneficiary, which though convertible, does not have a direct exchange rate, it has been decided that AD category – I banks may permit settlement of such export and import transactions (excluding those put through the ACU mechanism), subject to conditions as under:
a) Exporter / Importer shall be a customer of the AD Bank,
b) Signed contract / invoice is in a freely convertible currency,
c) The beneficiary is willing to receive the payment in the currency of beneficiary instead of the original (freely convertible) currency of the invoice / contract / Letter of Credit as full and final settlement,
d) AD bank is satisfied with the bonafides of the transaction, and;
e) The counter party to the exporter / importer of the AD bank is not from a country or jurisdiction in the updated FATF Public Statement on High Risk & Non-Cooperative Jurisdictions on which FATF has called for counter measures.
Members may kindly note the above please.
Thanks & Regards
R.Ramesh Kumar I.A.S
Council for Leather Exports