RBI extends time to complete export-import deals to nine months
Updated: Jan 18, 2014 02:07:10pm
Mumbai, Jan 18 (KNN) Making the export-import payment norms easier for traders, the Reserve Bank has extended the time limit to complete merchant or intermediary trade transactions to nine months from six months earlier.
"The entire merchant or intermediary trade transactions should be completed within an overall period of nine months and there should not be any outlay of foreign exchange beyond four months," RBI said in a notification.
Merchanting or intermediary trade transaction involves purchase of goods by Indian residents from non-residents and then reselling them to another non-resident directly without the goods touching Indian ports.
The merchanting transactions will include the discounting of export leg Letter of Credit by a bank authorised to deal in foreign exchange, as in the case of import transactions, RBI said.
In the light of the recommendations of the Technical Committee on Services/Facilities to Exporters (Chairman: G Padmanabhan) to further liberalise and simplify the procedure, the existing guidelines for merchanting or intermediary trade transactions have been reviewed, the apex bank said.
Further, RBI said such transactions should be routed through the same bank and the banks should verify the documents for genuineness of trade.
"Both the legs of a merchanting or intermediary trade transaction are routed through the same bank. The bank should verify the documents like invoice, packing list, transport documents and insurance documents and satisfy itself about the genuineness of the trade," RBI said.
It also asked the banks to ensure one-to-one matching in case of these transactions and report the defaults to the RBI on a half yearly basis.
However, in cases of repeated defaults of three cases or more in a year, banks should restrain the traders from entering into any further transaction and should consider recommending caution listing of the trader to RBI, it added.
RBI also said that the 'merchanting' traders have to be genuine traders of goods and not mere financial intermediaries.
"Confirmed orders have to be received by them from the overseas buyers. Authorised dealer should satisfy itself about the capabilities of the merchanting trader to perform the obligations under the order. The transactions should result in reasonable profits to the merchanting trader," RBI said. (KNN Bureau/SD)
"The entire merchant or intermediary trade transactions should be completed within an overall period of nine months and there should not be any outlay of foreign exchange beyond four months," RBI said in a notification.
Merchanting or intermediary trade transaction involves purchase of goods by Indian residents from non-residents and then reselling them to another non-resident directly without the goods touching Indian ports.
The merchanting transactions will include the discounting of export leg Letter of Credit by a bank authorised to deal in foreign exchange, as in the case of import transactions, RBI said.
In the light of the recommendations of the Technical Committee on Services/Facilities to Exporters (Chairman: G Padmanabhan) to further liberalise and simplify the procedure, the existing guidelines for merchanting or intermediary trade transactions have been reviewed, the apex bank said.
Further, RBI said such transactions should be routed through the same bank and the banks should verify the documents for genuineness of trade.
"Both the legs of a merchanting or intermediary trade transaction are routed through the same bank. The bank should verify the documents like invoice, packing list, transport documents and insurance documents and satisfy itself about the genuineness of the trade," RBI said.
It also asked the banks to ensure one-to-one matching in case of these transactions and report the defaults to the RBI on a half yearly basis.
However, in cases of repeated defaults of three cases or more in a year, banks should restrain the traders from entering into any further transaction and should consider recommending caution listing of the trader to RBI, it added.
RBI also said that the 'merchanting' traders have to be genuine traders of goods and not mere financial intermediaries.
"Confirmed orders have to be received by them from the overseas buyers. Authorised dealer should satisfy itself about the capabilities of the merchanting trader to perform the obligations under the order. The transactions should result in reasonable profits to the merchanting trader," RBI said. (KNN Bureau/SD)
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