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1 Foreign Exchange Foreign Exchange Management - Management - an overview of Current an overview of Current account Transactions account Transactions Santha Paul Santha Paul Asst. General Manager Asst. General Manager Reserve Bank Of India, Chennai Reserve Bank Of India, Chennai

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Page 1: FEMA

11

Foreign Exchange Management Foreign Exchange Management - -

an overview of Current account an overview of Current account TransactionsTransactions

Santha PaulSantha PaulAsst. General ManagerAsst. General Manager

Reserve Bank Of India, ChennaiReserve Bank Of India, Chennai

Page 2: FEMA

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What is new in FEMA regime ? What is new in FEMA regime ?

Preamble itself is changed Preamble itself is changed All current account transactions are free All current account transactions are free Capital account transactions are deregulated Capital account transactions are deregulated Definition of NRI changed from purpose to Definition of NRI changed from purpose to

residence residence From Criminal law to Civil Law From Criminal law to Civil Law Less punishment – No Imprisonment Less punishment – No Imprisonment Compounding powers to RBI Compounding powers to RBI Less stringent & more business friendly Less stringent & more business friendly

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Forex Management– Shift in focusForex Management– Shift in focus

1991-Downward correction of exchange rate 1991-Downward correction of exchange rate ( Devaluation)( Devaluation)

1992- LERMS (Liberalised Exchange 1992- LERMS (Liberalised Exchange Rate Management System)Rate Management System)

1993- Modified LERMS1993- Modified LERMS 1994 – Current Account Convertibility - declared1994 – Current Account Convertibility - declared 1997 – Capital Account Convertibility – debate started 1997 – Capital Account Convertibility – debate started

2000 – FEMA 1999 replaced FERA 1973 2000 – FEMA 1999 replaced FERA 1973 w.e.f.1.6.2000 w.e.f.1.6.2000

IMF loans repaid IMF loans repaid 2003 - Money Laundering Act, 1999 passed2003 - Money Laundering Act, 1999 passed - IMF designates India as Creditor under its - IMF designates India as Creditor under its

Financial Transaction Plan (FTP) Financial Transaction Plan (FTP) 2004 – Reserves exceed external debt 2004 – Reserves exceed external debt 2006 – Capital Account Convertibility– further steps 2006 – Capital Account Convertibility– further steps

Page 4: FEMA

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Foreign Exchange Market in Foreign Exchange Market in IndiaIndia

Regulator: Reserve Bank of IndiaRegulation: Foreign Exchange Management Act, 1999

Authorised Dealers, Money changers

Buyers and sellers: exporters, importers, individuals,Corporates, FIIs, Non-Residents, NRIs etc.

Tier-I

Tier - II

Tier-III

Page 5: FEMA

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Forex Activities in India – Forex Activities in India – FacilitatorsFacilitators

Ministry of FinanceMinistry of Finance Ministry of Commerce , DGFTMinistry of Commerce , DGFT Directorate of EnforcementDirectorate of Enforcement Customs Customs Export Promotion Councils – FIEO Export Promotion Councils – FIEO Export Inspection Units Export Inspection Units Authorised Persons Authorised Persons FEDAI FEDAI EXIM Bank EXIM Bank ECGC ECGC RBIRBI

Page 6: FEMA

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Current Account Capital Account

Trade Invisibles

Exports Imports

TourTravelRemittanceGiftProfit/Div/int

FDI Portfolio

Foreign IndianSource Source

(FII) (GDR/ADR)

Loan

(Govt/Pvt(ECB)

Fcy A/CRI & NRI

FOREIGN EXCHANGE TRANSACTIONS

Page 7: FEMA

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Forex – the Concept ( contd. ) – Forex – the Concept ( contd. ) –

Current & Capital AccountCurrent & Capital Account Current account transaction – Current account transaction – All transactions All transactions

undertaken by a resident that do not alter his assets or undertaken by a resident that do not alter his assets or liabilities outside India are current account transactions.liabilities outside India are current account transactions.

affects cash position of an entity – Trade-related affects cash position of an entity – Trade-related remittances & miscellaneous remittances fully remittances & miscellaneous remittances fully convertible - fully delegated to ADs convertible - fully delegated to ADs

Capital account transaction – affects asset & Capital account transaction – affects asset & liability position of an entity - borrowing, lending liability position of an entity - borrowing, lending & investment – FDI , FII, ECBs , NRI deposits , & investment – FDI , FII, ECBs , NRI deposits , Overseas Investments – expanding convertibility Overseas Investments – expanding convertibility

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GeneralGeneral

In terms of the Rules -In terms of the Rules -Foreign Exchange Foreign Exchange Management (Current Account Transactions) Management (Current Account Transactions) Rules, 2000 (Annex I)-Rules, 2000 (Annex I)- drawal of exchange for drawal of exchange for certain categories of transactions as listed in certain categories of transactions as listed in

Schedule I - expressly prohibitedSchedule I - expressly prohibited Schedule II - permitted by the ADs if approval Schedule II - permitted by the ADs if approval

from the Ministry/Dept of GoI is securedfrom the Ministry/Dept of GoI is secured Schedule III- prior approval of the RBI required Schedule III- prior approval of the RBI required

for remittance exceeding limits. for remittance exceeding limits.

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Schedule ISchedule I Remittance out of lottery winningsRemittance out of lottery winnings Remittance of income from racing/riding or any Remittance of income from racing/riding or any

other hobby etcother hobby etc Remittance for purchase of lottery tickets, Remittance for purchase of lottery tickets,

banned/ proscribed magazines, football pools, banned/ proscribed magazines, football pools, sweepstakes etc sweepstakes etc

Payment of commission on exports made towards Payment of commission on exports made towards investment in JV / WOS abroad of Indian investment in JV / WOS abroad of Indian companies. companies.

Payment related to callback services of Payment related to callback services of telephonestelephones

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Schedule I (contd…)Schedule I (contd…)

Remittance of dividend by any company where Remittance of dividend by any company where dividend balancing is applicable dividend balancing is applicable

Remittance of interest income on funds held in Remittance of interest income on funds held in Non – Resident Special Rupee ( Account ) Non – Resident Special Rupee ( Account ) Scheme. Scheme.

Payment of commission on exports under Rupee Payment of commission on exports under Rupee state credit Route, except commission upto 10% state credit Route, except commission upto 10% of invoice value of exports of tea and tobaco.of invoice value of exports of tea and tobaco.

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Schedule IISchedule II Remittances which need prior approval from the Remittances which need prior approval from the

dealing ministry / department of GoI and dealing ministry / department of GoI and permitted up to the amounts as mentioned in the permitted up to the amounts as mentioned in the approval letter – approval letter –

Cultural tours , Advertisement in foreign print Cultural tours , Advertisement in foreign print media , Freight of vessel charted by a PSU , media , Freight of vessel charted by a PSU , Payment for import by a Govt, dept. or PSU on Payment for import by a Govt, dept. or PSU on c.i.f. basis, Multi modal transport operators c.i.f. basis, Multi modal transport operators making remittance to their agents abroad , hiring making remittance to their agents abroad , hiring of transponders by TV channels , ISPs , of transponders by TV channels , ISPs , Remittances under technical collaboration Remittances under technical collaboration agreements etc.agreements etc.

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Schedule IIISchedule III

Transactions needing RBI approval for Transactions needing RBI approval for amounts exceeding delegated powers of amounts exceeding delegated powers of ADs ADs

– – travel , gift , donation , employment , travel , gift , donation , employment , emigration , maintenance , medical emigration , maintenance , medical expenses exceeding the estimates , higher expenses exceeding the estimates , higher studies exceeding the estimates, studies exceeding the estimates, commission to agents for sale of flats etc. commission to agents for sale of flats etc. in India , consultancy fees , pre- in India , consultancy fees , pre- incorporation expenses. incorporation expenses.

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Limits upto which ADs can release Limits upto which ADs can release foreign Exchange foreign Exchange

Sl noSl no TransactionTransaction Limit in US $Limit in US $

11 Private visitPrivate visit USD 10,000 per financial yearUSD 10,000 per financial year

22 Business travel, Business travel, Conference, Conference, TrainingTraining

USD 25,000 per tripUSD 25,000 per trip

33 Medical Medical treatmenttreatment

USD 100,000 or its equivalent on self declaration USD 100,000 or its equivalent on self declaration basis basis

44 Higher studiesHigher studies USD1,00,000 per academic year USD1,00,000 per academic year

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Limits upto which ADs can release Limits upto which ADs can release foreign Exchange foreign Exchange

Sl.Sl.no.no.

TransactionTransaction LimitLimit

55

EmploymentEmployment Upto USD 1,00,000Upto USD 1,00,000

66

EmigrationEmigration Upto USD 1,00,000 Upto USD 1,00,000

77

Gift/donationGift/donation USD 5,000 per remitter/donor per annum. USD 5,000 per remitter/donor per annum.

88 Maintenance of close Maintenance of close relatives abroad relatives abroad ––

USD 1,00,000 per recipient USD 1,00,000 per recipient

99 Cultural Cultural as sanctioned by GoIas sanctioned by GoI

1010 LRSLRS USD 2,00,000 per financial yearUSD 2,00,000 per financial year

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Liberalised Remittance Scheme of Liberalised Remittance Scheme of USD 200000USD 200000

Facility extended to all resident individuals Facility extended to all resident individuals freely remit upto USD 200,000 per financial year freely remit upto USD 200,000 per financial year

for any permissible current or capital account for any permissible current or capital account transaction or a combination of both. transaction or a combination of both.

Not available for purposes specifically prohibited Not available for purposes specifically prohibited (Sch I) or GOI (Sch II) of FEMA(Current Account (Sch I) or GOI (Sch II) of FEMA(Current Account Transactions) Rules, 2000. Transactions) Rules, 2000.

free to acquire and hold immovable property, free to acquire and hold immovable property, shares or any other asset outside India without shares or any other asset outside India without prior approval of RBIprior approval of RBI using the scheme.using the scheme.

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Liberalised Remittance Scheme of Liberalised Remittance Scheme of USD 200000 USD 200000

Free to open, hold and maintain foreign currency Free to open, hold and maintain foreign currency accounts with a bank outside India for accounts with a bank outside India for remittances under the scheme without the prior remittances under the scheme without the prior approval of RBI. approval of RBI.

Remittance cannot be made directly or indirectly Remittance cannot be made directly or indirectly to Bhutan, Nepal, Mauritius or Pakistan. to Bhutan, Nepal, Mauritius or Pakistan.

Not available for making remittances directly or Not available for making remittances directly or indirectly to countries identified by the Financial indirectly to countries identified by the Financial Action Task Force (FATF) as ‘non-co-operative Action Task Force (FATF) as ‘non-co-operative Countries or Territories, from time to time Countries or Territories, from time to time (website site (website site www.fatf-gafi.org).).

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Release of Foreign Currency-restrictionsRelease of Foreign Currency-restrictions

No releaseNo release of foreign exchange for any of foreign exchange for any kind of travel to kind of travel to Nepal and BhutanNepal and Bhutan or for or for any transaction with persons resident in any transaction with persons resident in Nepal and Bhutan.Nepal and Bhutan.

Travellers allowed to purchase/carry Travellers allowed to purchase/carry foreign currency notes/coins only up to foreign currency notes/coins only up to USD 2000. USD 2000.

Balance amount in the form of traveller’s Balance amount in the form of traveller’s cheque or banker’s draft.cheque or banker’s draft.

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Release of foreign Currency-Release of foreign Currency-RestrictionsRestrictions

Exceptions to this areExceptions to this are

• (a) travellers proceeding to Iraq and (a) travellers proceeding to Iraq and Libya - not exceeding USD 5000 or its Libya - not exceeding USD 5000 or its equivalent;equivalent;

• (b) travellers proceeding to the Islamic (b) travellers proceeding to the Islamic

Republic of Iran, Russian Federation and Republic of Iran, Russian Federation and other Republics of Commonwealth of other Republics of Commonwealth of Independent States - entire foreign Independent States - entire foreign exchange released in the form of foreign exchange released in the form of foreign currency notes or coins.currency notes or coins.

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Resident Going Abroad-Resident Going Abroad-Indian CurrencyIndian Currency

Residents are free to take outside India (other Residents are free to take outside India (other than to Nepal and Bhutan) currency notes of GOI than to Nepal and Bhutan) currency notes of GOI and RBI notes up to not exceeding Rs. 5,000/ - and RBI notes up to not exceeding Rs. 5,000/ - per person.per person.

They may take or send outside India (other than They may take or send outside India (other than to Nepal and Bhutan) commemorative coins not to Nepal and Bhutan) commemorative coins not exceeding two coins each.exceeding two coins each.

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Utilisation of forexUtilisation of forex

The foreign exchange acquired has to be used The foreign exchange acquired has to be used within 180 days of purchase.within 180 days of purchase.

If not possible, to be surrendered to an AD within If not possible, to be surrendered to an AD within 180 days.180 days.

Can retain upto USD 2000 in currency Can retain upto USD 2000 in currency notes/travellers cheque.notes/travellers cheque.

Foreign Exchange purchased for a specific Foreign Exchange purchased for a specific purpose is not utilized for that purpose, it could purpose is not utilized for that purpose, it could be utilized for any other eligible purpose be utilized for any other eligible purpose permitted under the relevant regulation. permitted under the relevant regulation.

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Residents coming to India from Residents coming to India from abroad-abroad-

regarding Indian Currencyregarding Indian Currency - - can bring in with himcan bring in with him(a)(a) up to Rs. 5,000 from any country other than Nepal or up to Rs. 5,000 from any country other than Nepal or

Bhutan, and Bhutan, and (b)(b) any amount in denomination not exceeding Rs.100 from any amount in denomination not exceeding Rs.100 from

Nepal or Bhutan.Nepal or Bhutan. Foreign Exchange-Foreign Exchange- can bring without any limit. can bring without any limit. 1.1. If the aggregate value of the foreign exchange in the If the aggregate value of the foreign exchange in the

form of currency notes, bank notes or TCs brought in form of currency notes, bank notes or TCs brought in exceeds USD 10,000/- or its equivalent and/or exceeds USD 10,000/- or its equivalent and/or

2.2. the value of foreign currency exceeds USD 5,000/- or its the value of foreign currency exceeds USD 5,000/- or its equivalent, equivalent,

3.3. To be declared to the Customs Authorities at the Airport To be declared to the Customs Authorities at the Airport in the Currency Declaration Form (CDF), on arrival in in the Currency Declaration Form (CDF), on arrival in India.India.

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FACILITIES FOR NON-RESIDENT INDIANS(NRI)/

PERSON OF INDIAN ORIGIN(PIO)

Page 23: FEMA

Definition Non-Resident Indian (NRI):

is a person  resident outside India who is a citizen of India or is a person of Indian origin .

(defined in Regulation 2 of FEMA Notification No.5 dated May 3, 2000) Person of Indian Origin (PIO) :

(defined in Regulation 2 of FEMA)

is a citizen of any country other than Bangladesh or Pakistan, if (a) he at any time held Indian passport; or(b) he or either of his parents or any of his grand-parents was a citizen of India by virtue of the Constitution of India or the Citizenship Act, 1955 or (c) the person is a spouse of an Indian citizen or a person referred to in sub-clause (a) or (b) above.

Page 24: FEMA

Relevant Circulars

Master Circular No.4 on Remittance

Facilities for Non-Resident Indians / Persons

of Indian Origin / Foreign Nationals dated

July 01, 2009

Notification FEMA 13/2000-RB dated

03/05/2000

Notification FEMA 21/2000-RB dated

03/05/2000

Page 25: FEMA

Accounts and Deposits-NRI

Non-Resident (External) Rupee (NRE) Accounts

Foreign Currency (Non-Resident) Account (Banks) Scheme (FCNR(B) Account

NRO Accounts NRO/NRE/FCNR accounts can be maintained

with ADs. Also certain co-operative banks and RRBs

have been authorised.

Page 26: FEMA

Non Resident Accounts

• NRE /NRO A/c.- Indian Rupee

type: Savings, Current & Recurring, Fixed

deposits

FCNR (B) A/c. – Foreign currency• In designated currencies-

USD, Pound Sterling, Euro, JY, AD, CDType: Only Term Deposit

Restriction• Individuals / entities of Bangladesh /

Pakistan nationality / ownership require prior approval of RBI.

Page 27: FEMA

Non Resident Accounts

NRO A/c:- • Any person resident outside India other than

those resident in Nepal/Bhutan can open an NRO a/c. with an AD for the purpose of putting through bonafide transcations in Rupees.

• POA cannot open any a/c. on behalf of the Non-resident.

• Individuals / entities of Bangladesh / Pakistan nationality / ownership require prior approval of RBI.

Page 28: FEMA

Remittance Facilities for NRI/PIORemittance of current Income

Remittance of Rent, Dividend, Pension, Interest etc.

of NRI/PIO (even those who do not maintain an NRO account) is freely allowed on the basis of

• appropriate certification by a CA that the amount proposed to be remitted is eligible for remittance

• and that applicable taxes have been paid/provided for.

NRI/PIO have the option to credit the current income to their NRE (rupee) account provided

• the AD is satisfied that the credit represents current income of the Non resident account holder and income tax thereon has been deducted / provided for.

Page 29: FEMA

Remittance of assets by NRI/PIO

remit an amount upto USD 1 million per financial year, out of the balances held in his NRO account/sale proceeds of assets (inclusive of assets acquired by way of inheritance or settlement) for all bona fide purposes, to the satisfaction of the AD bank, • on production of an undertaking by the

remitter• certificate by CA in the formats prescribed by

CBDT vide circular No.10/2002 dated October 09, 2002.

Page 30: FEMA

Remittance of assets by NRI/PIO

remit sale proceeds immovable property purchased by him out of Rupee funds ( as a person in India) without any lock in period subject to-

submit documentary evidence in support of inheritance or legacy of assets

An undertaking by the remitter Certificate by CA in the prescribed format

Page 31: FEMA

Restriction on Remittance Facility

The remittance facility in respect of sale proceeds of immovable property is not available to citizens of -• Pakistan, Bangladesh, Sri Lanka, China,

Afghanistan, Iran, Nepal and Bhutan The facility of remittance of sale proceeds of

other financial assets is not available to citizens of • Pakistan, Bangladesh, Nepal and Bhutan

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ExportsExports

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References..References..

Foreign Trade Policy 2005 - 2009Foreign Trade Policy 2005 - 2009 Section 7 of FEMA, 1999Section 7 of FEMA, 1999 Notification No. FEMA 23/2000-RB dated Notification No. FEMA 23/2000-RB dated

3.5.2000, as amended from time to time.3.5.2000, as amended from time to time. Master Circular No.9/2009-10 dated 1.07.2009 Master Circular No.9/2009-10 dated 1.07.2009

read with AP(DIR Series) Circulars issued read with AP(DIR Series) Circulars issued thereafter.thereafter.

GSR 381(E) dated May 3, 2000GSR 381(E) dated May 3, 2000

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Exemptions from Declaration under Regulation 4 Exemptions from Declaration under Regulation 4 of FEMA 23of FEMA 23

13 items exempted under regulation 4 of FEMA 23.13 items exempted under regulation 4 of FEMA 23.a few are as under;a few are as under;

A few such cases are as under;A few such cases are as under; Trade samples of goods and publicity material supplied Trade samples of goods and publicity material supplied

free of paymentfree of payment

Personal effects of travellers , whether accompanied or Personal effects of travellers , whether accompanied or unaccompanied;unaccompanied;

Goods or software accompanied by a declaration by the Goods or software accompanied by a declaration by the exporter that they are not more than USD 25000 in valueexporter that they are not more than USD 25000 in value

By way of gift of goods accompanied by a declaration by By way of gift of goods accompanied by a declaration by the exporter that they are not more than five lakh rupees in the exporter that they are not more than five lakh rupees in value etcvalue etc

Page 35: FEMA

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GR Approval for Trade Fair/Exhibitions abroadGR Approval for Trade Fair/Exhibitions abroad Firms / Companies and other organisations take/export Firms / Companies and other organisations take/export

goods for exhibition outside India without the prior approval goods for exhibition outside India without the prior approval of the Reserve Bank of India. of the Reserve Bank of India.

Unsold exhibit items may be sold outside the Unsold exhibit items may be sold outside the exhibition/trade fair in the same country or in a third exhibition/trade fair in the same country or in a third country. country.

Such sales at discounted value are also permissible.Such sales at discounted value are also permissible.

It would also be permissible to `gift' unsold goods up to the It would also be permissible to `gift' unsold goods up to the value of USD 5000 per exporter, per exhibition/trade fair. value of USD 5000 per exporter, per exhibition/trade fair.

AD Banks may approve GR Form of export items for display AD Banks may approve GR Form of export items for display or display-cum-sale in trade fairs/exhibitions outside India or display-cum-sale in trade fairs/exhibitions outside India subjectsubject to conditions to conditions

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GR approval for Export of GoodsGR approval for Export of Goods

for re-importsfor re-imports AD banks may consider request from exporters for granting AD banks may consider request from exporters for granting

GR approval in cases where goods are being exported for GR approval in cases where goods are being exported for re-import after repairs / maintenance / testing / calibration re-import after repairs / maintenance / testing / calibration etc. subject to the condition that the exporter shall;etc. subject to the condition that the exporter shall;

• produce relative Bill of Entry within one month of re-produce relative Bill of Entry within one month of re-import of the exported item from India.import of the exported item from India.

• Where the goods being exported for testing are Where the goods being exported for testing are destroyed during testing, AD banks may obtain a destroyed during testing, AD banks may obtain a certificate issued by the testing agency that the goods certificate issued by the testing agency that the goods have been destroyed during testing, in lieu of Bill of have been destroyed during testing, in lieu of Bill of Entry for import. Entry for import.

• Ap dir 21 dated Jan 10, 2006Ap dir 21 dated Jan 10, 2006

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Direct dispatch of documents by theDirect dispatch of documents by theexporterexporter

AD Banks should normally dispatch shipping documents to AD Banks should normally dispatch shipping documents to their overseas branches/correspondents expeditiously.their overseas branches/correspondents expeditiously.

However, they may dispatch shipping documents direct to However, they may dispatch shipping documents direct to the consignees where:the consignees where:

Advance payment or an irrevocable letter of credit Advance payment or an irrevocable letter of credit The exporter is a regular customer and the AD Banks The exporter is a regular customer and the AD Banks

is satisfied, on the basis of standing and track record is satisfied, on the basis of standing and track record of the exporter of the exporter

Status Holder Exporters' and SEZ units may be Status Holder Exporters' and SEZ units may be permitted to dispatch the export documents to permitted to dispatch the export documents to the consignees outside India subject to the terms the consignees outside India subject to the terms and conditions that:and conditions that:

The export proceeds are repatriated through the AD Banks The export proceeds are repatriated through the AD Banks named in the GR Form.named in the GR Form.

The duplicate copy of the GR form The duplicate copy of the GR form is submitted to the AD Banks for monitoring purposes, by is submitted to the AD Banks for monitoring purposes, by the exporters within 21 days from the date of export.the exporters within 21 days from the date of export.

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Period of realisationPeriod of realisation

the prescribed period of realization and the prescribed period of realization and repatriation of export proceeds has been repatriation of export proceeds has been increased from six months to twelve months increased from six months to twelve months from the date of export, subject to review after from the date of export, subject to review after one year. one year.

The provisions in respect of Special Economic The provisions in respect of Special Economic Zone (SEZ) and exports made to warehouses Zone (SEZ) and exports made to warehouses established outside India (with the permission of established outside India (with the permission of

Reserve Bank) remain unchanged.Reserve Bank) remain unchanged. • AP DIR 50 dated June 3, 2008AP DIR 50 dated June 3, 2008

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Reduction in ValueReduction in Value ADs can allow reduction in value subject to the following ADs can allow reduction in value subject to the following

conditions:conditions:

a.a. The reduction does not exceed 25 per cent of invoice The reduction does not exceed 25 per cent of invoice value:value:

b. b. It does not relate to export of commodities subject to It does not relate to export of commodities subject to floor price stipulationsfloor price stipulations

c. c. The exporter is not on the exporters’ caution list of The exporter is not on the exporters’ caution list of Reserve Bank, andReserve Bank, and

d.d. The exporter is advised to surrender proportionate export The exporter is advised to surrender proportionate export incentives availed of, if any.incentives availed of, if any.

e.e. In the case of exporters who have been in the export In the case of exporters who have been in the export business for more than three years, no such ceiling business for more than three years, no such ceiling subject to the above conditions as also subject to their subject to the above conditions as also subject to their track record being satisfactory, track record being satisfactory, i.e., the export outstandings do i.e., the export outstandings do not exceed 5 per cent of the average annual export realisation during not exceed 5 per cent of the average annual export realisation during the preceding three financial years.the preceding three financial years.

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Extension of time and Self write offExtension of time and Self write offby the exportersby the exporters

all exporters have been allowed to self write off (including all exporters have been allowed to self write off (including reduction in invoice value) outstanding export dues and reduction in invoice value) outstanding export dues and extend the period of realisation, provided;extend the period of realisation, provided;

The aggregate value of such export bills, written-off and The aggregate value of such export bills, written-off and extended, does not exceed 10 per cent of the extended, does not exceed 10 per cent of the export export proceeds due during the financial year andproceeds due during the financial year and

such export bills are not a subject of investigation by such export bills are not a subject of investigation by Enforcement Directorate / Central Bureau of Investigation Enforcement Directorate / Central Bureau of Investigation or any other Investigating Agencies.or any other Investigating Agencies.

Exporters dealing with more than one AD Banks can avail Exporters dealing with more than one AD Banks can avail of this facility through each AD bankof this facility through each AD bank

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Extension of Time by AD BankExtension of Time by AD Bank Reserve Bank of India has permitted the AD Reserve Bank of India has permitted the AD

Banks to extend the period of realisation of Banks to extend the period of realisation of export proceeds beyond the prescribed period export proceeds beyond the prescribed period from the date of export, up to a period of six from the date of export, up to a period of six months, months, at a timeat a time, irrespective of the invoice , irrespective of the invoice value of the export subject to conditions.value of the export subject to conditions.

While considering extension beyond one year While considering extension beyond one year from the date of export, the total outstanding of from the date of export, the total outstanding of the exporter does not exceed USD one million or the exporter does not exceed USD one million or 10 per cent of the average export realisations 10 per cent of the average export realisations during the preceding three financial years, during the preceding three financial years, whichever is higherwhichever is higher

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Write off by AD BanksWrite off by AD Banks AD Banks may accede to requests for write off AD Banks may accede to requests for write off

subject to the under noted conditions:subject to the under noted conditions:• The relevant amount has remained The relevant amount has remained

outstanding for one year or more;outstanding for one year or more;• The aggregate amount of write off allowed by The aggregate amount of write off allowed by

the AD does not exceed 10 per cent of the total the AD does not exceed 10 per cent of the total export proceeds realised by the concerned export proceeds realised by the concerned exporter during the previous financial year;exporter during the previous financial year;

• Satisfactory documentary evidence is Satisfactory documentary evidence is furnished in support of the exporter having furnished in support of the exporter having made all efforts to realise the dues; etcmade all efforts to realise the dues; etc

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ImportsImports

Section 5 of FEMA 1999Section 5 of FEMA 1999 Master Circular No.8/2009-10 dated Master Circular No.8/2009-10 dated

1.07.2009 read with AP(DIR Series) 1.07.2009 read with AP(DIR Series) Circulars issued thereafter.Circulars issued thereafter.

GOI Notification No.381 (E) of May 3, 2000GOI Notification No.381 (E) of May 3, 2000 follow KYC guidelines (issued by DBOD)follow KYC guidelines (issued by DBOD)

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Time Limit for Settlement of Import Payments Time Limit for Settlement of Import Payments

remittances against imports should be remittances against imports should be completed not later than completed not later than six six months from months from the date of shipment except in cases the date of shipment except in cases where amounts are withheld towards where amounts are withheld towards guarantee of performance etc.guarantee of performance etc.

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Time Limit for Settlement of Import Payments…Time Limit for Settlement of Import Payments…

Authorised Dealers may permit settlement Authorised Dealers may permit settlement of import dues delayed due to disputes, of import dues delayed due to disputes, financial difficulties etc. financial difficulties etc.

Interest in respect of such delayed Interest in respect of such delayed payments may be permitted in terms of payments may be permitted in terms of the directions/guidelines on trade credit. the directions/guidelines on trade credit.

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Advance RemittanceAdvance Remittance

If the amount of advance remittance If the amount of advance remittance exceeds USD 100,000 or its equivalentexceeds USD 100,000 or its equivalent

an unconditional, irrevocable standby an unconditional, irrevocable standby Letter of Credit or a guarantee from an Letter of Credit or a guarantee from an international bank of repute situated international bank of repute situated outside Indiaoutside India

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Advance Remittance…Advance Remittance…

the importer the importer unable to obtain bank guarantee from overseas unable to obtain bank guarantee from overseas

suppliers and the Authorised Dealer suppliers and the Authorised Dealer is satisfied about the track record is satisfied about the track record and bonafides of the importerand bonafides of the importer

the requirement of the bank guarantee/ standby the requirement of the bank guarantee/ standby Letter of Credit may not be insisted upon for Letter of Credit may not be insisted upon for advance remittances upto advance remittances upto USD 5,000,000USD 5,000,000

Authorised Dealers may frame their own internal Authorised Dealers may frame their own internal

guidelines to guidelines to as per a suitable policy framed as per a suitable policy framed by the bank's Board of Directorsby the bank's Board of Directors..

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Non Physical ImportsNon Physical Imports

Where imports are made in non-physical Where imports are made in non-physical form, form, • i.e., software or data through internet / i.e., software or data through internet /

datacom channels and drawings and designs datacom channels and drawings and designs through e-mail/fax, through e-mail/fax,

• a certificate from a Chartered Accountant that a certificate from a Chartered Accountant that the software / data / drawing/ design has been the software / data / drawing/ design has been received by the importer, may be obtained.received by the importer, may be obtained.

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Receipt of import documents by the importer Receipt of import documents by the importer directly from overseas suppliersdirectly from overseas suppliers

Import bills and documents should be received from the banker of Import bills and documents should be received from the banker of the supplier by the banker of the importer in India. AD bank the supplier by the banker of the importer in India. AD bank should not, therefore, make remittances where import bills have should not, therefore, make remittances where import bills have been received directly by the importers from the overseas been received directly by the importers from the overseas supplier, except in the following cases:supplier, except in the following cases:

i. Where the value of import bill does not exceed USD 300,000.i. Where the value of import bill does not exceed USD 300,000. ii. Import bills received by wholly-owned Indian subsidiaries of ii. Import bills received by wholly-owned Indian subsidiaries of

foreign companies from their principals.foreign companies from their principals. iii. Import bills received by Status Holder Exporters as defined in iii. Import bills received by Status Holder Exporters as defined in

the Foreign Trade Policy, 100% Export Oriented Units / Units in the Foreign Trade Policy, 100% Export Oriented Units / Units in Free Trade Zones, Public Sector Undertakings and Limited Free Trade Zones, Public Sector Undertakings and Limited Companies.Companies.

iv. Import bills received by all limited companies viz. public iv. Import bills received by all limited companies viz. public limited, deemed public limited and private limited companies.limited, deemed public limited and private limited companies.

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Thank youThank you

Santha PaulSantha Paul

RBI, ChennaiRBI, Chennai