Procedures to set-off export receivables against import payables, relaxed
24th November, 2011
In a major move at delegating more powers to banks, the Reserve Bank of India has empowered Authorised Dealer Category-I banks to deal with the cases of “set-off” of export receivables against import payables. This ‘set-off’ required the nod of RBI earlier. The RBI, in its press release, states that it has been allowing requests from the exporters through their AD Category 1 banks for such “set-off” subject to conditions and it has decided to delegate such power now.
As per A.P. (DIR Series) Circular No.47 dated 17th November, 2011, for such adjustments by the AD Category-I banks, the import should have been as per the Foreign Trade Policy and the importer is required to submit specified documents to the bank. These documents are invoices, bills of lading, airway bills and exchange control copies of bills of entry.
The circular, while laying down the condition that the set-off of export receivables should be in respect of same overseas buyer and supplier, also requires that the payment should be outstanding in the books of the importer.
GR forms will be released by the bank only after the entire export proceeds are adjusted/received. The export/import transactions with ACU countries have been kept outside the arrangement.