The Reserve Bank of India (RBI) has suggested that before "caution-listing," banks that are authorized foreign currency dealers offer exporters a fair chance to be heard.
The suggestion is included in the Foreign Exchange Management (Export and Import of Goods and Services)Act Regulations 2024 draft, which the central bank made available for public review on Tuesday.
Exporters who do not receive payment for exports within a 24-month period are placed on a warning list. Once a company receives the tag, it may only transport products on the condition of receiving a letter of credit or full advance payment.
All export earnings, including products and services, must be repatriated to the nation within nine months or 270 days, as per the present regulations. This is suggested to go forward in the revised draft.
Prior to 2020, the RBI would initiate a warning listing if export payments were not reflected against delivered items, and the computer system would automatically initiate one if payments were not received for exports within a 24-month period. Later, the Authorized Dealers were assigned this task since, on occasion, banks would fail to update their payment receipts on time, causing the RBI system to automatically caution-list them.
According to the newly suggested criteria, an exporter may be able to avoid the caution list provided he can show that the unpaid invoices are still being pursued.
Exporters who have been placed on the caution list, as per the draft rules, are only permitted to export after receiving full advance payment or an irreversible letter of credit that satisfies the authorized dealer.
In accordance with the draft, each exporter must provide a statement to the designated authority that details the total value of the products or services exported.
The draft reaffirmed, "Within nine months of the date of goods shipment and the date of services invoice, the amount representing the full export value of goods and services shall be realized and repatriated to India."
The proposal states that unless the RBI expressly approves them, no advance remittance for the import of gold or silver should be allowed.
According to the RBI, the new laws aim to facilitate commercial dealings, particularly for small importers and exporters.
According to the central bank, they are also meant to enable Authorized Dealer banks to provide their foreign exchange consumers faster and more effective service. September 1st is the deadline for comments on the draft.
