Advance receipts against exports - Banks given more powers
22nd February, 2012
AD Category- I banks have been permitted to allow exporters to receive advance payment for export of goods which would take more than one year to manufacture and ship after receipt of payment. Hitherto, prior permission of Reserve Bank of India was required for receipt of such advance by the exporters.
RBI A.P. (Dir Series) Circular No. 81, dated 21-2-2012 issued in this regard also lists some conditions like ensuring that export advance received by the exporter is utilized to execute export and not for any other purpose i.e., the transaction is a bona-fide transaction and that the rate of interest, if any, payable on the advance payment shall not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points.
As per the circular, documents covering the shipment should be routed through the same authorised dealer bank and in the event of the exporter's inability to make the shipment, RBI’s prior approval is required for refund of unutilized portion of advance payment or interest.