Third party payments for export/import transactions – Conditions relaxed
19 Februray, 2014
The Reserve Bank of India has liberalized norms for third party payments in foreign trade transactions. AD Category banks may now not insist that a ‘firm irrevocable order backed by a tripartite agreement should be in place’ for undertaking remittance in cases where documentary evidence for circumstances leading to third party payments/name of the third party being mentioned in the irrevocable order/invoice has been produced.
A.P. (DIR Series) Circular No.100, dated 4-2-2014 also provides that in such cases AD bank should be satisfied with the bona-fides of the transaction and export documents, such as, invoice/FIRC and should consider the FATF statements while handling such transactions. Limit of USD 100,000 eligible for third party payment for import of goods has also been withdrawn.