RBI/FED/2016-17/12

FED Master Direction No. 17/2016-17 January 1, 2016

(Updated as on February 02, 2018)
(Updated as on January 12, 2017)
(Updated as on October 20, 2016)
(Updated as on March 31, 2016)
(Updated as on February 4, 2016)

To

All Authorised Dealer Category – I banks and Authorised Banks

Madam / Dear Sir,

Master Direction – Import of Goods and Services

Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign
Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E)
dated May 3, 2000 viz. Foreign Exchange Management (Current Account Transaction)
Rules, 2000. These Regulations are amended from time to time to incorporate the changes
in the regulatory framework and published through amendment notifications.

2. Within the contours of the Regulations, Reserve Bank of India also issues directions to
Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA),
1999. These directions lay down the modalities as to how the foreign exchange business
has to be conducted by the Authorised Persons with their customers/constituents with a view
to implementing the regulations framed.

3. Instructions issued on import of goods and services into India have been compiled in this
Master Direction. The list of underlying circulars/ notifications which form the basis of this
Master Direction is furnished in the Appendix. Reporting instructions can be found in Master
Direction on reporting (Master Direction No. 18 dated January 01, 2016).

4. It may be noted that, whenever necessary, Reserve Bank shall issue directions to
Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the
Regulations or the manner in which relative transactions are to be conducted by the
Authorised Persons with their customers/ constituents. The Master Direction issued herewith
shall be amended suitably simultaneously.

Yours faithfully,

(Shekhar Bhatnagar)
Chief General Manager-in-Charge
 INDEX
Section I - Introduction
Section II - General Guidelines for imports
B.1. General Guidelines
B.2. Remittances for Import Payments
B.3. Import Licenses
B.4. Obligation of Purchaser of Foreign Exchange
B.5. Time Limit for Settlement of Import Payments
B.6. Import of Foreign exchange / Indian Rupees
B.7. Third Party Payment for Import Transactions
B.8. Issue of Guarantees by an Authorised Dealer
Section III - Operational Guidelines for Imports
C.1. Advance Remittance
C.2. Interest on Import Bills
C.3. Remittances against Replacement Imports
C.4. Guarantee for Replacement Import
Import of Equipment by Business Process Outsourcing (BPO)
C.5.
Companies for their overseas sites
Receipt of Import Bills/Documents by the Importer Directly from
C.6.
Overseas Suppliers
C.7. Evidence of Import
1
C.8. Import Data Processing and Monitoring System
C.9. Verification and Preservation
C.10. Follow up for Import Evidence
C.11. Import of Gold
C.12. Import of Other Precious Metals
C.13. Import Factoring
C.14. Merchanting Trade
C.15. Import Payments through Online Payment Gateway Service
Providers
2
C. 16 Settlement of Import transactions in currencies not having a
direct exchange rate
Consolidated List of Circulars in the Master Direction

1
Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016 prior to modification it read as ‘’Issue of acknowledgement”
2
Inserted vide AP (DIR) Series Circular 42 dated February 4, 2016

1
 Master Direction 17 – Import of Goods and Services

Section I - Introduction

(i) Import trade is regulated by the Directorate General of Foreign Trade (DGFT)
under the Ministry of Commerce & Industry, Department of Commerce, Government
of India. Authorised Dealer Category – I (AD Category – I) banks should ensure that
the imports into India are in conformity with the Foreign Trade Policy in force and
Foreign Exchange Management (Current Account Transactions) Rules, 2000
framed by the Government of India vide Notification No. G.S.R.381 (E) dated May
3, 2000 and the Directions issued by Reserve Bank under Foreign Exchange
Management Act, 1999 from time to time.

(ii) AD Category – I banks should follow normal banking procedures and adhere to
the provisions of Uniform Customs and Practices for Documentary Credits
(UCPDC), etc. while opening letters of credit for import into India on behalf of their
constituents.

(iii) Compliance with the provisions of Research & Development Cess Act, 1986
may be ensured for import of drawings and designs.

(iv) AD Category – I banks may also advise importers to ensure compliance with the
provisions of Income Tax Act, wherever applicable.

(v) Any reference to the Reserve Bank should first be made to the Regional Office
of the Foreign Exchange Department situated in the jurisdiction where the applicant
person resides, or the firm / company functions, unless otherwise indicated. If, for
any particular reason, they desire to deal with a different office of the Foreign
Exchange Department, they may approach the Regional Office of its jurisdiction for
necessary approval.

Section II - General Guidelines for Imports

B.1. General Guidelines

Rules and regulations to be followed by the AD Category – I banks from the foreign
exchange angle while undertaking import payment transactions on behalf of their
clients are set out in the following paragraphs. Where specific regulations do not
exist, AD Category – I banks may be governed by normal trade practices. AD
Category – I banks may particularly note to adhere to "Know Your Customer" (KYC)

2
guidelines issued by Reserve Bank (Department of Banking Regulation) in all their
dealings.

B.2. Remittances for Import Payments

AD Category I Banks may allow remittance for making payments for imports into
India, after ensuring that all the requisite details are made available by the importer
and the remittance is for bona fide trade transactions as per applicable laws in
force.

B.3. Import Licences

Except for goods included in the negative list which require licence under the
Foreign Trade Policy in force, AD Category - I banks may freely open letters of
credit and allow remittances for import. While opening letters of credit, the ‘For
Exchange Control purposes’ copy of the licence should be called for and adherence
to special conditions, if any, attached to such licences should be ensured. After
effecting remittances under the licence, AD Category - I banks may preserve the
copies of utilised licence /s till they are verified by the internal auditors or inspectors.

B.4. Obligation of Purchaser of Foreign Exchange

(i) In terms of Section 10(6) of the Foreign Exchange Management Act, 1999
(FEMA), any person acquiring foreign exchange is permitted to use it either for the
purpose mentioned in the declaration made by him to an Authorised Dealer
Category – I bank under Section 10(5) of the Act or for any other purpose for which
acquisition of foreign exchange is permissible under the said Act or Rules or
Regulations framed there under.

(ii) Where foreign exchange acquired has been utilised for import of goods into
India, the AD Category – I bank should ensure that the importer furnishes evidence
of import viz., 3as in IDPMS as explained in para C.7, Postal Appraisal Form or
Customs Assessment Certificate, etc., and satisfy himself that goods equivalent to
the value of remittance have been imported. 4AD bank should ensure that all import
remittances outstanding on the notified date of IDPMS are uploaded in IDPMS.

3
Modified vide AP DIR Series Circular No. 27 dated January 12, 2017 prior to modification it read as “Exchange Control
Copy of the Bill of Entry”
4
Inserted vide AP DIR Series circular No.5 dated October 06, 2016

3
5
(iii) Notwithstanding anything contained in the Manner of Payment in foreign
Exchange (FEMA 14R/2016-RB dated May 02, 2016), a person resident in India
may make payment for import of goods in foreign exchange through an international
card held by him/in rupees from international credit card/ debit card through the
credit/debit card servicing bank in India against the charge slip signed by the
importer or as prescribed by Reserve Bank from time to time ,provided that the
transaction is in conformity with the extant provisions and the import is in conformity
with the Foreign Trade Policy in force.

(iv) Any person resident in India may also make payment as under :

(a) In rupees towards meeting expenses on account of boarding , lodging and

services related thereto or travel to and from and within India of a person resident
outside India who is on a visit to India ;

(b) By means of a crossed cheque or a draft as consideration for purchase of

gold or silver in any form imported by such person in accordance with the terms and
conditions imposed under any order issued by the Central Government under the
Foreign Trade(Development and Regulations) Act, 1992 or under any other law,
rules or regulations for the time being in force;

(c) A company or resident in India may make payment in rupees to its non-
whole time director who is resident outside India and is on a visit to India for the
company’s work and is entitled to payment of sitting fees or commission or
remuneration, and travel expenses to and from and within India, in accordance with
the provisions contained in the company’s Memorandum of Association or Articles
of Association or in any agreement entered into it or in any resolution passed by the
company in general meeting or by its Board of Directors, provided the requirement
of any law, rules, regulations, directions applicable for making such payments are
duly complied with.

5
Modified vide AP DIR Series circular No.11 [(1)/14(R)] dated October 20, 2016 prior to modification it read as “In
addition to the permitted methods of payment for imports laid down in Notification No.FEMA14/2000-RB dated 3rd May
2000, payment for import can also be made by way of credit to non-resident account of the overseas exporter maintained
with a bank in India. In such cases also AD Category – I banks should ensure compliance with the instructions contained in
sub-paragraphs (i) and (ii) above.”

4
B.5. Time Limit for Settlement of Import Payments

B.5.1. Time limit for Normal Imports

(i) In terms of the extant regulations, remittances against imports should be

completed not later than six months from the date of shipment, except in cases
where amounts are withheld towards guarantee of performance, etc.

(ii) AD Category – I banks may permit settlement of import dues delayed due to
disputes, financial difficulties, etc. However, interest if any, on such delayed
payments, usance bills or overdue interest is payable only for a period of up to
three years from the date of shipment and may be permitted in terms of the
directions in para C.2 of Section III below.

B.5.2. Time Limit for Deferred Payment Arrangements

Deferred payment arrangements (including suppliers’ and buyers’ credit) upto five
years, are treated as trade credits for which the procedural guidelines as laid down
in the Master Circular for External Commercial Borrowings and Trade Credits may
be followed.

B.5.3. Time Limit for Import of Books

Remittances against import of books may be allowed without restriction as to the

time limit, provided, interest payment, if any, is as per the instructions in para C.2 of
Section III of this Circular.
6
B.5.4 Extension of Time
(i) AD Category – I banks can consider granting extension of time for settlement of
import dues up to a period of six months at a time (maximum up to the period of
three years) irrespective of the invoice value for delays on account of disputes
about quantity or quality or non-fulfilment of terms of contract; financial difficulties
and cases where importer has filed suit against the seller. In cases where sector
specific guidelines have been issued by Reserve Bank of India for extension of time
(i.e. rough, cut and polished diamonds), the same will be applicable.

6
Inserted vide AP DIR Series circular No.65 dated April 28, 2016

5
(ii) While granting extension of time, AD Category –I banks must ensure that:

a. The import transactions covered by the invoices are not under investigation
by Directorate of Enforcement / Central Bureau of Investigation or other
investigating agencies;

b. While considering extension beyond one year from the date of remittance 7,
the total outstanding of the importer does not exceed USD one million or 10
per cent of the average import remittances during the preceding two financial
years, whichever is lower; and

c. Where extension of time has been granted by the AD Category – I banks, the
date up to which extension has been granted may be indicated in the
‘Remarks’ column.

(iii) Cases not covered by the above instructions / beyond the above limits, may be
referred to the concerned Regional Office of Reserve Bank of India.
8
(iv) The above shall be reported in IDPMS as per message “Bill of Entry Extension”
and the date up to which extension is granted will be indicated in “Extension Date”
column.

B.6. Import of Foreign Exchange / Indian Rupees

(i) Except as otherwise provided in the Regulations, no person shall, without the
general or special permission of the Reserve Bank, import or bring into India, any
foreign currency. Import of foreign currency, including cheques, is governed by
clause (g) of sub-section (3) of Section 6 of the Foreign Exchange Management
Act, 1999, and the Foreign Exchange Management (Export and Import of Currency)
Regulations 2000, issued by Reserve Bank vide 9Notification No. FEMA 6(R)/2015-
RB dated December 29, 2015, as amended from time to time.

(ii) Reserve Bank may allow a person to bring into India currency notes of
Government of India and / or of Reserve Bank subject to such terms and conditions

7
Clarification: may be considered as date of shipment
8
Inserted vide AP DIR Series circular No.05 dated October 06, 2016
9
Modified vide Notification No.6(R)/2015-RB prior to modification it read as “Notification No. FEMA 6/2000-RB dated
May 3, 2000”

6
as the Reserve Bank may stipulate.

B.6.1. Import of Foreign Exchange into India

A person may–

(i) Send into India, without limit, foreign exchange in any form other than currency
notes, bank notes and travellers cheques;

(ii) Bring into India from any place outside India, without limit, foreign exchange
(other than unissued notes), subject to the condition that such person makes, on
arrival in India, a declaration to the Custom Authorities at the Airport in the Currency
Declaration Form (CDF) annexed to these Regulations; provided further that it shall
not be necessary to make such declaration where the aggregate value of the
foreign exchange in the form of currency notes, bank notes or travellers cheques
brought in by such person at any one time does not exceed USD 10,000 (US
Dollars ten thousand) or its equivalent and/or the aggregate value of foreign
currency notes (cash portion) alone brought in by such person at any one time does
not exceed USD 5,000 (US Dollars five thousand) or its equivalent.

B.6.2. Import of Indian Currency and Currency Notes

(i) Any person resident in India who had gone out of India on a temporary visit, may
bring into India at the time of his return from any place outside India (other than
from Nepal and Bhutan), currency notes of Government of India and Reserve Bank
of India notes up to an amount not exceeding Rs.25,000 (Rupees twenty five
thousand only).

(ii) A person may bring into India from Nepal or Bhutan, currency notes of
Government of India and Reserve Bank of India for any amount in denominations
up to Rs.100/-.

B.7. Third Party Payment for Import Transactions

AD category I banks are allowed to make payments to a third party for import of
goods, subject to conditions as under:

a. Firm irrevocable purchase order / tripartite agreement should be in place.

However this requirement may not be insisted upon in case where

7
 documentary evidence for circumstances leading to third party payments /
name of the third party being mentioned in the irrevocable order / invoice has
been produced.

b. AD bank should be satisfied with the bonafides of the transactions and

should consider the Financial Action Task Force (FATF) Statement before
handling the transactions;

c. The Invoice should contain a narration that the related payment has to be
made to the (named) third party;

d. Bill of Entry should mention the name of the shipper as also the narration that
the related payment has to be made to the (named) third party;

e. Importer should comply with the related extant instructions relating to imports
including those on advance payment being made for import of goods.

B.8. Issue of Guarantees by an Authorised Dealer

B.8.1 An authorised dealer may give a guarantee in respect of any debt, obligation
or other liability incurred by a person resident in India and owned to a person
resident outside India, as an importer, in respect of import on deferred payment
terms in accordance with the approval by the Reserve Bank of India for import on
such terms.

B.8.2 An authorised dealer may give guarantee, Letter of Undertaking of Letter of

Comfort in respect of any debt, obligation or other liability incurred by a person
resident in India and owned to a person resident outside India (being an overseas
supplier of goods, bank or a financial institution), for import of goods, as permitted
under the Foreign Trade Policy announced by Government of India from time to
time and subject to such terms and conditions as may be specified by Reserve
Bank of India from time to time.

B.8.3 An authorised dealer may, in the ordinary course of his business, give a
guarantee in favour of a non-resident service provider, on behalf of a resident
customer who is a service importer, subject to such terms and conditions as
stipulated by Reserve Bank of India from time to time:

Provided that no guarantee for an amount exceeding USD 500,000 or its

equivalent shall be issued on behalf of a service importer other than a Public Sector

8
Company or a Department / Undertaking of the Government of India / State
Government:

Provided further that where the service importer is a Public Sector Company or a
Department / Undertaking of the Government of India / State Government, no
guarantee for an amount exceeding USD 100,000 or its equivalent shall be issued
without the prior approval of the Ministry of Finance, Government of India.

B.8.4 An authorised dealer may, subject to the directions issued by the Reserve
Bank of India in this behalf, permit a person resident in India to issue corporate
guarantee in favour of an overseas lessor for financing import through operating
lease effected in conformity with the Foreign Trade Policy in force and under the
provisions of the Foreign exchange Management (Current Account Transactions)
Rules, 2000 framed by the Government of India vide Notification No. G. S. R. 381
(E) dated May 3, 2000 and the Directions issued by Reserve Bank of India under
Foreign Exchange Management Act, 1999 from time to time.

Section III - Operational Guidelines for Imports

C.1. Advance Remittance

C.1.1. Advance Remittance for Import of Goods

(i) AD Category – I bank may allow advance remittance for import of goods without
any ceiling subject to the following conditions:

(a) If the amount of advance remittance exceeds USD 200,000 or its equivalent, an
unconditional, irrevocable standby Letter of Credit or a guarantee from an
international bank of repute situated outside India or a guarantee of an AD Category
– I bank in India, if such a guarantee is issued against the counter-guarantee of an
international bank of repute situated outside India, is obtained.

(b) In cases where the importer (other than a Public Sector Company or a
Department/Undertaking of the Government of India/State Government/s) is unable
to obtain bank guarantee from overseas suppliers and the AD Category – I bank is
satisfied about the track record and bonafides of the importer, the requirement of
the bank guarantee / standby Letter of Credit may not be insisted upon for advance
remittances up to USD 5,000,000 (US Dollar five million). AD Category – I banks
may frame their own internal guidelines to deal with such cases as per a suitable

9
policy framed by the bank's Board of Directors.

(c) A Public Sector Company or a Department/Undertaking of the Government of

India / State Government/s which is not in a position to obtain a guarantee from an
international bank of repute against an advance payment, is required to obtain a
specific waiver for the bank guarantee from the Ministry of Finance, Government of
India before making advance remittance exceeding USD 100,000.

(ii) All payments towards advance remittance for imports shall be subject to the
10
specified conditions and AD banks are required to create Outward Remittance
Message (ORM) for all such outward remittances in IDPMS & follow other extant
IDPMS guidelines.

C.1.2. Advance Remittance for Import of Rough Diamonds

a) AD category – I banks are permitted to take decision on overseas mining

companies to whom an importer (other than Public Sector Company or Department
/ Undertaking of Government of India / State Government) can make advance
payments, without any limit / bank guarantee/ stand-by letter of Credit. Banks must
ensure the following:

i. The overseas mining company should have the recommendation of GJEPC.

ii. The importer should be a recognised processor of rough diamonds and should
have a good track record.

iii. AD Category - I banks should, undertake the transaction based on their

commercial judgment and after being satisfied about the bonafides of the
transaction.

iv. Advance payments should be made strictly as per the terms of the sale contract
and should be made directly to the account of the company concerned, that is, to
the ultimate beneficiary and not through numbered accounts or otherwise and AD
banks should ensure that they have created the Outward Remittance Message
(ORM) for all such outward remittances in IDPMS.

v. Further, due caution may be exercised to ensure that remittance is not permitted
for import of conflict diamonds (Kimberly Certification).

10
Inserted vide AP (DIR Series) Circular dated No.5 dated October 06, 2016

10
vi. KYC and due diligence exercise should be done by the AD Category - I banks as
per the existing guidelines.

vii. AD Category - I banks should follow-up submission of the Bill of Entry /

documents evidencing import of rough diamonds into the country by the importer, in
terms of the Act / Rules / Regulations / Directions issued in this regard.

b) In case of an importer entity in the Public Sector or a Department / Undertaking

of the Government of India / State Government/s, AD Category - I banks may permit
the advance remittance subject to the above conditions and a specific waiver of
bank guarantee from the Ministry of Finance, Government of India, where the
advance payments is equivalent to or exceeds USD 100,000/- (USD one hundred
thousand only).
11
viii. Based on the AD code declared by the importer, the banks shall download the
Bill of Entry (BOE) issued by EDI ports from “BOE Master” in IDPMS. For non-EDI
ports, AD banks of the importer shall upload the BoE data in IDPMS as per
message format “Manual BoE reporting” on daily basis on receipt of BoE from the
customer/Customs Office.

ix. AD banks will enter BOE details and mark off ORMs as per the message format
“BOE Settlement”

x. In case of payment after receipt of BoE, the AD bank shall generate ORM for
import payments made by the importer customer as per the message format “BOE
Settlement”

xi. Multiple ORMs can be settled against single BoE and also multiple BoEs can be
settled against one ORM.

C.1.3. Advance Remittance for Import of Aircrafts/Helicopters and other Aviation

Related Purchases

1. As a sector specific measure, entities which have been permitted under the
extant Foreign Trade Policy to import aircrafts and helicopters (including used /
second hand aircraft and helicopters) or any other person who has been granted
permission by the Directorate General of Civil Aviation (DGCA) to operate
Scheduled or Non-Scheduled Air Transport Service (including Air Taxi Services),

11
Point viii to xi. Inserted vide AP (DIR Series) Circular No.5 dated October 06, 2016

11
can make advance remittance without bank guarantee or an unconditional,
irrevocable Standby Letter of Credit, up to USD 50 million. Accordingly, AD
Category – I banks may allow advance remittance, without obtaining a bank
guarantee or an unconditional, irrevocable Standby Letter of Credit, up to USD 50
million, for direct import of each aircraft, helicopter and other aviation related
purchases.

2. Importers of Aircrafts/ Helicopters and other Aviation related Purchases, not

eligible under clause (1) above can make advance remittance without bank
guarantee, in terms of Para C.1.1 above.

3. The remittances for the transactions at 1 and 2 above shall be subject to the
following conditions:

i. The AD Category - I banks should undertake the transactions based on their

commercial judgment and after being satisfied about the bonafide of the
transactions. KYC and due diligence exercise should be done by the AD Category-I
banks for the Indian importer entity and the overseas manufacturer company as
well.

ii. Advance payments should be made strictly as per the terms of the sale contract
and directly to the account of the manufacturer (supplier) concerned.

iii. AD Category - I banks may frame their own internal guidelines to deal with such
cases, with the approval of their Board of Directors.

iv. In the case of a Public Sector Company or a Department / Undertaking of Central

/State Governments, the AD Category - I bank shall ensure that the requirement of
bank guarantee has been specifically waived by the Ministry of Finance,
Government of India for advance remittances exceeding USD 100,000.

v. Physical import of goods into India is made within six months (three years in case
of capital goods) from the date of remittance and the importer gives an undertaking
to furnish documentary evidence of import within fifteen days from the close of the
relevant period. It is clarified that where advance is paid as milestone payments, the
date of last remittance made in terms of the contract will be reckoned for the
purpose of submission of documentary evidence of import.

vi. Prior to making the remittance, the AD Category – I bank may ensure that the

12
requisite in principle approval of the Ministry of Civil Aviation in case of Scheduled
Air Service Operators and in other cases approval of the Director General of Civil
Aviation / other agencies in terms of the extant Foreign Trade Policy has been
obtained by the company, for import.

vii. In the event of non-import of aircraft and aviation sector related products, AD
Category - I bank should ensure that the amount of advance remittance is
immediately repatriated to India.

Prior approval of the concerned Regional Office of the Reserve Bank will be
required in case of any deviation from the above stipulations.
12
viii. Concerned AD Category I banks to ensure generation of ORMs, BoE entries
and BoE settlement with the respective ORMs etc. as per extant IDPMS guidelines.

C.1.4. Advance Remittance for the Import of Services

AD Category – I bank may allow advance remittance for import of services without
any ceiling subject to the following conditions:

(a) Where the amount of advance exceeds USD 500,000 or its equivalent, a
guarantee from a bank of international repute situated outside India, or a guarantee
from an AD Category – I bank in India, if such a guarantee is issued against the
counter-guarantee of a bank of international repute situated outside India, should be
obtained from the overseas beneficiary.

(b) In the case of a Public Sector Company or a Department/ Undertaking of the

Government of India/ State Governments, approval from the Ministry of Finance,
Government of India for advance remittance for import of services without bank
guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or
its equivalent would be required.

(c) AD Category – I banks should also follow-up to ensure that the beneficiary of the
advance remittance fulfils his obligation under the contract or agreement with the
remitter in India, failing which, the amount should be repatriated to India.
13
(d) AD Category – I banks should ensure generation of ORMs and marking off in
the IDPMS etc., as per extant IDPMS guidelines.

12
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016

13
C.2. Interest on Import Bills

(i) AD Category – I bank may allow payment of interest on usance bills or overdue
interest on delayed payments for a period of less than three years from the date of
shipment at the rate prescribed for trade credit from time to time.

(ii) In case of pre-payment of usance import bills, remittances may be made only
after reducing the proportionate interest for the unexpired portion of usance at the
rate at which interest has been claimed or LIBOR of the currency in which the
goods have been invoiced, whichever is applicable. Where interest is not separately
claimed or expressly indicated, remittances may be allowed after deducting the
proportionate interest for the unexpired portion of usance at the prevailing LIBOR of
the currency of invoice.
14
(iii) In case of change in value due to (i) or (ii) above, the respective AD bank
should ensure proper remark/indicator is entered for ORM mark off in IDPMS etc as
per extant IDPMS guidelines.

C.3. Remittances against Replacement Imports

Where goods are short-supplied, damaged, short-landed or lost in transit and the
Exchange Control Copy of the import licence has already been utilised to cover the
opening of a letter of credit against the original goods which have been lost, the
original endorsement to the extent of the value of the lost goods may be cancelled
by the AD Category – I bank and fresh remittance for replacement imports may be
permitted without reference to Reserve Bank, provided, the insurance claim relating
to the lost goods has been settled in favour of the importer. It may be ensured that
the consignment being replaced is shipped within the validity period of the
15
license. AD bank should ensure that proper remark/indicator is entered for ORM
mark off/closure of Bills in IDPMS etc. as per extant IDPMS guidelines.

C.4. Guarantee for Replacement Import

In case replacement goods for defective import are being sent by the overseas

13
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016

14
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016
15
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016

14
supplier before the defective goods imported earlier are reshipped out of India, AD
Category-I banks may issue guarantees at the request of importer client for
dispatch/return of the defective goods, according to their commercial judgment.

C.5. Import of Equipment by Business Process Outsourcing (BPO) Companies for

their Overseas Sites

AD Category – I bank may allow BPO companies in India to make remittances

towards the cost of equipment to be imported and installed at their overseas sites in
connection with the setting up of their International Call Centres (ICCs) subject to
the following conditions:

(i) The BPO company should have obtained necessary approval from the Ministry of
Communications and Information Technology, Government of India and other
authorities concerned for setting up of the ICC.

(ii) The remittance should be allowed based on the AD Category - I banks’

commercial judgment, the bonafides of the transactions and strictly in terms of the
contract.

(iii) The remittance is made directly to the account of the overseas supplier.

(iv) The AD Category – I banks should also obtain a certificate as evidence of

import from the Chief Executive Officer (CEO) or auditor of the importer company
that the goods for which remittance was made have actually been imported and
installed at overseas sites.
16
(v) The AD Category I bank should ensure compliance with IDPMS guidelines as
applicable.

C.6. Receipt of Import Bills/Documents

17
Concerned AD Category banks to ensure generation of ORMs, BoE entries and
BoE settlement with the respective ORMs in compliance with IDPMS guidelines as
applicable.

C.6.1 Receipt of import documents by the importer directly from overseas suppliers

16
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016
17
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016

15
Import bills and documents should be received from the banker of the supplier by
the banker of the importer in India. AD Category – I bank should not, therefore,
make remittances where import bills have been received directly by the importers
from the overseas supplier, except in the following cases:

(i) Where the value of import bill does not exceed USD 300,000.

(ii) Import bills received by wholly-owned Indian subsidiaries of foreign companies

from their principals.

(iii) Import bills received by Status Holder Exporters as defined in the Foreign Trade
Policy, 100% Export Oriented Units / Units in Special Economic Zones, Public
Sector Undertakings and Limited Companies.

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

C.6.2. Receipt of import documents by the importer directly from overseas suppliers
in case of specified sectors

As a sector specific measure, AD Category - I banks are permitted to allow

remittance for imports by non-status holder importers up to USD 300,000 where the
importer of rough diamonds, rough precious and semi-precious stones has received
the import bills / documents directly from the overseas supplier and the
documentary evidence for import is submitted by the importer at the time of
remittance. Status holder importers as defined in the Foreign Trade Policy dealing
in the import of rough diamonds, rough precious and semi- precious stones can
receive import bills directly from the suppliers without any ceiling. AD Category - I
banks may undertake such transactions subject to the following conditions:

(i) The import would be subject to the prevailing Foreign Trade Policy.

(ii) The transactions are based on their commercial judgment and they are satisfied
about the bonafides of the transactions.

(iii) AD Category - I banks should do the KYC and due diligence exercise and
should be fully satisfied about the financial standing / status and track record of the
importer customer. Before extending the facility, they should also obtain a report on
each individual overseas supplier from the overseas banker or reputed overseas
credit rating agency.

16
C.6.3. Receipt of import documents by the AD Category – I bank directly from
overseas suppliers

(i) At the request of importer clients, AD Category – I bank may receive bills directly
from the overseas supplier as above, provided the AD Category – I bank is fully
satisfied about the financial standing/status and track record of the importer
customer.

(ii) Before extending the facility, the AD Category – I bank should obtain a report on
each individual overseas supplier from the overseas banker or a reputed overseas
credit agency. However, such credit report on the overseas supplier need not be
obtained in cases where the invoice value does not exceed USD 300,000 provided
the AD Category – I bank is satisfied about the bonafides of the transaction and
track record of the importer constituent.

C.7. Evidence of Import

C.7.1. Physical Imports

18
(i) In case of all imports, irrespective of the value of foreign exchange remitted /
paid for import into India, it is obligatory on the part of the AD Category– I bank
through which the relative remittance was made, to ensure that the importer
submits:-
19

(a) The importer shall submit BoE number, port code and date for marking evidence
of import under IDPMS as detailed in para C.8.

18
Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 prior to modification it read as “In case of all imports,
where value of foreign exchange remitted / paid for import into India exceeds USD 100,000 or its equivalent, it is obligatory
on the part of the AD Category– I bank through which the relative remittance was made, to ensure that the importer
submits”
19
Sub points of point no. (i) and point no.(ii) modified vide AP (DIR Series) Circular No. 27 dated January 12, 2017 prior to
modification they read as “(a) The Exchange Control Copy of the Bill of Entry for Home Consumption, or
(b) The Exchange Control Copy of the Bill of Entry for warehousing, in case of 100% Export Oriented Units, or
(c) Customs Assessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities, where
import has been made by post, or Courier Bill of Entry as declared by the courier companies to the Customs Authorities in
cases where goods have been imported through couriers, as evidence that the goods for which the payment was made have
actually been imported into India, or
(d) The Exchange Control Copy of the Ex-Bond Bill of Entry or Bill of Entry issued by Customs Authorities by any other
similar nomenclature for goods imported and stored in Free Trade Warehousing Zone (FTWZ) or SEZ Unit warehouses or
Customs bonded warehouses, etc.
(ii) In respect of imports on Delivery against acceptance basis, AD Category – I bank should insist on production of evidence
of import at the time of effecting remittance of import bill. However, if importers fail to produce documentary evidence due
to genuine reasons such as non- arrival of consignment, delay in delivery/ customs clearance of consignment, etc., AD bank
may, if satisfied with the genuineness of request, allow reasonable time, not exceeding three months from the date of
remittance, to the importer to submit the evidence of import.

17
(b) Customs Assessment Certificate or Postal Appraisal Form, as declared by the
importer to the Customs Authorities, where import has been made by post, or
Courier Bill of Entry as declared by the courier companies to the Customs
Authorities in cases where goods have been imported through couriers, as evidence
that the goods for which the payment was made have actually been imported into
India, or

(c) For goods imported and stored in Free Trade Warehousing Zone (FTWZ) or
SEZ Unit warehouses or Customs bonded warehouses, etc., the Exchange Control
Copy of the Ex-Bond Bill of Entry or Bill of Entry issued by Customs Authorities by
any other similar nomenclature the importer shall submit applicable BoE number,
port code and date for marking evidence of import under IDPMS as detailed in para
C.8.

(ii) In respect of imports on Delivery against acceptance basis, AD Category – I

bank shall verify the evidence of import from IDPMS at the time of effecting
remittance of import bill. However, if importers fail to produce documentary
evidence due to genuine reasons such as non- arrival of consignment, delay in
delivery/ customs clearance of consignment, etc., AD bank may, if satisfied with the
genuineness of request, allow reasonable time, not exceeding three months from
the date of remittance, to the importer to submit the evidence of import.
20
(iii) AD banks are required to create Outward Remittance Message(ORM) for all
such outward remittances irrespective of value and shall perform the subsequent
activity viz document submission, outward remittance data, matching with ORM,
closing of transactions etc. as per IDPMS guidelines.

C.7.2. Evidence of Import in Lieu of Bill of Entry

(i) AD Category – I bank may accept, in lieu of Exchange Control Copy of Bill of
Entry for home consumption, a certificate from the Chief Executive Officer (CEO) or
auditor of the company that the goods for which remittance was made have actually
been imported into India provided :-

(a) The amount of foreign exchange remitted is less than USD 1,000,000 or its
equivalent and

20
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016

18
(b) The importer is a company listed on a stock exchange in India and whose net
worth is not less than Rs.100 crore as on the date of its last audited balance sheet,
or, the importer is a public sector company or an undertaking of the Government of
India or its departments.

(ii) The above facility may also be extended to autonomous bodies, including
scientific bodies/academic institutions, such as Indian Institute of Science / Indian
Institute of Technology, etc. whose accounts are audited by the Comptroller and
Auditor General of India (CAG). AD Category – I bank may insist on a declaration
from the auditor/CEO of such institutions that their accounts are audited by CAG.
21
(iii) Outward Remittance Message has to be created & BoE has to be downloaded
from “BoE Master “in IDPMS (in case of EDI ports). In case of Non-EDI ports
duplicate copy/customs certified copy have to be submitted or BoE waiver obtained
from RBI.

C.7.3. Non-physical Imports

(i) Where imports are made in non-physical form, i.e., software or data through
internet / datacom channels and drawings and designs through e-mail / fax, a
certificate from a Chartered Accountant that the software / data / drawing/ design
has been received by the importer, may be obtained.

(ii) AD Category – I bank should advise importers to keep Customs Authorities

informed of the imports made by them under this clause.
22

23
C.8. Detailed Operational Procedures for IDPMS

The operational guidelines are summarised as below :

(i) AD banks are required to create Outward Remittance Message (ORM) for all
outward remittance/s for import payments on behalf of their importer customer for
which the prescribed documents for evidence of import have not been submitted.

21
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016

22
Clarification: ORM not applicable for non physical imports
23
Modified vide AP (DIR series circular) No.5 dated October 05, 2016 prior to modification it read as “Issue of
Acknowledgement : AD Category – I bank should acknowledge receipt of evidence of import e.g. Exchange Control Copy
of the Bill of Entry, Postal Appraisal Form, or Customs Assessment Certificate, etc., from importers by issuing
acknowledgement slips containing all relevant particulars relating to the import transactions.”

19
(ii) Creation of ORM for all outstanding outward remittance/s for import payments
need to be completed on or before October 31, 2016

Settlement of ORM with BoE

(iii) Based on the AD code declared by the importer, the banks shall download
the Bill of Entry (BoE) issued by EDI ports from “BOE Master” in IDPMS. For non-
EDI ports, AD bank of the importer shall upload the BoE data in IDPMS as per
message format “Manual BOE reporting” on daily basis on receipt of BoE from the
24
customer/Customs office. In order to enhance the ease of doing business and
reduce transaction costs, submission of hardcopy of evidence of import documents
i.e., BoE Exchange Control copy has been discontinued with effect from December
1, 2016 as the same is available in IDPMS. The revised procedure is as under:

(iv) AD banks shall enter BoE details (BoE number, port code and date) for ORM
associated with the advance payments for import transactions as per the message
format “BOE settlement”.

(v) In case of payment after receipt of BoE, the AD bank shall generate ORM for
import payments made by its importer customer as per the message format “BOE
settlement”.

(vi) Multiple ORMs can be settled against single BoE and also multiple BoE can
be settled against one ORM.
25
(vii) On settlement of ORM with evidence of import AD Category – I bank shall in
all cases issue an acknowledgement slip to the importer containing the following
particulars:

a. importer's full name and address with code number ;

b. number and date of BoE and the amount of import ; and
c. a recap advice on number and amount of BoE and ORM not settled for
the importer.

26
(viii) The importer needs to preserve the printed ‘Importer copy’ of BoE as
evidence of import and acknowledgement slip for future use.

24
Inserted vide AP (DIR Series) Circular No.27 dated January 12, 2017
25
Inserted vide AP (DIR Series) Circular No. 27 dated January 12, 2017
26 Inserted vide AP (DIR Series) Circular No. 27 dated January 12, 2017

20
Extension and Write Off

(ix) AD Category I banks shall give extension for submission of BoE beyond the
prescribed period in terms of the extant guidelines on the matter, and the same will
be reported in IDPMS as per the message “Bill of Entry Extension” and the date up
to which extension is granted will be indicated in “Extension Date” column.

(x) AD Category I banks can consider closure of BoE/ORM in IDPMS that

involves write off to the extent of 5% of invoice value in cases where the amount
declared in BoE varies from the actual remittance due to operational reasons and
AD bank is satisfied with the reason/s submitted by the importer.

(xi) AD Category I banks may close the BoE for such import transactions where
write off is on account of quality issues; short shipment or destruction of goods by
the port / Customs / health authorities in terms of extant guidelines on the matter
subject to submission of satisfactory documentation by the importer irrespective of
the amount involved. AD Bank shall settle and close ORM/BoE with appropriate
“Adjustment Indicator” in IDPMS.

(xii) The above operational guidelines for extension and write off are meant to
facilitate closure of bills in IDPMS and will be subject to extant guidelines on the
matter and not absolve the importer from remitting / receiving the amount in case of
change in circumstances.

(xiii) While allowing write off, AD Category - I banks must ensure that:

a. The case is not the subject matter of any pending civil or criminal suit;

b. The importer has not come to the adverse notice of the Enforcement
Directorate or the Central Bureau of Investigation or any such other law
enforcement agency; and

c. There is a system in place under which internal inspectors or auditors of the

AD category – I banks (including external auditors appointed by authorised
dealers) should carry out random sample check / percentage check of write-off
of import bills;

(xiv) Extension and write off cases not covered by the extant guidelines may be
referred to the concerned Regional Office of Reserve Bank of India for necessary
approval.

21
 27
(xv) The extant instructions and guidelines for Evidence of Import in Lieu of Bill of Entry
will apply mutatis mutandis. The evidence of import in lieu of BoE in permitted/approved
conditions will be created and uploaded by AD Category – I bank of the importer in the form
of BoE data as per message format “Manual BOE reporting” in IDPMS.

Follow-up for Evidence of Import

28
(xvi) AD Category – I banks shall continue to follow up for outward remittance made for
import (i.e. unsettled ORM) in terms of extant guidelines and instructions on the subject. In
cases where relevant evidence of import data is not available in IDPMS on due dates
against the ORM, AD Category – I bank shall follow up with the importer for submission of
documentary evidence of import. Similarly, if BoE data is not settled against ORM within the
prescribed period, AD Category – I banks shall follow up with the importer in terms of extent
instructions.

29
C.9. Verification and Preservation

(i) Internal inspectors and IS auditors (including external auditors appointed by AD Category
– I bank) should carry out verification and IS audit and assurance of the “BOE Settlement”
process in IDPMS. Data and process followed by AD Category –I bank for “BOE
Settlement” should be preserved in terms of the guidelines under Cyber Security
Framework in the bank.

(ii) Internal inspectors or auditors (including external auditors appointed by AD

Category – I bank) should carry out verification of the documents evidencing import
other than which are available in IDPMS, e.g. Exchange Control copies of Postal
Appraisal Forms, or Customs Assessment Certificates, etc.

(iii) Documents evidencing import into India should be preserved by AD Category – I

bank for a period of one year from the date of their verification. However, in respect

27
Inserted vide AP (DIR Series) Circular No. 27 dated January 12, 2017
28
Modified vide AP (DIR Series) Circular No. 27 dated January 12, 2017 prior to modification it read as “AD Category – I banks are
required to follow up for submission of prescribed documents for evidence of import in terms of extant guidelines on the subject”
29
Modified vide AP (DIR Series) Circular No. 27 dated January 12, 2017 prior to modification it read as “(i) Internal
inspectors or auditors (including external auditors appointed by AD Category – I bank) should carry out verification of the
documents evidencing import, e.g. Exchange Control copies of Bills of Entry or Postal Appraisal Forms, or Customs
Assessment Certificates, etc.
(ii) Documents evidencing import into India should be preserved by AD Category – I bank for a period of one year from the
date of their verification. However, in respect of cases which are under investigation by investigating agencies, the
documents may be destroyed only after obtaining clearance from the investigating agency concerned.”

22
of cases which are under investigation by investigating agencies, documents, and/or
data, process may be destroyed only after obtaining clearance from the investigating
agency concerned.

C.10. Follow-up for Import Evidence

(i) In case an importer does not furnish any documentary evidence of import, as
required under paragraph C.7. of Section III, within 3 months from the date of
remittance involving foreign exchange 30 irrespective of value, the AD Category – I
31
bank should rigorously follow-up for the next 3 months, by using various modes of
communications. It should, however, be ensured that atleast one communication
with the importer in this regard is by issuance of registered letter.
32
(ii) In IDPMS, all outstanding import remittances, irrespective of the amount
involved, should be reported by the AD Category-I banks. Further, submission of a
separate BEF Statement by the AD Category-I bank would be required till the half
year ended December 2017 and discontinued thereafter.

33
C.11 Import of Gold

C.11.1 Import of Gold.

i. The 20:80 scheme of import of gold was withdrawn on November 28, 2014.
However, the obligation to export under the 20:80 scheme would apply to the
unutilised gold imported before November 28, 2014.

ii. Nominated banks and nominated agencies, as notified by DGFT, are

permitted to import gold on consignment basis. All sale of gold domestically
will, however, be against upfront payment. Nominated banks are free to grant
gold metal loans.

30
Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 prior to modification it read as “exceeding USD
100,000”
31
Modified. Prior to modification it read as “including issuing registered letters to the importer”
32
Modified. Prior to modification it read as” On operationalization of IDPMS, all outstanding import remittances,
irrespective of the amount involved, will be reported into the system by banks and submission of a separate BEF statement
would be discontinued from a date, to be notified separately”. which was modified vide AP (DIR Series) Circular No.65
dated April 28, 2016 prior to modification it read as “AD Category - I banks should henceforth submit a statement on
half-yearly basis as at the end of June & December of every year, in form BEF furnishing details of import transactions,
exceeding USD 100,000 in respect of which importers have defaulted in submission of appropriate document evidencing
import within 6 months from the date of remittance using the online eXtensible Business Reporting Language (XBRL)
system on a Bank-wide basis instead of the present system of branch-wise submission, to the respective Regional Offices
of the RBI. The Statement should be submitted within 15 days from the close of the half-year to which the statement
relates.”
33
Omitted

23
 iii. Star and Premier Trading Houses (STH/PTH) can import gold on Document
against Payment (DP) basis as per entitlement without any end use
restrictions.

iv. The import of gold coins and medallions is permitted. However, prohibition on
sale of gold coins and medallions by banks continues pending further review.

Head Offices / International Banking Divisions of AD Category - I banks shall

henceforth submit the following statements under XBRL system from October 2014
onwards.(a) Statement on half yearly basis (end March / end September), showing
the quantity and value of gold imported by the nominated banks/ agencies/ EOUs/
SEZs in Gem & Jewellery Sector, mode of payment-wise.(b) Statement on monthly
basis showing the quantity and value of gold imports by the nominated agencies
(other than the nominated banks)/ EOUs/ SEZs in Gem & Jewellery sector during
the month under report as well as the cumulative position as at the end of the said
month beginning from the 1st month of the Financial Year. Both the statements
shall be submitted, even if there is 'Nil' position, by the 10th of the following month /
half year, to which it relates.

C.11.2. Import of Gold Jewellery Including Jewellery Made of Precious Metals

or/and Studded With Diamonds / Precious Stones /Semi-precious.

Suppliers’ and Buyers’ credit (trade credit) including the usance period of Letters of
Credit opened for import of gold in any form, including jewellery made of
gold/precious metals or/and studded with diamonds/semi- precious/precious stones,
should not exceed 90 days from the date of shipment.

C.12. Import of Other Precious Metals

C.12.1. Import of Platinum /Palladium/Rhodium/ Silver/Rough, Cut & Polished

Diamonds / Precious and Semi-precious Stones.

(a) Suppliers’ and Buyers’ Credit, including the usance period of Letters of Credit
opened for import of Platinum, Palladium, Rhodium and Silver and rough, cut and
polished Diamonds, Precious and semi-precious stones; should not exceed 90 days
from the date of shipment.

However for Clean Credit i.e. credit given by a foreign supplier to its Indian
customer/ buyer, without any Letter of Credit (Suppliers’ Credit)/ Letter of

24
Undertaking (Buyers’ Credit)/ Fixed Deposits from any Indian financial institution for
import of rough, cut and polished diamonds, precious and semi-precious stones,
may be permitted for a period not exceeding 180 days from the date of
34
shipment. Further, AD banks may allow extension of time in respect of such clean
credit for import of rough, cut and polished diamonds, for a period exceeding 180
days from the date of shipment to a maximum period of 180 days beyond the
prescribed period/ due date beyond which they may refer the cases to the
respective Regional Office of the Reserve Bank. Such extension by AD banks may
be subject to the conditions such as: (i) AD banks being satisfied of the
genuineness of the reason and bonafides of the transaction and also that no
interest payment is involved for the additional period; (ii) reasons for such extension
are due to financial difficulties and/ or quality disputes; (iii) importer is not under
investigation and is not a frequent offender. AD banks may submit a half yearly
report of such extensions allowed customer-wise, to the respective Regional Office
of the Reserve Bank.

(b) AD Category – I banks should ensure that due diligence is undertaken and
Know Your Customer (KYC) norms and Anti-Money Laundering (AML) guidelines,
issued by the Reserve Bank are adhered to while undertaking import of the precious
metals and rough, cut and polished diamonds. Further, any large or abnormal
increase in the volume of business should be closely examined to ensure that the
transactions are bonafide and are not intended for interest / currency arbitrage.

C.12.2. Import of Platinum / Silver on Unfixed Price Basis

The nominated agency/bank may allow import of platinum and silver, on outright
purchase basis subject to the condition that although ownership of the same shall
be passed on to the importers at the time of import itself, the price shall be fixed
later as and when the importer sells to the user.

C.13. Import Factoring

(i) AD Category – I bank may enter into arrangements with international factoring
companies of repute, preferably members of Factors Chain International, without
the approval of Reserve Bank.

(ii) They will have to ensure compliance with the extant foreign exchange directions

34
Inserted vide A.P.(DIR Series) Circular No. 57 dated March 31, 2016

25
relating to imports, Foreign Trade Policy in force and any other guidelines/directives
issued by Reserve Bank in this regard.

C.14. Merchanting Trade

C.14.1. For a trade to be classified as Merchanting Trade following conditions

should be satisfied:

a. Goods acquired should not enter the Domestic Tariff Area, and

b. The state of the goods should not undergo any transformation.

C.14.2. AD Category – I bank may handle bonafide Merchanting Trade

Transactions and ensure that:

(a) Goods involved in the transactions are permitted for export / import under the
prevailing Foreign Trade Policy (FTP) of India as on the date of shipment and all the
rules, regulations and directions applicable to export (except Export Declaration
Form) and import (except Bill of Entry) are complied with for the export leg and
import leg, respectively,

(b) Both the legs of a Merchanting Trade Transaction are routed through the same
AD bank. The bank should verify the documents like invoice, packing list, transport
documents and insurance documents (if originals are not available, non-negotiable
copies duly authenticated by the bank handling documents may be taken) and
satisfy itself about the genuineness of the trade.

(c) The entire Merchanting Trade Transactions should be completed within an

overall period of nine months and there should not be any outlay of foreign
exchange beyond four months.

(d) The commencement of Merchanting Trade would be the date of shipment /

export leg receipt or import leg payment, whichever is first. The completion date
would be the date of shipment / export leg receipt or import leg payment, whichever
is the last;

(e) Short-term credit either by way of suppliers' credit or buyers' credit will be
available for Merchanting Trade Transactions, to the extent not backed by advance

26
remittance for the export leg, including the discounting of export leg LC by an AD
bank, as in the case of import transactions ;

(f) In case advance against the export leg is received by the Merchanting Trader,
AD bank should ensure that the same is earmarked for making payment for the
respective import leg. However, AD bank may allow short-term deployment of such
funds for the intervening period in an interest bearing account;

(g) Merchanting Traders may be allowed to make advance payment for the import
leg on demand made by the overseas seller. In case where inward remittance from
the overseas buyer is not received before the outward remittance to the overseas
supplier, AD bank may handle such transactions by providing facility based on
commercial judgement. It may, however, be ensured that any such advance
payment for the import leg beyond USD 200,000/- per transaction, should be made
against Bank Guarantee / LC from an international bank of repute, except in cases
and to the extent where payment for export leg has been received in advance;

(h) Letter of Credit to the supplier is permitted against confirmed export order
keeping in view the outlay and completion of the transaction within nine months;

(i) Payment for import leg may also be allowed to be made out of the balances in
Exchange Earners Foreign Currency Account (EEFC) of the Merchant Trader.

(j) AD bank should ensure one-to-one matching in case of each Merchanting Trade
transaction and report defaults in any leg by the traders to the concerned Regional
Office of RBI, on half yearly basis within 15 days from the close of each half year,
i.e. June and December.

(k) Defaulting Merchanting Traders, whose outstandings reach 5% of their annual

export earnings, would be caution-listed.

(l) The KYC and AML guidelines should be observed by the AD bank while handling
such transactions.

Merchanting Traders have to be genuine traders of goods and not mere financial
intermediaries. Confirmed orders have to be received by them from the overseas
buyers. AD banks should satisfy themselves about the capabilities of the
Merchanting Trader to perform the obligations under the order. The overall
Merchanting Trade should result in reasonable profits to the Merchanting Trader.

27
C.14.3. Merchanting trade to Nepal and Bhutan

As Nepal and Bhutan are landlocked countries, there is a facility of transit trade
whereby goods are imported from third countries by Nepal and Bhutan through
India under the cover of Customs Transit Declarations in terms of the Government
of India Treaty of Transit with these two countries. In consultation with Government
of India, it is clarified herein that goods consigned to the importers of Nepal and
Bhutan from third countries under merchanting trade from India would qualify as
traffic-in-transit, if the goods are otherwise compliant with the provisions of the
India-Nepal Treaty of Transit and Indo-Bhutan Treaty of Transit respectively.

C.15. Processing of import related payments through Online Payment Gateway

Service Providers (OPGSPs)

AD Category-l banks have been permitted to offer facility of payment for imports of
goods and software of value not exceeding USD 2,000 by entering into standing
arrangements with the OPGSPs subject to the following:-

(a) The balances held in the Import Collection account shall be remitted to the
respective overseas exporter's account immediately on receipt of funds from the
importer and, in no case, later than two days from the date of credit to the collection
account.

(b) The AD Category –I bank will obtain a copy of invoice and airway bill from the
OPGSP containing the name and address of the beneficiary as evidence of import
and report the transaction in R-Return under the foreign currency payment head.

(c) The permitted credits in the OPGSP Import Collection account will be:

(i) collection from Indian importers for online purchases from overseas
exporters electronically through credit card, debit card and net banking and
(ii) charge back from the overseas exporters.

(d) The permitted debits in the OPGSP Import Collection account will be:

(i) payment to overseas exporters in permitted foreign currency;

(ii) payment to Indian importers for returns and refunds;
(iii) payment of commission at rates/frequencies as defined under the contract to
the current account of the OPGSP; and

28
 (iv) bank charges
35
C.16. Settlement of Import transactions in currencies not having a direct exchange
rate

To further liberalize the procedure and facilitate settlement of import transactions

where the invoicing is in a freely convertible currency and the settlement takes
place in the currency of the beneficiary, which though convertible, does not have a
direct exchange rate, it has been decided that AD Category-I banks may permit
settlement of such import transactions (excluding those put through the ACU
mechanism), subject to conditions as under:

(a) Importer shall be a customer of the AD Bank,

(b) Signed contract / invoice is in a freely convertible currency,
(c) The beneficiary is willing to receive the payment in the currency of
beneficiary instead of the original (freely convertible) currency of the invoice/
contract, Letter of Credit as full and final settlement,
(d) AD bank is satisfied with the bonafides of the transactions, and
(e) The counterparty to the importer of the AD bank is not from a country or
jurisdiction in the updated FATF Public Statement on High Risk & Non Co-
operative Jurisdictions on which FATF has called for counter measures.

Appendix

35
Inserted vide AP (DIR) Series Circular 42 dated February 4, 2016

29
Consolidated List of Circulars on Import of Goods and Services

Sr. AP (DIR Subject Date of

No Series) Circular
Circular No
1 106 Import of goods and services into India. June 19,
2003
2 4 Merchanting Trade Transactions – Clarifications - July 19, 2003
Short term credit
3 9 Evidence of Import – Liberalisation August 18,
2003
4 15 Advance Remittance for Imports September
17, 2003
5 49 Advance Remittance for Imports December
15, 2003
6 66 Imports into India – Direct Receipt of Import February 6,
Bills/Documents 2004
7 72 Foreign Exchange Management Act, 1999 - Import February 20,
of Goods into India – Evidence of Import 2004
8 2 Import of Gold by (i) Export Oriented Units (EOUs), July 9, 2004
(ii) Units in SEZ/EPZ, and (iii) Nominated Agencies
9 34 Import of Gold on Loan Basis – Tenor of Loan and February 18,
Opening of Stand-By Letter of Credit 2005
10 1 Import of Goods of Value USD 100,000 and Less - July 12, 2005
Clarification on Follow up for Evidence of Import
11 33 Liberalisation of Export and Import procedures February 28,
2007
12 34 Import of Goods of Value USD 100,000 and Less - March 2,
Clarification on Follow up for Evidence of Import 2007
13 63 Import of Equipments by BPO Companies in India May 25, 2007
for International Call Centre
14 77 Advance Remittance for Import of aircrafts / June 29,
helicopters / other aviation related purchases 2007
15 18 Direct Receipt of Import Bills / Documents - November 7,
Liberalisation 2007
16 37 Direct Receipt of Import Bills / Documents for April 16, 2008
Import of Rough Precious & Semi-Precious Stones
17 03 Advance Remittance for Import of Rough August 4,
Diamonds 2008
18 08 Advance Remittance for Import of Rough August 21,
Diamonds 2008
19 09 Foreign Exchange Management Act, 1999- August 21,
Advance Remittance for Import of Goods - 2008
Liberalisation
20 12 Foreign Exchange Management Act, 1999 – Import August 28,
of Platinum / Palladium / Rhodium / Silver 2008
21 13 Direct Receipt of Import Bills / Documents - September 1,

30
 Liberalisation 2008
22 15 Foreign Exchange Management Act, 1999 – September 8,
Advance Remittances for Import of Services 2008
23 21 Advance Remittance for Import of Rough December
Diamonds 29, 2009
24 56 Advance Remittance for Import of Goods – April 29, 2011
Liberalisation
25 59 Import of rough, cut and polished diamonds May 06, 2011
26 82 Release of Foreign Exchange for Imports – Further February 21,
Liberalisation 2012
27 83 Import of Gold on Loan Basis - Tenor of Loan and February 27,
Opening of Stand - By Letter of Credit 2012
28 103 Data on import of Gold – Statements – Modification April 03, 2012
29 83 Import of precious and semi precious stones- February 20,
Clarification 2013
30 103 Import of Gold by Nominated Banks/Agencies May 13, 2013
31 107 Import of Gold by Nominated Banks/Agencies June 4, 2013
32 122 Import of Gold by Nominated Banks/Agencies June 27,
2013
33 15 Import of Gold by Nominated Banks July 22, 2013
/Agencies/Entities
34 39 Export import of Currency September 6,
2013
35 70 Third party payments for export / import November 8 ,
transactions 2013
36 71 Advance Remittance for Import of Rough November 8,
Diamonds 2013
37 73 Import of Gold by Nominated Banks November
/Agencies/Entities 11, 2013
38 75 Trade Credit for imports into India- Online November
submission of data on issuance of 19, 2013
Guarantee/Letter of Undertaking (LoU)/Letter of
Comfort (LoC) by ADs
39 82 Import of Gold by Nominated December
Banks/Agencies/Entities 31, 2013
40 95 Merchanting Trade Transactions January 17,
2014
41 100 Third party payments for export / import February 04,
transactions 2014
42 103 Import of Gold / Gold Dore by Nominated Banks February 14,
/Agencies /Entities - Clarifications 2014
43 115 Merchanting Trade Transactions - Revised March 28,
guidelines 2014
44 116 Advance Remittance for Import of Rough April 01, 2014
Diamonds
45 122 Trade Credits for Imports into India – Review of all- April 10, 2014
in-cost ceiling

31
46 133 Import of Gold by Nominated Banks / Agencies / May 21, 2014
Entities
47 146 Export & Import of Currency- Enhanced Facilities June 19,
2014
48 2 Import of Rough, Cut and Polished Diamonds - July 07, 2014
credit relaxation
49 42 Import of Gold by Nominated Banks/Agencies November
28, 2014
50 76 Form A1- Payments for Imports - Discontinuance February 12,
thereof 2015
51 79 Guidelines on Import of Gold by Nominated Banks / February 18,
Agencies 2015
52 96 Merchanting Trade to Nepal and Bhutan April 30, 2015
53 16 Processing and settlement of import and export September
related payments facilitated by Online Payment 24 , 2015
Gateway Service Providers
54 29 Import of Goods into India – Evidence of Import November
26, 2015
55 30 Advance Remittance for Import of aircrafts / November
helicopters /other aviation related purchases 26, 2015
56 42 Settlement of Export/ Import transactions in February 4,
currencies not having a direct exchange rate 2016
57 57 Import of Rough, Cut and Polished Diamonds March 31,
2016
58 65 Import of goods- Import Data Processing and April 28, 2016
Monitoring System (IDPMS)
59 05 Import Data Processing and Monitoring System October 06,
(IDPMS) 2016
60 11[(1)/14(R)] Foreign Exchange Management (Manner of October 20,
Receipt and Payment) Regulations 2016 2016
61 27 Evidence of Import under Import Data Processing and January 12,
Monitoring System (IDPMS) 2017

32