RBI eases banking and document handling procedures for exporters

In Covid times, courier services were a big challenge. So many exporters have telegraphically sent the documents and exporters have made the payment
The Reserve Bank of India (RBI) on Friday announced measures to ease procedures for exporters, bringing some respite to traders at a time when exports are suffering due to fresh Covid-induced lockdowns in major markets.


Exporters said while the measures would reduce transaction time and hassles, the RBI should have addressed some other teething issues such as payment from a third country.


Currently, some procedures need to be approved by the central bank. The RBI on Friday removed this clause, allowing banks to decide on their own.


For instance, banks will now be able to regularise exports where proceeds have been realised. Currently, banks do so in the case of exports of up to $1 million. Above this threshold, the RBI’s intervention is required in case documents are directly shipped by exporters to the buyers.


Ajay Sahai, director general and CEO, Federation of Indian Export Organisations, said amid the Covid-19 pandemic, many exporters have directly shipped documents to buyers. Status-holder exporters are allowed to send documents directly to buyers but others can do so only in the case of advance payments.


Many exporters have been digitally sending documents and getting payments from exporters as the Covid-19 pandemic made it difficult to access courier services.


“It makes sense that when the country has received the payment, banks should regularise exports. It is a pragmatic move,” Sahai said.


The RBI also permitted banks to write off export bills without any limits in case overseas importers are declared insolvent or goods have been destroyed by Customs and other authorities abroad.


Sahai said the write-off facility is currently available to the extent of 5 per cent of export value for normal exporters and 10 per cent in the case of status holders. Beyond that, cases have to be sent to the RBI for approval.


The RBI also permitted banks to allow groups to set off their receivables against the money to be paid to the same importers. An exporter said this was available to companies currently, but has been extended to groups now.


Banks have been allowed to consider refund requests without insisting on import of goods, which are perishable in nature or had been auctioned, destroyed by the authorities concerned — subject to production of documentary evidence.  However, there are a number of issues where exporters require a little more support from the RBI, particularly regarding third-country transactions.


It is because of the extant rules that exporters are losing share in the African markets because importers there insist they will make payments through Dubai or some other place. The rules say if one is receiving money from a third country, one should have declared it at the time of exports.  The RBI should remove this condition, he said.  


Mahesh Desai, chairman of Engineering Export Promotion Council of India, said the move would ease transaction pressures, even as export finance itself remains costly.

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