Implementation of Second Authentication i-Access Code (IAC)
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The Master Circular has been suitably updated by incorporating the instructions issued upto June 30, and has also been placed on the RBI website http: A copy of the Master Circular is enclosed. Annex 4 — Cara principal forex de malasia of tariffs of engineering goods of 6th Interest Subvention Scheme dated January 14, Annex cara principal forex de malasia — Annex of cara principal forex de malasia of Engineering goods of Interest Cara principal forex de malasia dated May 24, Annex 6 — Annex of 6 tariffs of Textile goods of interest subvention circular dated May 24, A statutory directive issued by the Reserve Bank in exercise of the powers conferred by Sections 21 and 35 A of the Banking Regulation Act, This Master Circular consolidates and updates all the instructions contained in the Circulars listed in the Appendices and clarifications issued during the year.
Pre-shipment Rupee Export Credit 2. Post-shipment Rupee Export Credit 3. Interest on Rupee Export Credit. Export Credit in Foreign Currency 5. Pre-shipment Export Credit in Foreign Currency 6. Post-shipment Export Credit in Foreign Currency 7.
Interest on Export Credit in Foreign Currency. Customer service and simplification of procedures 9. Pre-shipment credit to diamond exporters- conflict diamonds The scheme is intended to make short-term working capital finance available to exporters at internationally comparable interest rates.
Under the earlier scheme in force upto June 30,RBI fixed only the ceiling rate of interest for export credit while banks were free to decide the rates of interest within the ceiling rates keeping in view the Benchmark Prime Lending Rate BPLR and spread guidelines and taking into account track record of the borrowers and the risk perception.
However, the BPLR system, introduced infell short of its original objective of bringing transparency to lending rates. For the same reason, it was also difficult to assess the transmission of policy rates of the Reserve Bank to lending rates of banks.
Shri Deepak Mohanty banks were advised to switch over to the system of Base Rate w. The Base Rate System is aimed at enhancing transparency in lending rates of banks and enabling better assessment of transmission of monetary policy.
Under the Base Rate System, applicable w. July 1,interest rates applicable for all tenors of rupee export credit advances are at or above Base Rate. Banks should also monitor the progress made by the exporters in timely fulfillment of export orders. Where the exporter is unable to tender export bills of equivalent value for liquidating the packing credit due to the shortfall on account of wastage involved in the processing of agro products like raw cashew nuts, etc.
However, in respect of export of agro-based products like tobacco, pepper, cardamom, cashew nuts etc. The non-exportable balance is necessarily sold domestically. For the packing credit covering such non-exportable portion, banks are required to charge commercial rate of interest applicable to the domestic advance from the date of advance of packing credit and that portion of the packing credit would not be eligible for cara principal forex de malasia refinance from RBI.
The advance in excess of the export order is required to be adjusted either in cash or by sale of residual by-product oil within a period not exceeding 30 days from the date of advance to be eligible for concessional rate of interest. While allowing substitution of contract in this way, banks should ensure that it is commercially necessary and unavoidable.
Cara principal forex de malasia should also satisfy themselves about the valid reasons as to why packing credit extended for shipment of a particular commodity cannot be liquidated in the normal method. As far as possible, the substitution of contract should be allowed if the exporter maintains account with the same bank or it has the approval cara principal forex de malasia the members of the consortium, if any.
However, it is possible that the exporter might avail of EPC with one bank and submit the documents to another bank. In view of this possibility, banks may extend such facility after ensuring that the exporter has not availed of packing credit from another bank against the documents submitted.
If any packing credit has been availed of from another bank, the bank to which the documents are submitted has to ensure that the proceeds are used to liquidate the packing credit obtained from the first bank. It is cara principal forex de malasia that the availability of raw materials cara principal forex de malasia seasonal in some cases.
In some other cases, the time taken for manufacture and shipment of goods is more than the delivery schedule as per export contracts. Needless to add that, while marking off the pre-shipment credit in the manner indicated above, banks should ensure that export credit available in respect of individual pre-shipment credit does not go beyond the period of sanction or days from the date of advance, whichever is earlier.
In such cases, banks will be required to cara principal forex de malasia higher rate of interest on the portion of refinance availed of by them from the RBI in respect of the relative pre-shipment credit.
All such cases should be reported to the Monetary Policy Department, Reserve Bank of India, Central Office, Mumbai which will decide the rate of interest to be charged on the refinance amount. If it is inconvenient for the export house to open such inland LCs in favour of the supplier, the latter should draw bills on the export house in respect of the goods supplied for export and adjust packing credit advances from the proceeds of such bills.
In case the bills drawn under such arrangement are not accompanied by bills of lading or other export documents, the bank cara principal forex de malasia obtain through the supplier a certificate from the export house at the end of every quarter that cara principal forex de malasia goods supplied under this arrangement have in fact been exported. The certificate should give particulars of the relative bills such as date, cara principal forex de malasia and the name of the bank through which the bills have been negotiated.
The scheme should be made available to the exporters with good track record. On the basis of such a LC, the sub-supplier's banker will grant EPC as working capital to enable the sub-supplier to manufacture the components required for the goods to be exported. On supplying the goods, the LC opening bank will pay to the sub-supplier's banker against the inland documents received on the basis of inland LC. Taking into account the operational convenience, it is for the LC opening bank to fix the minimum amount for opening such LCs.
The total period of packing credit availed by the sub-supplier sindividually or severally and the EOH should be within normal cycle of production required for the exported goods. Normally, the total period will be computed from the date of first drawal of packing credit by any one of the sub-suppliers to the date of submission of export documents by EOH.
Once the sub-supplier makes available the goods as per inland LC terms to the EOH, his obligation of performance cara principal forex de malasia the scheme will be treated as complied with and the penal provisions will not be applicable to him for delay by EOH, if any.
The scheme will cover only the first stage of production cycle. For examplea manufacturer exporter will be allowed to open domestic LC in favour of his immediate suppliers of components etc. In case the EOH is merely a trading house, the facility will be available commencing from the manufacturer to whom the order has been passed on by the Trading House.
Cara principal forex de malasia, the credit extended under the system will be treated as export credit from the date of advance to the sub-supplier to the date of liquidation by EOH under the inland export LC system and upto the date of liquidation of packing credit by shipment of goods by EOH and will be eligible for refinance from RBI by the respective banks for the appropriate periods.
It has to be ensured that no double financing of the same leg of the transaction is involved. To the extent the outstandings in the account are not adjusted in the stipulated manner, banks may charge normal rate of interest on such advance. Pre-shipment and post-shipment finance may be provided to exporters of all the tradable services covered under the General Agreement on Trade in Services GATS where payment for such services is received in free foreign exchange as stated at Chapter 3 of the Foreign Trade Policy All provisions of this circular shall apply mutatis mutandis to export of services as they apply to export of goods unless otherwise specified.
A list of services cara principal forex de malasia given in Appendix 10 of HBPv1. The financing bank should ensure that there is no double financing and the export credit is liquidated with remittances from abroad. The statement of export receivables from such service providers may be tallied with the statement of payables received from the overseas party. In view of the large number of categories of service exports with varied nature of business as well as in the environment of progressive cara principal forex de malasia where the matters with regard to micro management are left to be decided by the individual financing banks, the banks may formulate their own parameters to finance the service exporters.
Exporters of services qualify for working capital export credit pre and post shipment for consumables, wages, supplies etc. There is a cara principal forex de malasia lag between the outlay of working capital expense and actual receipt of payment from the service consumer or his principal abroad. There is a valid Working Capital gap i. Company cara principal forex de malasia raise the invoice as per the contract.
Where payment is received from overseas party, the service exporter would utilize the funds to repay the export credit availed of from the bank. In the case of floriculture, pre-shipment credit is allowed to be cara principal forex de malasia by banks for purchase of cut-flowers etc. However, with a view to promoting export of floriculture, grapes and other agro-based products, banks are allowed to extend concessional credit for working capital purposes in respect of export-related activities of all agro-based products including purchase of fertilizers, pesticides and other inputs for growing of flowers, grapes etc.
Export credit should not be extended for investments, such as, import of foreign technology, equipment, land development etc. Agri- Export Oriented Units processing are set up in Agri- Export zones as well as outside the zones and to promote such units, production and processing are to be integrated. The producer has to enter into contract farming with farmers and has to ensure supply of quality seeds, pesticides, micro-nutrients and other material cara principal forex de malasia the group cara principal forex de malasia farmers from whom the exporter would be purchasing the products as raw material for production cara principal forex de malasia the final products for export.
The Government, therefore, suggested that such export processing units may be provided packing credit under the extant guidelines for the purpose of procuring and supplying inputs to the farmers so that quality inputs are available to them which in turn will ensure that only good quality crops are raised.
The processor units would be able to effect bulk purchases of the inputs and supply the same to the farmers as per a pre-determined arrangement.
Banks cara principal forex de malasia to ensure that the exporters have made the required arrangements with the farmers and overseas buyers in respect of crops to be purchased and products to be exported respectively.
The financing banks will also appraise the projects in agri export zones and ensure that the tie-up arrangements are feasible and projects would take off within a reasonable period of time. They cara principal forex de malasia also to monitor the end-use of funds, viz. As per the current instructions of FED, the period prescribed for realisation of export proceeds is 12 months from the date of shipment. Such adjusted export bills should however continue to be followed up for realization of the export proceeds and will continue to be reported in the XOS statement.
In order to reduce the cost to exporters i. However, the corresponding GR form will remain outstanding and the amount will be shown outstanding in XOS statement. In case of usance bills, credit can be granted for a maximum duration of days from date of shipment inclusive of Normal Transit Period NTP and grace period, if any.
However, banks should closely monitor the need for extending post-shipment credit upto the permissible period of days and they should persuade the exporters to realise the export proceeds within a shorter period. It is not to be confused with the time taken for the arrival of goods at overseas destination.
Interest rate structure on post-shipment credit and instructions in regard thereto are detailed in paragraph cara principal forex de malasia. Payment of undrawn balance is contingent in nature. Banks may consider granting advances against undrawn balances at concessional rate of interest based on their commercial judgement and the track record of the buyer.
Such advances are, however, eligible for concessional rate of interest for a maximum period of 90 days only to the extent these are repaid by actual remittances from abroad and provided such remittances are received within days after the expiry of NTP in the case of demand bills and due date in the case of usance bills. It may like-wise arise in the case of sub-contracts.
No advances may be granted against retention money relating to services portion of the contract. Exporters may be cara principal forex de malasia to arrange, as far as possible, provision of suitable guarantees, instead of retention money. Banks may consider, on a selective basis, granting of advances against retention money relating to the supplies portion of the contract taking into account, among others, the size of the retention money accumulated, its impact on the liquid funds position of the exporter and the past performance regarding the timely receipt of retention money.
Where the retention money is payable within a period of one year from the date of shipment, according to the terms of the contract, banks should charge prescribed rate of interest upto a maximum period of 90 cara principal forex de malasia.
The rate of interest prescribed for the category 'ECNOS' at post-shipment stage may be charged for the period beyond 90 days. Where the retention money is payable after a period of one year from the date of shipment, according to the terms of the contract and the corresponding advance is extended for a period exceeding one year, it will be treated as post-shipment credit given on deferred payment terms exceeding one year, and the bank is free to decide the rate of interest.
Advances against retention money will be eligible for concessional rate of interest only to the extent the advances are actually repaid by remittances received from abroad relating to the retention money and provided such payments are received within days from the due date of payment of the retention money, according to the terms of the contract.
Export on consignment basis lends scope for a lot of misuse in the matter of repatriation of export proceeds. Therefore, export on consignment basis should be at par with exports on outright sale basis on cash terms in matters regarding the rate of interest to be charged by banks on post-shipment credit.