RBI Eases Payment System for Exporters
Feb. 22 – The RBI has permitted banks to allow exporters to accept advance payment for shipment of goods which would take more than one year to manufacture, a stride which will decrease transaction time. The RBI stated that to liberalize the process, AD Category-I banks would be able to allow exporters to receive advance payment for the export of goods which would take more than one year to manufacture and ship.
According to the previous rule under the Foreign Exchange Management (Export of Goods and Services) Regulations, prior approval of the apex bank was required to be obtained by an exporter for receipt of an advance in case the agreement provided for shipment of goods extending beyond the period of one year from the date of receipt of advance payment.
In its notice, the RBI said that respite could be availed, subject to certain conditions such as compliance with Know Your Customer (KYC) norms and other guidelines, besides due diligence by the concerned bank.
According to the data from the Ministry of Commerce, exports grew by merely 6.7 percent to US$25 billion in December 2011 when compared to the same month last year due to demand slowdown in the United States and Europe. In January, though, exports went up by 10.1 percent year-on-year to US$25.4 billion.
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