Professional Documents
Culture Documents
3 ECB 20
4 Proposal for Short Term Foreign Currency Loan 21
5 Acknowledgement slip for evidence of import 24
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23 INTORDUCTION
Branches should strictly adhere to Know Your Customers Rules while
handling import bills received on collection basis on behalf of their
customers. Some of the precautions to be observed are :
Even though Bank advances are not involved, utmost care must be
exercised by the Bank to avoid handling of fake import bills, which if
undetected will lead to outflow of forex without any physical imports
taking place.
Bonafides of importer customer, particularly a new customer, has to
be established.
Branch has to satisfy itself about the financial status/standing of the
importer.
If branch is not fully satisfied about importer‟s standing, credit report
on the supplier has to be called for from overseas banks/reputed
credit agencies. Specific comments as to whether supplier is
ordinarily engaged in manufacturing / trading in the commodity
sought to be imported is to be called for.
Payment in respect of import bills are to be authorised by Branch
Manager / Head of Forex Department of ‘B’ category branch in
case of ELB who should apply his mind on the following factors :
i) Is the importer banking with the branch for reasonably long
period ?
ii) Whether the importer is availing any credit facilities in the
branch ?
iii) Has the branch examined the Balance Sheet of the importer ?
iv) Is the importer dealing in the goods sought to be imported ?
v) Has the importer‟s business place / godown been visited ?
vi) Are sale proceeds regularly credited to importer‟s CD/CC a/c?
Are the credits of cash / non-cash nature ?
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vii) Does the importer has the requisite license or permission to
import the goods and does he have the I.E.Code for the trade ?
Brief comments on the above points should be held on record and the
Branch Manager / Head of Forex Department of „B‟ category branch
in case of ELB should hold record of such approval / decision.
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import bills have been received directly by the importers from the
overseas supplier, except in the following cases:
a. Where the value of import bill does not exceed USD 300,000.
b. Import bills received by wholly-owned Indian subsidiaries of
foreign companies from their principals.
c. Import bills received by Status Holder Exporters as defined in
Foreign Trade Policy, 100% Export Oriented Units / Units in Special
Economic Zones, Public Sector Undertakings and Limited
Companies.
d. Import bills received by all limited companies viz. public limited,
deemed public limited and private limited companies.
Branch should maintain record of import bill directly received from overseas
seller. This record is to be produced for scrutiny by Internal / RBI auditors.
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23.2. PROCEDURE FOR HANDLING IMPORT BILLS
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Dr. Foreign Bills Receivable
Cr. Foreign Bills for Collection
Extra copy of presentation memo along with a copy of forwarding
bank‟s covering schedule is to be kept separately for follow up. This
will reduce Safe-In / Safe-Out operations for follow up.
In case of DA bills, documents should be delivered against acceptance
of Bill of Exchange after affixing the required stamps. In case of
goods covered under licence, „Exchange control‟ copy of licence is to
be obtained and endorsed in the third column. Due date is to be
informed to the forwarding bank under advice to the party. The
customer should be reminded 15 days prior to the due date, calling
for A1 form, Exchange control copy of the Bill of Entry and other
documents to facilitate timely remittance.
If the drawee desires to retire the bill, second copy of presentation
memo is to be submitted to the Bank, duly signed together with
I.E.Code allotment letter, EC copy of import licence if applicable,
and A1 form duly signed incorporating ITC(HS) classification no. of
the item imported.
Verify the licence / letter of authority and confirm that goods
imported are as mentioned in the licence, enough balance is
available in the licence/letter of authority and shipment is made
within the validity period. If the commodity imported is freely
importable obtain declaration mentioning ITC(HS) Classification no.
Also obtain an undertaking to submit exchange control copy of Bill of
Entry immediately on clearing the goods, but not later than three
months.
Prepare process note furnishing therein full details of the importer,
line of activity, length of banking relationship, credit facilities
enjoyed with outstanding, if any, financial standing, conduct of the
account, goods imported, payment terms etc. The process note is to
be signed by the desk officer and the Forex in charge and put up to
Branch Manager or Head of Forex Department of „B‟ category branch
in case of ELB Officer, who has to bear in mind the guidelines as
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explained earlier, before according approval for remittance.
Approval has to be recorded on the process note under the full
signature of the competent authority.
Report the transaction to the Dealing Room and obtain B.C. Selling
rate. If forward contract is booked, apply contracted rate and inform
utilization of forward contract to Back Office. Realise the import bill
in Finacle incorporating the rate obtained from Dealing room. On
verification of the Realisation of the Bill in Finacle, system will
Calculate the Rupee equivalent at appropriate exchange rate and
calculate the commission and generate the following transactions :
i) Dr. Customers CC / CD a/c / „C‟ category branch
Cr. Treasury / „A‟ category branch
Cr. Income a/c Comm. on Import Bills
Cr. Exp. A/c Telegram / postages a/c.
Note:
Settlement to ACU countries should be through ACU Dollar mechanism
except where beneficiaries are outside ACU countries.
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certificate of origin etc. are to be delivered against proper
acknowledgement. Copies of all documents such as invoice,
certificate of origin, BL / AWB / PP Receipt are to be retained with
the folder and filed together with office record.
Note :
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iii) In case of D.A documents beyond 6 months and not exceeding
3 years prior approval should be obtained by the party from
A.D. provided value of such transaction is less than USD 20
million or its equivalent . Application should be obtained in
form ECB (Annexure 23(3)) and approval be given in the
form_as per Annexure 23(4). Monthly reporting of such
approval, disbursement and repayment should be made to IBD
in the prescribed format on line ‘MIS Gap Data’ as per IBD
Circular No.6444 dt.22.09.2012.
iv) If documents are to be delivered free of payment, at the
instructions of the forwarding bank, it is advisable to seek
reasons form the drawee and ensure compliance of Trade
Control and Exchange Control Regulations. Commission at 50%
of the normal rate and out of pocket expenses to be recovered
upfront. Payment should not be made subsequently without
prior approval from RBI. Follow up for Bill of Entry is to be
ensured.
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Bill of Entry has to be submitted by the importer (whether imports
are under L/C or not) within 3 months from the date of remittance in
the case of sight bills. In the case of DA bills, Bill of Entry should be
insisted upon while making payment on due date. However, if
importer fails to produce documentary evidence due to genuine
reasons such as non-arrival of consignment, delay in delivery/customs
clearance of consignment etc. Branches may allow reasonable time
not more than 3 months from the date of remittance to the importer.
In case of the payment of DA bill under LC, the branch must effect
payment since we have advised the date to the negotiating bank even
in absence of Bill of Entry subject to the above conditions. However,
in the case of advance payment made for import of capital goods
physical imports has to be made within 3 years and evidence of
imports has to be submitted within 15 days thereafter. Branch should
diarise due date for receipt of Bill of entry and in the case of non
receipt send reminder to the importer as per guidelines explained
under Exchange Control Regulations pertaining to imports.
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In case the importer defaults in submission of Bill of Entry within 6
months from the date of payment despite reminder / Registered
notice, such cases where the import value is USD One lac and above
or its equivalent to have to be reported to RBI in the Half yearly
returns in Form BEF for period ending June and December.
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half yearly basis, for the purpose of determining the requirement for
follow up.
23.4.3.2 In all other cases, i.e. borrowal a/c is sub-standard, party not
enjoying credit facility, remittances effected at the request of other
banks etc., branches will follow up for submission of Evidence of
Imports for USD50,000 and above. No follow up will be done for
remittance below USD50,000. Non borrowal accounts that have not
completed 6 months of satisfactory operating of the account, Bill of
entry to be submitted for all remittances effected in the first six
months.
23.4.4 Branches are further advised to take a very careful note of the
following points for the purpose of better monitoring of import transactions:
a. Customers who are required to submit evidence of Import as in
para 23.4.3.2 above, can also submit consolidated certificate
from Chartered Accountant on quarterly basis, showing full
particulars of all the import transactions completed as per
customers book of account (like Bill of lading no., Vessel name,
date of shipment, port of loading / unloading, Consignor, value
etc.). This can be accepted as evidence of import.
b. Where the customer has lost evidence of Import to be
submitted as per 23.4.3.2 above, a certificate in lieu of
evidence confirming receipt of goods and accounting of the
same in the Books, by the Chartered Accountant of the
customer is accepted.
c. In case of non-submission of evidence of Import by customer
falling under para 23.4.3.2 above for more than three
remittances of above USD50,000 per year, the customer will be
put on notice that the Bank may not be able to handle further
requests for remittance unless a proper explanation is given.
Branches in their letter would state details of the transactions
wherein the Importer has defaulted while putting him on
notice. Copy of the same to be sent to Regional Office.
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d. Where the customer fails to submit evidence despite follow up
as in 23.4.4.c above, it should be mentioned in the credit
appraisal of such customer during the annual review of the
account. The sanctioning authority should be satisfied that
there is no diversion of funds or diminishing of primary security
in the account. Then appropriate decision on permitting the
remittance be taken and conveyed to the Branch. Where the
customer is not having any credit facility, further request for
remittance of foreign exchange to be accepted only with the
prior approval of Regional Office, after giving satisfactory
reasons as to why evidence of Import had not / could not be
submitted. Regional Office should enquire on the credentials of
the customer and the reasons for non-submission. If Regional
Office is satisfied, that KYC norms have been properly
followed, they can permit further remittances on behalf of the
customer.
e. Internal auditors will continue to carry out verification of
evidence of Imports submitted as being done presently and
also have random sample checking of those cases where
exemption for submission of evidence of import is permitted
and submit a report on their observation.
f. In cases where the documents have been received directly,
payment of documents exceeding USD25,000 will be made only
upon submission of evidence of import by the importers or
upon giving a declaration to submit the evidence of import
where the goods have not been cleared at the time of making
the payment.
g. All Authorised Dealing Branches should submit a report on
consolidated basis, annually on the number of remittances,
value of total remittances customer wise, for which evidence
of import is not submitted but required to be submitted as per
the Policy to their Regional Office under copy to International
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Banking Division. Further review of the Policy will be taken
based on such report and risk assessment.
Branches are advised not to hold with them import bills where
disposal instructions are not received after 60 days.
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prevailing on the date of lodgment. Requisite amount of foreign bills
tamp is to be noted in the Export / Import bill register.
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23.8. Annexure Annexure 23(1)
Date
To :
1.
2.
3.
Thanking you,
Yours faithfully,
MANAGER
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Annexure 23(2)
Date:
To
Our charges of …………….. are not paid by the bank / drawees. We,
therefore, request you to effect payment of our charges which please remit
to ........................................................................... for the
credit of A/c. No....................... maintained by our..........................
branch under advice to us.
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In the meantime, the documents are held by us at your risk and
responsibility. Kindly send us your instructions by authenticated SWIFT telex
quoting our ref. no……………………….
Thanking you,
Yours faithfully,
MANAGER
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Annexure 23(3)
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Annexure 22(4)
ADDRESSEE
M/s……………………………………………………………………………
Please refer to your application dated ________ in form ECB for the
captioned short term credit. We advise that you have our approval to raise
the short term credit for the purpose of imports.
i) Name of Lender :
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xi) Repayment Terms:
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RELATES, TILL THE LOAN IS FULLY REPAID.
6. Please note that interest (and other fees etc,) payable under the above
loan/credit are liable to income tax, and hence subject to withholding
tax as per the Income Tax Act, 1961.
Yours faithfully,
NOTE : This communication is issued from the foreign exchange angle under
the provisions of FEMA and should not be construed to convey the approval
by any other statutory authority or Government under any other
laws/regulations. If further approval or permission is required from any
other regulatory authority or Government under the relevant
laws/regulations, the applicant should take the approval of the concerned
agency before effecting the transaction. Further, it should not be construed
as regularising or validating any irregularities, contravention or other lapses,
if any, under the provisions of any other laws/regulations. Copy forwarded
for information and necessary action to:
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Annexure 23(5)
_____________________Branch
Ref.No.
To:_________________________
4. Reference No.
8. Value of Import :
Authorised Signatory
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