RBI rolls out new norms for export/import third party payments | SupportBiz

In Brief

RBI rolls out new norms for export/import third party payments

 
The Reserve Bank of India released a notification on the 8th November 2013, which allows third party transactions in export/import, provided some checks and balances are in place.

The central bank stated the purpose of the change as, “With a view to further liberalising the procedure relating to payments for exports/imports and taking into account evolving international trade practices, authorised Dealer banks may allow payments for export of goods / software to be received from a third party (a party other than the buyer) subject to conditions.”

Below are the details of the new procedures of the changes notified.

EXPORT TRANSACTIONS

AD banks may allow payments for export of goods / software to be received from a third party (a party other than the buyer) subject to conditions as under:

a. Firm irrevocable order backed by a tripartite agreement should be in place;

b. Third party payment should come from a Financial Action Task Force (FATF) compliant country and through the banking channel only;

c. The exporter should declare the third party remittance in the Export Declaration Form;

d. It would be responsibility of the Exporter to realize and repatriate the export proceeds from such third party named in the EDF;

e. Reporting of outstandings, if any, in the XOS would continue to be shown against the name of the exporter. However, instead of the name of the overseas buyer from where the proceeds have to be realised, the name of the declared third party should appear in the XOS; and

f. In case of shipments being made to a country in Group II of Restricted Cover Countries, (e.g. Sudan, Somalia, etc.), payments for the same may be received from an Open Cover Country.

Note: Restricted cover Group II country is country which experiences chronic political and economic problems as well as balance of payment difficulties.

IMPORT TRANSACTIONS

AD 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;

b. Third party payment should be made to a Financial Action Task Force (FATF) compliant country and through the banking channel only;

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; and

f. The amount of an import transaction eligible for third party payment should not exceed USD 100,000. This limit will be revised as and when considered expedient.