The Reserve Bank of India (RBI) has relaxed norms regarding receiving advance payment for exporters in India, according to a news report.
RBI has now allowed banks to permit exporters to receive advance payment in lieu of goods which would take over a year to produce. This will help exports improve their working capital situation.
"With a view to liberalising the procedure with respect to receipt of advance payment for export of goods involving shipment (manufacture and ship) beyond one year, it has since been decided to permit AD Category I banks to allow exporters to receive advance payment for export of goods which would take more than one year to manufacture and ship and where the ‘export agreement’ provides for the same subject to certain conditions," stated the RBI.
The old rule under the Foreign Exchange Management (Export of Goods and Services) Regulations required the exporters to take prior approval from the RBI for receipt of advance payment, given that the agreement provided for shipment of goods extending beyond the period of one year from the date of receipt of advance payment, reports IBN Live.
An exporter can avail of the relaxation subject to conditions like compliance with Know Your Customer (KYC) norms and Anti Money Laundering standards and other guidelines, as well as due diligence by the bank in question.