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BFM MODULE-A
Chapt
er5:FACI
LITI
ESFOREXPORTSand
I
MPORTERS(PART-
I)
Whatwewi
llst
udy?
*
Whati
sWor
kingCapi
tal
?
*
Whati
sWor
kingCapi
talCy
cle?

I
MPORTEXPORTCONTROL:
InIndi
a,exporttr
ade/
ImportTradeisregulat
edby
theDir
ectorateGener
alofForeignTrade(DGFT),
whichfuncti
onsundertheMinistr
yofcommer ce
andIndustri
es,ofGover
nmentofI ndi
a.
Expor
tandI
mpor
tTr
ade:
*
Regul
atedby:DGFT
*
DGFTundermi
nist
ry:Mi
nist
ryofCommer
ceand
I
ndust
ry
 Joi
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Whi l
ethepol i
ciesandpr oceduresr
equir
edtobe
foll
owedf orexporttrade/ImportTr
adeare
announcedbyt heDGFT, fi
nancingofexpor
t
trade/I
mpor tTradeandf acili
ti
esgr
antedunder
FEMAr egulationsaregov ernedbytheRBI
regulat
ions/guidel
ines.
*Pol
ici
esandpr
ocedur
esofi
mpor
t/expor
t:Made
byDGFT
*
Financi
ngofexpor
t/i
mpor
t:
Gov
ernedbyRBI

EXCHANGEANDTRADECONTROLGUI
DELI
NES
FOREXPORTERS:
1.I
mpor
ter
-Expor
terCodeNumber:
Everyperson/
fir
m/ companyengagedinExport
-
Importtr
adehast oapplyandobtai
nanimporter
export
erCodeNumber( I
ECNumber )f
rom the
Dir
ectorGeneralofForei
gnTrade(DGFT).
Thisi
sar egist
rat
ionnumberoft
hef
ir
m/company
fori
nter
nationalt
rade.
 Joi
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2.Expor
tDecl
arat
ionFor
ms:
AsperFEMAAct ,allexportofgoodsf r
om India,
whetherinphysicalform oranyotherform,requires
tobedeclaredinthepr escri
bedformst otheef f
ect
thatful
lval
ueofexpor tswi l
lbereal
izedwithinthe
prescri
bedperi
odandi ntheprescri
bedmanner .
Theprescr
ibedf
ormsareEDFandSOFTEXfor
ms
whichareusedf
orthepur
posesnot
edbel
ow:
(
i)EDFFor
m:(
Elect
roni
cDecl
arat
ionFor
m)
Expor
tsot
hert
hansof
twar
emadebyal
lmodes.
(
ii
)SOFTEXFor
m:
Expor
tofsof
twar
einnon-
phy
sicalf
orm.
El
ect
roni
cDat
aInt
erchange(
EDI
):
Withtheintroduct
ionofElectr
onicDat aInt
erchange
(EDI)syst
em atcertaincustomsoffices,where
shippingbi
llsareprocessedelect
ronical
ly,
theGR
form hassincebeenr epl
acedbyadecl arati
onin
form EDF(Electr
onicDeclarat
ionForm) .
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3.Pr
escr
ibedTi
meLi
mit
s:
A.ForSubmi
ssi
onofExpor
tDocument
s:(
21day
s)
Theexporteri
srequi
redtosubmitt
heexpor t
documents,al
ongwiththedupli
cat
e/exchange
contr
olcopyofEDFform wit
hin21days
f
rom t
hedat
eofexpor
t
or
f
rom t
hedat
eofcer
ti
fi
cat
ionoft
heSOFTEXf
orm
toanaut hor
iseddeal
er,
f orcol
lect
ion,
pur
chase,
discountornegoti
ati
on,asthecasemaybe.
Theauthorizeddealermayacceptthedocument s
pert
aini
ngt oexportsubmit
tedaftertheexpi
ryof
thespeci
fiedperiodof21days,forreasonsbeyond
thecontr
oloft heexport
er.
*Wi
thi
n21day
sfr
om t
hedat
eofexpor
t.
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B.ForReal
isat
ionofExpor
tBi
ll
s:
Iti
sobli
gat
oryonthepartoftheexport
erthatthe
amountofexpor
tsisr
ealizedandrepatr
iat
edinto
Indi
a,wi
thi
nthesti
pul
atedt i
meperiod.
1.Theamountr epresent
ingthef
ullexportv
alueof
goods/sof
tware/servi
cesexport
edshallbereal
ised
andrepatr
iat
edt oIndiawit
hinni
nemont hs
(
9mont
hs)f
rom t
hedat
eofexpor
t.
However
,ther
eal
isat
ionper
iodmayber
elaxedas
under
:
(a)Wher ethegoodsar eexport
edt oawar ehouse
establ
ishedgout si
deIndi
awi t
ht heper mi ssionof
theReser veBank,theamountrepresent ingt heful
l
exportvalueofgoodsexpor t
edshal lbepai dtothe
authori
seddeal erassoonasitisrealisedandi n
anycasewi t
hinfif
teenmonths(15Mont hs)f rom
thedateofshi pmentofgoods;
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(b)f urthert
hattheReserveBank,orsubj ecttot
he
directionsissuedbythatBanki nthisbehalf,
the
aut horiseddealermay,forasuffi
cientand
reasonabl ecauseshown, extendtheperiodofnine
mont hsorfift
eenmont hs,asthecasemaybe.
(
C)Repor
ti
ngOfOv
erdueBi
ll
s:
I
fthebi
lli
snotreal
isedwit
hint
hist
imesti
pulated,
t
heexport
ershouldappl
ytohisADforext
ensionof
t
imeinETXform.
Allover
duebill
swhi charenotreali
zedwithint
he
duedateshouldbef oll
owedupv igorousl
yand
report
edtoReser v
eBankofI ndiainahalf-y
earl
y
statementXOS( Tobesubmi t
tedbyeachAD
branchforJuneandDecembereachy ear
).
*
ForNor
malExpor
t:9Mont
hs
*
ForWar
ehouseExpor
t:15Mont
hs
*XOSfor
mi susedt
orepor
tov
erdueExpor
tbi
llt
o
RBI(
hal
f-
yearl
y)
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4.Pr
escr
ibedMet
hodofPay
ment
:
Theamountrepresent
ingthefullexportval
ueof
thegoodsexpor
tedshallbereceivedthroughanAD
Bankinthemannerspecifi
edint heForeign
ExchangeManagement.
Everyreceiptinforei
gnexchangebyanaut hori
zed
dealer
,whet herbywayofr emi t
tancefrom aforei
gn
countr
yorbywayofr ei
mbur sementf r
om his
branchorcor respondentoutsi
deI ndi
aagainst
paymentf orexportfrom I
ndia,oragainstanyother
payment ,shal
lbeasment i
onedbel ow:
(a)For
m ofbankdr
aft
,payorder
,cr
edittoExpor
ter
Bank'
sNostr
oaccount
,Inwar
dRemittance,
etc.
(b)For
eigncur
rencynot
es,
trav
ell
erschecksf
rom
t
hebuyer.
(
C)Pay
mentoutofFCNR,
NREaccountoft
hebuy
er.
(d)Thr
oughInt
ernat
ionalcr
edi
tcards,whengoods
aresol
dduri
ngtheov er
seasvi
sitoftheexpor
ter
concer
ned.
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(e)InIndi
anrupees,
whentr
ansact
ionar
ewi
th
personsresi
denti
nNepal
.
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BFM MODULE-A
Chapt
er5:
FACILI
TIESFORIMPORTER&
EXPORTER(PART-
II
)
Whatwewi
llst
udy?
*Whataret
hev
ari
ousf
aci
li
ti
esav
ail
abl
efor
expor
ter
?

FACI
LITI
ESFOREXPORTERS-
FACI
LITI
ES/REMI
TTANCESCONNECTED
WI
THEXPORTS

(
a)AgencyCommi
ssi
ononExpor
tsAgency
:
Commi ssi
oncanbeal lowedeit
herbyremi
ttanceor
deducti
onf r
om invoi
cevaluebytheADssubjectt
o
thecondit
ionthat:
I
thasbeendeclaredi
ntherel
ati
veEDF/SOFTEX
f
orm,andacceptedbythecust
omsauthori
ti
es,and
 Joi
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t
hatt
her
elat
iveshi
pmenthasal
readybeenmade.

(
B)Reduct
ioni
ninv
oicev
alue
Exporter
smayal l
owr educti
onininv
oicevalue,on
accountofcashdiscounttoover
seasbuyers,for
prepaymentofusancebill
s.
Thediscountcanbeallowedf
ortheunexpir
ed
per
iodatthestipul
atedrat
eofint
erestoraLIBOR
oft
hecur r
ency.
Inothercases, wheretheexpor tbil
lhasbeen
negotiat
edorsentf orcollect
ion,ifreducti
onin
i
nvoicev alueisrequi
redtobeal l
owed, ADscan
approvet hereducti
on,ifsati
sfiedaboutthe
genuinenessoft herequest,provided
(i
)ther educti
ondoesnotexceed25%oft heinvoi
ce
value,
t hereducti
oni snotinrespectof
commodi ti
essubj ecttomini
mum pr i
cerestr
ict
ions,
(f
loorpr i
ce)andt heexportershouldnotbeinthe
exporterscautionl i
stofRBI.
 Joi
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Ther educti
oncanbeal lowedwi thoutany
percentagerestri
cti
on,incasetheexpor terisinthe
exportbusinessforlastthr
eey ears,t
het rack
recordissatisf
actoryandtheexpor tbil
ls
outstandingintheaccountisnotmor ethan5%of
theav er
ageannualexpor ttur
nov erofthepr ecedi
ng
threecalendaryears.

(
c)Cl
aimsAgai
nstExpor
ts
Bankscanal lowclaimsagai nstexportbi
ll
s,
providedtherelat
iveexportproceedshav ebeen
real
izedandr epatr
iatedt
oI ndia,andtheexport
eris
notint hecauti
onlistoft
heReser veBankofIndi
a.

(
d)Ref
undofexpor
tpr
oceeds:
Ref
undofexportpr
oceedscanbeallowedbythe
AD,t
hroughwhom theproceedsoft
heexpor
tbil
l
 Joi
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wereori
ginal
lyr
eceived,
provi
dedtheexporterhas
submit
tedtheevidenceofre-
importofgoodsinto
Indi
aonaccountofpoorqualit
y,t
radedispute,
etc.
However,i
nsuchcases,A.D.smust

(i
)Exerci
seduedi
li
gencer
egar
dingt
het
rackr
ecor
d
oftheexpor
ter
(
ii
)Ver
if
ythebona-
fi
desoft
het
ransact
ions
(ii
i)Obtai
nf rom theexporteracerti
fi
catei ssuedby
DGFT/ Custom aut hor
it
iesthatnoincentiveshav e
beenav ai
ledbyt heexporteragainsttherelevant
exportorthepr oporti
onateincenti
vesav ai
led,ifany
,
fortherel
ev antexporthavebeensur rendered

(
e)Ext
ensi
onofTi
meLi
mit
:
Iftheexportbil
lisnotreal
izedwithinthe
prescri
bedperiod,forr
easonsbey ondcontrol
,the
exporteri
srequiredtomakeanappl i
cati
oninform
ETXt otheAD, whichhashandledt heexpor
tbil
l,
andseekext ensi
onoft i
mel i
mitforreali
zat
ionof
 Joi
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expor
tpr
oceeds.
TheADi spermi tt
edbyt heReser veBankofI ndi
a,t
o
grantextensionoft imelimitf orreali
zat
ionof
exportproceedsbey ondt hest i
pulatedperi
odf r
om
thedateofexpor t,
upt oper i
odofsi xmonthsata
ti
me, ir
respect i
veoft heinvoicev alueofexport,
subjecttofollowingcondi ti
ons:
(a)Theexporttransact
ionscoveredbyt heinv
oices
arenotunderinvesti
gat
ionbyDirector
ateof
Enforcement/
Cent r
alBureauofInvest
igati
onor
otherinv
esti
gati
ngagenci es.
(b)TheADCat egory-Ibanki
ssatisf
iedthatt
he
exporterhasnotbeenabletoreal
izeexport
proceedsforreasonsbeyondhiscontrol
.
(C)Theexpor tersubmit
sadecl ar
ati
ont
hatt
he
exportproceedswi l
lbereal
izedduri
ngt
he
extendedperiod.
(d)Whileconsi
der
ingextensi
onbey ondoneyear
from t
hedateofexport
,thetotaloutst
andi
ngofthe
export
erdoesnotexceedUSDonemi l
li
onor10per
 Joi
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centoftheaver
ageexportreali
zati
onsduri
ngt
he
precedi
ngthr
eefinanci
alyears,whi
cheveri
shi
gher
.

(
f)Wr
it
eof
fofunr
eal
izedexpor
tbi
ll
s:
Anexporterwhohasnotbeenabl et oreali
zethe
outst
andingexportduesdespi tebesteffort
s,may
ei
thersel
f-writ
eof forapproachtheADCat egor
y–I
banks,whohadhandl edtherel
evantshipping
document s,
withappr opr
iatesupporti
ng
document ar
yev i
dence.
RBIhasprescr
ibedl
imit
sandcondi
ti
onsf
orsel
f
wri
teoffaswellaswri
teof
fbyA.D.
Sel
fwiteoff
:upt
o5%ofexpor
treal
izat
ioni
nlast
cal
endaryear
.
Ifexportisst
atushol
derandhi
saccounti
s
sati
sfactoryt
henupto10%.
BankorA.
Dcanwr
it
eof
f:upt
o10%
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(
g)Ef
fect
iveDat
eofReal
izat
ion:
I
ntermsofFEDAIrul
es,t
heeffect
ivedat
eof
r
eal
izat
ionofanexpor
tbil
lis:
I
fFor
eignCur
rencyBi
ll
:
Theef f
ect
ivedat
eofreal
izati
onofexportbil
lwil
lbe
thedateonwhichthebank’s‘
NOSTRO' accountget
credi
ted.
I
fRupeesCur
rencyBi
ll
:
Theeffect
ivedat
eofreal
izati
onofexpor
tbil
lwil
lbe
thedateonwhichthebank’s‘
VOSTRO'accountget
debi
ted.

(
h)For
eignCur
rencyAccount
s:
(
1)Ov
erseasFor
eignCur
rencyAccount
:
TheReserv
eBankofIndi
aper
mi t
sthefoll
owi
ng
ent
it
iestoopen,
hol
dandmaintai
nForeign
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Curr
encyaccount
sinIndi
aorinfor
eigncount
ri
es
subj
ectt
ocertai
nsti
pulat
ions:
*Export
erstoopenf orei
gncurr
encyaccountsin
forei
gncountr
ies,orinIndi
a,t
oholdexport
proceeds,f
orthepur poseofmaki
ngpay mentsfor
thegoodsimported.
*Part
ici
pant
sininter
nati
onaltr
adefair
s/exhi
bit
ions
havebeenall
owedt oopentemporaryfor
eign
curr
encyaccounts,t
odepositsal
eproceeds.
Thebal ancesintheseaccountshav
etobe
repatr
iatedtoIndia,
withi
nonemont hf
rom t
he
closeoft heexhi
biti
on/tr
adefair
.
*Aunitl
ocatedi
naSpeci
alEconomicZone(SEZ)
mayopen,holdandmai
ntai
naFor ei
gnCurr
ency
Accountwit
hanADCategory-IbankinI
ndi
a.
*Apersonresi
denti
nIndi
abeingaproj
ect/
servi
ce
export
ermayopen,holdandmaint
ainf
orei
gn
curr
encyaccountwi
thabankoutsi
deorinIndi
a.
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(
2)Di
amondDol
larAccount(
DDA)
:
Whocanopen:
Expor
ter
s-i
mport
ersdeal
inginr
oughandpol
ished
di
amondsordiamond-st
uddedj
ewell
ery
.
*Agoodtrackrecord,
ofatleast
,twoyear
sand
aver
ageexporttur
noverofRs.3.
00crores
*
HecanopenDi amonddol
laraccountwit
hanAD,
f
ort
ransact
ingbusi
nessi
nf or
eignexchange.
*
Anexpor
tercanmai
ntai
nupt
o5DDAs.
(
3)EEFCAccount
:
Apersonresi
dentinIndiamayopenwi th,anAD
Cat
egory-IbankinIndia,anaccountinforeign
cur
rencycall
edtheExchangeEar ner
s'Foreign
Cur
rency(EEFC)Account ,
I
nExchangeEar
ner
sForei
gnCur
rencyAccount
(
EEFC),
hecancurr
ent
lycr
edi
tupto100%oft he
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i
nwardpayment
srecei
vedi
nfor
eigncur
rencyt
o
t
hisaccount
.
TheseEEFCaccount
sarei nthenatur
eofcur
rent
account
,andar
enon-int
erestbeari
ng.
Nocr edi
tfaci
li
ti
es,
eitherfund-
basedornon-f
und
based,shouldbepermitt
edagainstthesecur
it
yof
balancesheldi
nEEFCaccount sbytheADCat egor
y
-Ibanks.
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BFM MODULE-A
Chapt
er5:Faci
li
ti
esf
orExpor
ter
sandI
mpor
ter
s
(
PART-
II
I)
Whatwewi
llst
udy
?
*Whati
sbenef
itofGol
dCar
dSt
atusf
orexpor
ter
?
*Whati
sEDPMS&I
DPMS?
GOLDCARDSTATUSFOREXPORTERS:
RBI,i
nconsult
ati
onwithsel
ectbanksandexporter
s,has
drawnupaschemef orexport
erwhichiscal
ledgol
dcard
scheme,whichenvi
sagescert
ainaddi
ti
onalbenefi
tsbased
ontherecor
dofperformanceoftheexport
ers.
I
twasi
ssuedbyMi
nist
ryofCommer
ceandI
ndust
ry.
Forei
gnTradePoli
cy2003-04suggestedt
ol aunchaGold
cardschemeforcredi
twort
hyexport
erswithgoodtrack
recor
dforeasyavail
abi
li
tyofexpor
tcredi
tonbestterms.
Thegoldcardholderwoul
denj
oysi
mplerandmore
eff
ici
entcredi
tdeli
ver
ymechani
sm i
nrecogni
ti
onofhi
s
goodtrackrecor
d.
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Thesal
ientf
eat
uresoft
heschemear
e:
(
i)Allcr
edit
worthyexpor
ter
s,incl
udingthosei
nsmalland
medium sector
s,wit
hgoodtrackrecordwouldbeeli
gibl
e
f
orissueofGoldCardbyindivi
dualbanksasperthecrit
eri
a
t
obel ai
ddownbyt hebank.
(i
i)Theschemewillnotbeappli
cablef
orexpor
ter
s
bl
ackli
stedbyECGCorhav i
ngoverduebil
lsi
nexcessof
10%oftheprevi
ousy ear
'st
urnover
.
(i
ii
)GoldCardhol derexpor
ter
s,dependingontheirt
rack
recordandcreditworthi
ness,
willbegrantedbet
terter
ms
ofcredi
tincl
udingr at
esofint
erest.
(i
v)Appl
icat
ionsf
orcr
editwi
llbeprocessedbasedon
si
mplernormsandunderaprocessfastert
hanforot
her
expor
ter
s.
(vi
)Thechargesandfee-
str
ucturei
nrespectofservi
ces
provi
dedbybankstoexport
ersundertheSchemewi llbe
rel
ati
vel
ylowerthant
hoseprovidedtootherexpor
ter
s.
(
vii
)'I
n-pr
inci
ple’
li
mi tswil
lbesancti
onedforaperi
odof3
y
earswi t
hapr ovi
sionforaut
omat i
crenewalsubj
ectt
o
f
ulf
il
lmentoftheter msandconditi
onsofsancti
on.
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(vi
ii
)Astand-byl
imitofnotl
essthan20percentofthe
assessedli
mitmaybeaddi t
ional
lymadeavail
ablet
o
faci
li
tat
eurgentcredi
tneedsforexecut
ingsuddenorder
s.
(ix)Incaseofunantici
pat
edexportor
der
s,nor
msfor
i
nv entor
ymayber elaxed,
taki
ngint
oaccountt
hesi
zeand
natureoftheexportorder
.
(x)Requestsfr
om cardholder
swoul dbepr
ocessedquickl
y
bybankswi thi
n25day s/
15day sand7daysforfr
esh
appli
cati
ons(25)/
renewalofli
mits(
15)andadhoclimi
ts(7)
,
respect
ivel
y.
(xi
)GoldCardholders,
onthebasi softhei
rtr
ackrecordof
ti
melyreal
izati
onofexportbil
ls,wil
lbeconsi
der
edf or
i
ssuanceoff or
eigncurr
encycr edi
tcardsf
ormeeting
urgentpay
mentobl i
gati
ons,etc.

EXPORTDATAPROCESSI
NGANDMONI
TORI
NGSYSTEM
(EDPMS)
:
Forbet t
ermonit
ori
ngofexpor tofgoodsandsof twareand
facil
it
ati
ngADbankst orepor
tv ari
ousretur
nst hrougha
singl
epl at
for
m,theReserveBankofI ndi
ahasl auncheda
compr ehensi
veIT-
basedsystem call
edExportDat a
ProcessingandMonitor
ingSystem (EDPMS) .
 Joi
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TheEDPMShasbeenoper
ati
onal
izedwi
thef
fectf
rom 1st
March,
2014.
Theobject
iveofEDPMSwast osi
mpl i
fytheprocedur
efor
fi
li
ngretur
nsonasinglepl
atform andforbet
termonitor
ing;
toint
egrat
etheret
urnsrel
atedto
(
a)handl
ingofshi
ppi
ngbi
ll
sforcaut
ionl
ist
edexpor
ter
s;
(
b)del
ayedut
il
izat
ionofadv
ancesr
ecei
vedf
orexpor
ts;
and
(
c)expor
tsout
standi
ngbey
ondt
hest
ipul
atedper
iod.

Feat
uresofEDPMS:
ADbankscanaccesst
heupdat
edlistofcaut
ionl
ist
ed
expor
ter
sthr
oughEDPMSondailybasis.
Hence,bankscannowrefertot
heupdat
edcaut
ionl
istof
expor
tersonaregul
arbasis.
RBIwil
lcaut
ion/de-
caut
iont
heexpor
ter
sbasedont
he
recommendati
onofADbanks.
ADsmayf or
wardit
sfindingstotheconcernedr
egi
onal
off
iceofRBIr
ecommendi ngincl
usionofthenameofthe
export
eri
nthecaut
ionlist.
Thi
swi
llr
equi
ret
hebankst
orepor
tcaseswher
ethe
 Joi
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export
erisnott
raceabl
eornotmakinganyser
iousef
for
ts
forr
eali
zati
onofexportpr
oceeds.
Thegui
deli
nesrequi
rebankstorecor
dadvance
remi
tt
ancesrecei
vedforexpor
tsinEDPMS.
Besides,bankswi
llal
soberequir
edt
orecor
dol
d
outstandi
ngadvancesrecei
ved.
Thi
swouldrequi
rebankstodevel
opar ecor
ding
mechani
sm toensur
ethatal
ladvanceshavebeencapt
ured
i
ntheEDPMS.
Ext
ensionofti
mel i
mitforr
eali
sat
ionofexpor
tproceeds
anddetail
sofexportbi
ll
swrit
tenoffbyADBanksarealso
i
ncorporat
edintheEDPMS.
Banksarenowr equir
edtodi
sconti
nuesepar
ateXOS
repor
ti
ng(forExportbil
l
sout
standi
ngbeyondthest
ipul
ated
peri
od)andreportthesameonEDPMS.
Thechangei
ntherepor
ti
ngr
equi
rementsi
nvol
veshi
ft
s
fr
om manualr
epor
tingt
oaut
omatedrepor
ti
ng.
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I
MPORTDATAPROCESSI
NGANDMONI
TORI
NGSYSTEM
(
IDPMS)
:
Reserv eBankofI ndi
ahadconstit
utedaWor kingGr oup
(Chairman:Shr iA.K.Pandey ,
CGM, FED)compr i
singof
represent at
ivesf r
om Cust
oms, DGFT,SEZ,
FEDAIand
selectedADbanks, t
osuggestputti
nginplacea
compr ehensiveIT-basedsystem t
ofacil
it
ateeffi
cient
processi ngofal li
mporttr
ansacti
onsandef fect
ive
moni toringthereof.
TheWor kingGrouphadr ecommendeddevel
opmentofa
robustandeffecti
veIT-basedsyst
em “
ImportData
ProcessingandMoni t
oringSyst
em”(I
DPMS)ont heli
nesof
“ExportDataProcessi
ngandMoni t
ori
ngSyst
em”( EDPMS).
Ear
li
erthecoordi
nat
ionbetweentheCustomsandBanks
wasnotuptoadesir
edlevelandhencetherewer
ealarge
amountofinf
ormati
ongapst hatneededt
obeplugged.
Withthesetti
ngupoft heIDPMS, i
tisexpect
edthatal
l
concernedagencies,vi
z.,
Customs,RBIandBankswi l
luse
acommoni nfor
mat i
onplatf
orm whichwil
lstr
eamli
nethe
enti
reprocess.
TheIDPMSwasi
mpl
ement
edwi
thef
fectf
rom 10t
hOct
ober
,
2016.
 Joi
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Totrackthemov
ementofimporttr
ansact
ionsthroughbanking
syst
em, Cust
omshav
emodi f
iedtheBil
lofEntr
yf or
mattodisplay
theADCodeofbankconcer
ned,asreport
edbyt heimport
ers.
Pri
marydataonimporttr
ansactionsfr
om Customswil
lfi
rstf
low
i
ntotheIDPMSserverandthereupondependi
ngontheADcode
shal
lbesharedwit
htherespectivebanksf
ortaki
ngthe
tr
ansact
ionsfor
ward.
Thisissimi
lartosystem wher
eintheShi
ppi
ngBil
ldet
ail
sar
e
sharedforexportt
ransacti
onsthr
oughtheEDPMS.
TheADbankwi l
lent
erev erysubsequentacti
vit
y,v
iz.document
submission,out
wardremi t
tancedata,et
c.inIDPMSsoast o
updat
et heIDPMSdat abaseonr ealt
imebasis.
FornonEDI( manual
)Customsports,ti
llt
heyareupgr
adedt oEDI
(computeri
sed)port
s,thenodal
branchofADbankswi llupl
oad
Bil
lsofEntry(
BoE)databasedonor i
ginalBoEwith
stamp/signat
ureoftheCustomsassubmi ttedbyi
mpor t
er.
Sinceal
linf
ormat
iononsubmissi
on/non-
submissi
onofBi l
lsof
Entri
eswouldbeavai
labl
etoRBI,
thr
oughtheIDPMSser ver,
submissi
onofBEFstatement
sbyBankshasbeendi sconti
nued.
 Joi
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BFM MODULE-A
Chapt
er5:Faci
li
ti
esf
orExpor
ter
sandI
mpor
ter
s
(
PART-
IV)
Whatwewi
llst
udy
?
*Whati
sFact
ori
ng?
*Whati
sFor
fai
ti
ng?

FACTORI
NGANDFORFAI
TING:
Factor
ingandfor
fai
ti
ngaret
hetwoproducts,whichal
low
theexport
erst
osellt
hei
rbookdebt
sandr ai
sefinance
upfr
ont.
Fact
ori
ng:
Factoringisdef i
nedasanagr eementbet weenaf inancial
i
nst i
tuti
on( knownas“ Factor'
)andt hebusi nessconcer n
(theexpor ter/
sell
er)sel
li
nggoodsorser vicest ocust omers
oncr edit
, wherebythefactorpur chasest heclients'book
debts,eitherwi t
horwi t
houtrecour set othecl i
entandi n
relat
ionther etocontr
olsthecr editextendedt ot he
customer sandadmi ni
stersthesal esledger .
 Joi
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Asgivenabov e,
thepurchaseofbookdebtsiscent
ral
funct
ionoft hefactor
ing,whil
ecredi
tcontr
oland
administrati
onofsalesledgerar
eotherservi
cespr
ovi
ded
bythef actor.
Whi l
efactori
nghasal onghistory
,dati
ngbacktoseveral
centuri
es,inIndia,
itwasintr
oducedinearl
y90safter
recommendat i
onofKalyanasundaram Committ
ee,setup
toexami nethefeasibi
li
tyofint
roduct
ionoffact
ori
ngin
Indi
awhi chwer eacceptedbytheReserveBankofIndia.
Afact
orprov
idesdi
ff
erentser
vices,
whi
chcanbedescr
ibed
asunder
:
(
a)DebtAdmi
nist
rat
ion:
Managingthesalesledgeroft
hecli
ent,savi
nghis
admini
strat
ivecostofbookkeepi
ng,inv
oi ci
ng,
credi
t
cont
rolanddebtcollect
ion.
Thi
swoul dal
soi
ncl
udewor
koff
oll
owi
ngupf
ort
hedebt
col
lect
ion.
(
b)Cr
edi
tPr
otect
ion:
Asprof essional
s,factorswil
lhav
et hef
acil
it
yforcr
edi
t
i
ntell
igencet oenablet hem t
oassesscredi
tri
skandadvi
se
thei
rclientsaccordingly.
 Joi
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Thedat
abaseontheindiv
idualbuy
ersbui
ltupoveraperi
od
oft
ime,byt
hefactorcoul
dbeusedbyt hecli
entf
orafee.
(
c)Fact
orFi
nanci
ng:
Whi
leinIndi
afi
nanci
ngisanessent
ialact
ivi
tyforafactor
,
i
ncert
aincount
ri
esitmaynotbeanessentialser
vice.
General
ly
, afact
orwil
lbewil
li
ngt
oadv
anceupt
o75–80%
oftheoutstandi
ngdebts.
HowFact
ori
ngwor
ks(
Fact
orMechani
cs)
:
Forfactor
ingoperat
ions,t
hebasi
cneedi
stohav
ea
fact
oringagreementbetweent
hefact
orandt
hecli
ent
.
Besidesthesetwopart
ies,
thepurchaser,
whohas
purchasedthegoodsfrom t
hecli
ent,isal
soapart
ytothe
factor
ingdeal,
whichnormall
yevolvesonthest
epsas
givenbelow:
1.Thecli
ent/export
erapproachesthefact
orwit
hrequi
sit
e
detai
lsofbusiness,debt
orsandordersinhand,
whichhe
i
ntendstogetf act
ored.
2.Thefactor
,(exportfactor
),contactshi
scounterparti
n
thecountr
yoft heimporter/buyer
,(knownasi mportfact
or)
,
toassessthecr edi
tworthi
nessoft hedebtor
/buyer,t
oset
l
imitsonhim.
 Joi
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3.Theexportf
actor,
thensi
gnsanagr eementwit
hhis
cl
ient,
det
ail
ingtermsofservi
ces,
alongwithindi
cat
ive
l
imitsonthebuyers/
import
ers.
4.Thecli
entssubmitt
wocopiesoftheinvoi
cesdrawnon
thebuyer
/debtor
s,andgetf
inanceuptotheextent
approv
ed.
5.Theexportfactorsendsonecopyoft
heinvoi
cetohis
counter
part(
normal l
ycall
edasimportf
act
or)
, i
nthecount
y
oftheimport
er,forcoll
ecti
onofdebt
,whendue.
6.Theimportfactor,col
lectsthedebt,onduedat eand
remit
sproceedst otheexpor tfact
or,enabl
inghimtoadjust
hisoutst
anding.Thebalanceamounti srel
easedtothe
export
er,af
teradjusti
ngf ori
nterest,
charges,et
c.
I
ncaseonnon- pay mentbyt hedebtorsonduedate,the
i
mpor tfactorsett
lest hedues,andstepsint
ot heshoesof
thecli
ent/exportfactorforrecover
yofduesfrom the
debtori
ncludingtakingl egalr
ecourse.

Dependi
ngupont heneedoftheexport
er-
cli
entandhis
pri
cebeari
ngcapacit
yv ar
iousty
pesofint
ernati
onal
fact
ori
ngarei
nv ogue,t
hepr i
nci
palamongstthem ar
e:
 Joi
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1.Singlefact
orsystem:whereusuall
ytheexport
erandthe
i
mpor terdecidetohaveacommonf act
or,
with
offi
ces/branchesinboththecount
ri
es,tospeedupthe
processandr educecosts.

2.Twof act
orsy st
em:wher etwodiff
erentfact
orsi
ntwo
countr
iesareused, bothindependentl
yrenderi
ngserv
ices
totheexporterandt heimporter
.

3.Di
rectexpor tf
actor
ing:inthi
scase,
onlyonefactor
ing
company, basedinexporterscount
ryi
sengaged,who
makesallar r
angements,assessmentofcredi
tofthe
debt
or,etc.,onhisown.

4.Di
rectimportf
actor
ing:her
eonl
yonef
act
or,
basedi
n
i
mpor t
erscountr
yisengaged.
Heisengagedbythei
mpor
tert
opr
imar
il
yfaci
li
tat
e
fi
nanci
ngofdebts.
 Joi
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Wi
thr
ecour
sef
act
ori
ng:
Whent heimport
erdoesnotpayhisdebt
s(donotmake
paymentforthegoodsorser
vices)t
hentheSel
lerhas
responsi
bil
it
yofit
.

Wi
thoutr
ecour
sef
act
ori
ng:
Whent heimport
erdoesnotpayhisdebts(donotmake
paymentforthegoodsorservi
ces)thentheSel
lerhasno
responsi
bil
it
yofit
.Theresponsi
bil
it
ylieswit
hfactor
.

Adv
ant
agesofFact
ori
ng:
(
a)I
mmedi
atef
inanci
ngupt
o75-
80%oft
hei
nvoi
cev
alue.
(b)Noneedf
orLC,
thussav
ingcost
sfort
hei
mpor
ter
/
buyer
.
(
c)Cr
edi
tcheckoni
mpor
ter
s/buy
ers.
(
d)Sal
esl
edgermai
ntenance.
(
e)Cr
edi
tpr
otect
iononal
lappr
oveddebt
orl
imi
ts.
(
f)Adv
isor
yser
vicesf
ornewar
eas,
count
ri
es.
 Joi
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2.For
fai
ti
ng:
Tot
all
ysi
mil
art
oFact
ori
ngexcept
:
*
her
etheper
soni
scal
ledf
orf
eit
er(
notFact
or)
.
*
Immedi
atef
inanci
ngupt
o100%ofi
nvoi
cev
alue.
*Inforf
aiti
ngy ouhaveonl
ywithoutrecourseoption.
(export
erisnotl i
abl
eforanydefaul
tfrom importer
,forf
eit
erwi l
lberesponsi
blef
orthisdefaultandhewi l
l
makeef fortt
or ecov
erthemoneybyt akinglegalopti
ons
avail
able)
*
Wit
hrecour
seopt
ioni
snotav
ail
abl
einf
orf
ait
ing.
*
For
fai
ti
ngi
sdoneonbehal
fofLCorBG.
*Total5part
yinv
olv
edinfact
ori
ng1-Import
er2-
Expoer
ter
3-I
mpor t
er’
sbank4-Expor
ter
’sbank5-
Forf
eit
or
*
Onl
yEXI
M banki
sal
lowedbyRBIf
orf
orf
ait
ing.
 Joi
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BFM MODULE-A
Chapt
er5:Faci
li
ti
esf
orExpor
ter
sandI
mpor
ter
s
(
PART-
V)
Whatwewi
llst
udy
?
*Whati
sFor
fai
ti
ng?
*
Whatar
ethebenef
it
sofFor
fai
ti
ng?

2.For
fai
ti
ng:
Tot
alFact
ori
ngexcept
:
*
her
etheper
soni
scal
ledf
orf
eit
er(
notFact
or)
.
*
Immedi
atef
inanci
ngupt
o100%ofi
nvoi
cev
alue.
*I
nforfai
tingy ouhav eonl
ywithoutrecourseopti
on.
(
exporterisnotl i
ableforanydefaul
tfrom import
er
,f
orfei
terwillberesponsiblef
orthisdefaultandhe
wil
lmakeef forttorecoverthemoneybyt aking
l
egaloptionsav ail
able)
*
Wit
hrecour
seopt
ioni
snotav
ail
abl
einf
orf
ait
ing.
*
For
fei
ti
ngi
sdoneonbehal
fofLCorBG.
 Joi
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*Total5part
yinvol
vedinfact
ori
ng1-Impor
ter2-
Expoerter3-
Import
er’
sbank4-Expor
ter’
sbank5-
Forf
eitor
*
Onl
yEXI
M banki
sal
lowedbyRBIf
orf
orf
eit
ing.
Anot
herproductf
orf
inanci
ngofexpor
trecei
vabl
es
i
sForfai
ti
ng.
I
tcanbedef inedasamechani sm f orfinancingby
discounti
ngofexportreceivables(billofExchange),
withoutrecoursetot
heexpor ter/sell
er, f
ora
medi um ter
m, onafi
xedr atebasis, f
ort hefull
valueofthecont r
act
/invoice.
I
nanot herwords,for
fait
ingisthepurchasebyt
he
fi
nancer,ofmedium term exportcl
aimsonthe
buyer
s, wit
houtrecoursetotheexporter
s.
I
tisasour
ceoff
inanceandnotat
ypeofcr
edi
t
i
nsur
ance.
Thefinanceragreestofinancethet
ransact
ionon
thebasisofthestandingoft hei
mporter
,hi
s
countryri
sk,andatti
mes, doessoont hestr
engt
h
 Joi
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ofguar
ant
eeoft
hei
mpor
ter
'sbank.
Sinceforf
aiti
nggener
all
ycoversmedi um-term
fi
nancing,expor
tofcapit
algoods,project
s,etc.
,
madeonmedi um t
erm basi
s,areeli
giblefor
forf
ait
ing.
However,therei
snor estr
ictionforfi
nanci
ngof
medium t
erm export
sonly, assuchexportsof
commoditi
es,consumergoods, whereexport
sare
nor
mallymadef orshortperiodsofsayupt o12
monthsarealsofi
nancedt hrought hi
srout
e!
Mechani
sm ofaFor
fai
ti
ngTr
ansact
ion:
Ther
ear
efi
vepar
ti
est
oanyf
orf
ait
ingt
ransact
ion.
Otherthant heexport
er,
impor
terandthe
fi
nancer(Forfai
ter
),t
hebanksoftheexpor
terand
t
hei mpor t
erarealsoinv
olv
ed.
Aftergetti
ngthepr oposalf
rom t
heexpor
ter
,the
forfai
terascert
ainsthecountr
yrisk,
asal
sothe
creditworthi
nessoft heimpor
ter.
I
fneedbe,t
heimport
eri
sadvi
sedtogetguar
ant
ee
ofhi
sbankforpay
mentofi
nvoi
cesonhim.
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Thediscountchargesfort
hetransact
ionwoul
d
dependupont hequali
tyofcr
edit,
countr
yri
skand
thenatur
eoftransacti
on.
Ift
heconditi
onsareagr eeabl
etothepart
ies
concerned,
acontracti
ssi gnedbetweent
he
export
erandtheforfai
ter.
Ther
eaft
er,
theexpor
tsaremadeandbi
llsor
aised,
di
scount
edbythefor
fai
ter.
Forf
aiti
ngisdoneagainstthebil
lofexchangeor
thepromissorynot
e,dulyaccept
edbyt heimpor
ter
andguaranteedbyhisbank.
Thi
sisknownasav
ail
ingoft
hebi
llofexchange.
Thecostchar
gedbyt heforf
aiter
,usual
lycover
sthe
commitmentfees,di
scount/
financi
ngchargesas
al
sodocument at
ionfees.
Thecommitmentfeesusual
lyrangesbetween0.50
to1.
50%perannum, ontheunuti
li
zedporti
onofthe
val
ueofcont
ract
,andischargedfortheperi
odthe
commit
mentisgiven.
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Thecommi
tmentf
eei
snon-
ref
undabl
e.
Discountchargesaremarket
-rel
atedfi
nancing
costs,basedonLIBORfortheperiodofcredit
,pl
us
amar gintocoverfor
fai
ter
'sr
isks.
InIndi
a,RBIhaspermi
ttedEXIM Banktofaci
li
tat
e
fi
nancingofmedium-t
erm expor
tbill
sthr
ough
Forfai
ti
ng.
Benef
it
sofFor
fai
ti
ngt
oExpor
ter
s:
(a)Takesawaypol
it
icalandcommerci
alr
isks
associat
edwit
hexportrecei
vabl
es.
(
b)Makesav
ail
abl
e100%f
inanceagai
nstt
he
i
nvoi
cedr
awn.
(
c)Wi
thoutr
ecour
sef
aci
li
ty.
(d)Fr
eedom f
rom cr
edi
tadmi
nist
rat
ion,
andf
oll
ow-
up.
(
e)Costsavi
ngonexpor
tcr
edi
tinsur
ance,
besi
des
r
elat
edpaperwor
k.
(
f)Fi
xedratef
inanci
ng, f
reedom f
rom mov
ementof
i
nter
estr
atesforthetenorofthebil
l.
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BFM MODULE-A
Chapt
er5:Faci
li
ti
esf
orExpor
ter
sandI
mpor
ter
s
(
PART-
VI)
Whatwewi
llst
udy
?
*
Whati
sExpor
tFi
nance?
*
Whati
sPr
eshi
pmentcr
edi
t?

EXPORTFI
NANCE:
TheReser v
eBankofI ndi
ahasf ramedspecific
guidel
inesforfi
nancetoexporters,
soast oall
ow
fi
nanceatconcessionali
nterestrat
es,tomake
exporter
scompet ewitht
heircompet i
torsf
rom
othercountri
es,andal
sotoboostt heexportsfrom
thecountry.
TheRBIfi
rsti
ntr
oducedt
heschemeofExpor
t
Fi
nanci
ngin1967.
Theschemei sint
endedtomakeshor t
-t
erm
workingcapi
talfi
nanceavai
labl
etoexport
ersat
i
nternati
onal
lycomparabl
einter
estr
ates.
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Exportcr
editi
savai
labl
ebot
hinr
upeeaswel
lasi
n
for
eigncurr
ency.
TheReser veBankofI ndiahasi
ssuedbr oad
dir
ecti
vestobanks, ont hesubj
ectofexpor tf
inance,
andbanksar efreetochar gei
nterestr
atesupt o
thecei
lingsandi naccordancewithguidel
ines
prescr
ibedbyRBIf rom timetotime.
Fi
nancet
oexpor
tercanbeoft
wot
ypes:
1-Pr
e-Shi
pmentLoanorPacki
ngCr
edi
tLoan(
PCL)
:
Financeall
owedt oanexporter,t
ofundtheneedfor
procurementofrawmat eri
al,manufact
uri
ngandup
tothestageofpackingandshi pment,i
scall
edPre-
ShipmentFinance/Loan(PCL)alsocall
edPacki
ng
credit
.
2-Post
-Shi
pmentExpor
tFi
nance(
PSEF)
:
Whi l
eontheotherhand,
financeagai
nstexpor
tbi
ll
s,
whent heshi
pmentisalr
eadymade, i
scall
edPost
ShipmentCredi
torPost-
ShipmentExportFi
nance
(PSEF).
 Joi
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TheReserv
eBankofI ndiahasalsopermit
ted
bankstoal
lowbot hPacki
ngcreditsaswellaspost
-
shi
pmentadv ancest
oexporter
si nIndi
anrupeesas
wellasi
nforeigncur
renci
es.
Letusseetherul
esrel
atedt
orupeeadvancesfi
rst
,
befor
egoingtothef
orei
gncurr
encyexportcr
edi
tto
export
ers.
Pr
e-shi
pmentf
inancecanbeoft
wot
ypes:
1.Packi
ngCr
edi
t(EPCorPCL)
.
Packi
ngCr
edi
tLoan(
PCL)orExpor
tPacki
ngCr
edi
t
(EPC)
.
2.Advanceagai
nstGov
t.r
ecei
vabl
es,
i.
e.Dut
y
Drawback,et
c.
Dut
ydr
awback:
(r
efundofcust
omsdut
ybyGov
)
Dutydrawbackprovi
sionsar
egi venundersecti
on
74and75oft heCustomsAct ,1962.Secti
on74
al
lowsdutydrawbackonr e-
exportofdutypaid
goods.Whereassecti
on75al l
owsdr awbackon
i
mpor t
edgoodsusedi nthemanuf actur
eofexport
goods.
 Joi
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Post-
shipmentfinancecanbeofvarioust
ypes,
as
under:1.Expor
tbill
spurchased/
discount
ed
/negoti
ated.
2.Adv
anceagai
nstbi
ll
ssentoncol
lect
ion.
3.Adv
ancesagai
nstexpor
tsonconsi
gnmentbasi
s.
4.Adv
ancesagai
nstundr
awnbal
ances.
5.Adv
ancesagai
nstDut
yDr
awback.

1.Pr
e-Shi
pmentFi
nance:
Asgivenabov e,pre-
shipmentfinance,general
ly
knownasPacki ngCreditLoan(PCL)orExpor t
PackingCredit(EPC),i
sessent i
all
yawor ki
ng
capit
aladvanceal l
owedf orthespecif
icpurposeof
procuri
ngpr ocessi
ng/manuf acturi
ngofgoods
meantf orexport.
Itcoul
dcov eral
lcostspri
ortoshipmentoffi
nished
goods,i.
e.packi
ng,localt
ranspor
tati
on,l
abour
charge,et
c.
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Forallowi
ngPackingCreditadvancesitisapre-
requi
sitet
hattheborr
owermusthav eaf i
rm export
orderoranExportLett
erofCr edi
t,andthattheloan
soallowedmustbel i
quidatedoutofrelati
veexport
proceeds.
Here,i
ncert
aincases,
thebankcanwai
ve
submissi
onoforderorLCattheti
meofavai
li
ngof
advance.
Whilemakingapprai
salofanexportcr
editpr
oposal
,
banksaresupposedtofoll
owtheguideli
nes/
rul
es
i
ssuedbyRBI ,
DGFT, ECGC,andeachbank’s
i
nternalsy
stem f
orgranti
ngadvances.
Normall
y,t
hefol
lowi
ngbr
oadgui
del
inesneedt
obe
ascer
tai
ned:
A.Pr
e-sanct
ion:
1.Thebor
roweri
sbank'
scust
omer
.
2.Theyshoul
dhav
eImport
/Expor
tCodenumber
(I
EC)all
ott
edbyDi
rect
orGener
alofFor
eignTr
ade
(DGFT).
3.Thei
rnameshoul
dnotappearundert
hecaut
ion
 Joi
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l
istofRBI
.
4.Theyshoul
dnotbeundert
heSpeci
fi
cAppr
oval
l
istofECGC.
5.Theyhavethecapaci
tyt
oexecutetheorder
withi
nsti
pul
atedti
meandhasagenui neandv al
id
exportor
derorLet
terofCr
edi
tforexportofgoods.
6.Al
l‘
KnowYourCust
omer
'(KYC)gui
del
inesar
e
compli
edwi
th.
7.Thetot
alper
iodsancti
onedshouldbeasperthe
manufact
uri
ngcycl
eort heprocesscycl
eoft
he
goodsbei
ngmanuf act
ured.
(normall
y180days)
Nor
mally,
quantum offi
nancewillbefi
xedont he
FOB(Fr
eeOnBoar d)val
ueoft hecontr
actortheLC
ort
hedomesticvalueofthegoodswhicheveris
l
essaft
erdeducti
ngthepr of
itmargi
n.
Advancef
orthefrei
ghtandi
nsur ancechar
gesar
e
nottobedi
sbursedatthei
nit
ialstageit
sel
f.
I
fthecontractortheLCi sonCI Fbasis(cost,
i
nsurance,
f r
ight
),theFOBv aluewillbearri
vedatby
deducti
ng13%t o14%( representi
ngf r
eightand
 Joi
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i
nsurance)f
rom t
heCI Fval
ue,i
fthedi
spat
chis
t
hroughseaandar ound25%ifthedi
spat
chisbyai
r.
Aft
erarr
ivingattheFOBval
ue,
theusualmar
gin,
i.
e.,
pr
ofitmarginsti
pulat
edi
nthet
ermsofsanct
ionsto
bededucted.
8.Normall
ythetot
alper
iodofPCLshoul
dnot
exceed180days.
Bankscangr antextensionsbeyond180day supto
360day s,basedont hei
rassessmentandneedof
thecustomer .Anyextensionbeyond360day s,
wouldceaset oqualifyforconcessi
onalr
ateof
i
nteresttotheexporter.
9.TheRat eofI
nteresti
sli
nkedtotheBenchmar
k
MarginalCostofFundsbasedLendingRate(
MCLR)
eff
ectiv
e1stApr i
l2016foral
lcommer ci
al
advancesincl
udingexport
s.
10.Banksmayadoptaf lexi
bleat
ti
tudewithregard
todebt-
equit
yratio,
marginandsecuri
tynormsbut
ther
ecouldbenocompr omi sei
nrespecttoviabi
li
ty
oftheproposalandthei
ntegri
tyoftheborr
ower .
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11.Expor
ter
'scr
edi
trequi
rementsatpr
e-andpost
-
shi
pmentstagesar
etobeconsideredi
ntotal
.
B.Post
-sanct
ion:
1.NoPCLhasbeenavai
ledbyhim agai
nstt
he
sameorder
/LCf
rom anyotherbank.
Forthisr easononly,t
heBankwhi chhasgr anted
thePr e-Shipmentfaci
li
tyshouldnotethefactofits
credi
tf acil
ityontherever
sesideoftheoriginalLC
ororiginalCont r
actsothatiti
sawar ni
ngtoany
otherbankwhi chishandli
ngtheexporter
's
document s.
2.Bankshoul
dcallf
orCr
edi
tRepor
t/St
atusRepor
ts
onthefor
eignbuy
ers.
3.Theexpor
tershoul
dsubmi
tstockstat
ement
sfor
thegoodsonwhichPCLhasbeenall
owed.
4.Iftheexport
sarecoveredunderlet
ter
sofcr
edi
ts,
bankswoul dneedtobesatisf
iedaboutthe
standingofthecr
editopeni
ngbank.
5.Banksmayalsolookint
otheregul
ati
ons,t
he
pol
it
icalandf
inanci
alcondi
ti
onsofthebuyer
's
 Joi
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count
ry.
6.Afterpropersanct
ioni
ngofcr edi
tli
mits,
the
di
sbur si
ngbranchshouldinform ECGCthedetai
ls
ofli
mi tsancti
onedintheprescri
bedformatwit
hin
30day sfrom thedateofsancti
on.
(Whereveradvancesarecover
edunderWhole
Tur
nov erPre-
ShipmentPoli
cy(WTPCG)and/or
WholeTur nov
erPost-Shi
pmentPol
icy(WTPSG)of
ECGC.)
7.Theadvanceshouldbeliqui
dat
edonsubmi ssi
on
ofrel
ati
veexportbi
ll
s,bywayofallowingpost
shi
pmentfinanceagainstt
hosebil
ls.
(Eveni ncasepost-
shipmentli
mitsarenot
sanctioned,PCLshouldbeliqui
datedbyall
owing
post -
shipmentadvancetotheextentofPÇL.Once
goodshav ebeenshipped,
wecannotcont i
nuewit
h
apr e-shi
pmentadvanceagainstthesegoods)
.
8.I
ncaseafterall
owingPCL,exportsdonottake
pl
ace,t
headv anceistr
eat
edasl ocaladv
ance,and
i
nter
estatdomest i
cpenalr
atesistobecharged.
 Joi
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C.SpecialCasesf
oral
lowi
ngPacki
ngCr
edi
t
Advances:
(a)Packingcredi
tscanbeall
owedtosub-suppl
i
ers
alsoatthefi
rststageundert
heRupeecredit
scheme.
(b)Bankshav ebeenauthorizedtograntpre-
shipmentadv ancesforexportsofanycommodi ty
withoutinsi
sti
ngonpr i
orlodgmentofl ett
ersof
credit
/fi
rm exportor
dersunder'RunningAccount
facil
it
y’subj
ecttothefoll
owi ngcondi
tions:
(i
)Thefaci
li
tymaybeextended,pr
ovi
dedtheneed
for'
Runni
ngAccountfaci
li
ty’
hasbeenest
abli
shed
bytheexpor
ter
stothesati
sfact
ionoft
hebank.
(
ii
)Thebanksmayextendt
he‘Runni
ngAccount
f
acil
it
y’onl
ytot
hoseexpor
ter
swhosetr
ackrecord
i
sgood.
(i
ii
)Inallthecaseswher epr
e-shi
pmentCr edit
RunningAccountf aci
li
tyhasbeenextended,lett
ers
ofcredit
/fir
m ordersshoul
dbepr oducedwithina
reasonableperi
odoft i
me.
 Joi
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I
nt hecaseofcommodi t
iescoveredunderSel
ecti
ve
Credi
tContr
ol,banksshouldi
nsistonproduct
ionof
l
etter
sofcredi
t/fi
rm or
derswithi
naper i
odofone
monthfrom t
hedat eofsanct
ion.
(i
v)IncaseofPCLal l
owedforpurchaseofseeds,
forexpor
tofde-oi
ledcake,t
heproceedsf rom l
ocal
saleofoilcanbeusedtoli
quidat
ePCL, withi
na
peri
odof30day sfrom t
hedateofadv ance.
(v)I
fthecommodi tytobeexpor
tedfall
sunder
‘
Restri
ctedCategory'
,ali
censef
rom thecompetent
author
it
yisrequir
ed.
Ift
hecommodi t
yfal
lsunder‘Negat
iveCat
egor
y’,
it
cannotbeexpor
tedoutofIndia.