chapter 7 post - shipment finance - union bank of … 07credmonipolicypostshipfinan… · chapter 7...
TRANSCRIPT
1
CHAPTER 7
POST - SHIPMENT FINANCE
2
CHAPTER 7 POST - SHIPMENT FINANCE
INDEX
Para No TOPIC Page No
7 Introduction 5
7 1 Types of Pots-shipment Finance 5
7 1 1 Purpose 5
7 1 2 Period 6
7 1 3 Period & Notional Due Date 6
7 1 4 Rate of Interest 7
7 1 4 1 Interest on Post-ship Credit Adjusted from Rupee
Resources
8
7 1 5 Normal Transit Period 9
7 1 6 Usance Bills 10
7 2 Export Documents 10
7 3 Scrutiny of Documents 10
7 3 1 Examination of Draft or Bill of Exchange (B/E) 11
7 3 2 Examination of Invoice 11
7 3 3 Examination of Transport Documents – Bill of Lading 13
7 3 4 Airway Bill (AWB) / Air Consignment Note 15
7 3 5 Post Parcel Receipt (PPR) 17
7 3 6 Forwarder’s Cargo Receipt 18
7 3 7 Examination of Insurance Documents 19
7 3 8 Other Documents 20
7 3 9 Direct Despatch of Shipping documents 20
3
7 4 Bills under LC Negotiation under Restricted LC 21
7 4 1 Negotiation under Restricted LC 26
7 4 2 Negotiation under Clause LC 27
7 4 3 Negotiation under Revolving LC 28
7 5 Checkpoints while preparing Forwarding Schedule 28
7 6 Handling of Export Documents negotiated/Purchased
by C Category Branches, Procedure to be followed
by C and B category Branch
30
7 7 Realisation of Export Bills Negotiated 32
7 8 Purchase/Discount of Export Bills under Contract
Lodgment / Realisation
35
7 9 Follow up of Export Bills Purchased / Negotiated 38
7 10 Crystallisation 39
7 10 1 Relisation on or after Notional Due Date/Actual Due
Date but before Crystallsiation
41
7 10 2 Realisation of Bill after crystallization 41
7 10 3 Recovery of Advance in cash before crystallization
on dishonor of Documents
42
7 10 4 Recovery of Advance in cash after crystallization 42
7 11 Export Documentary Bills for Collection 43
7 12 Export Bills outstandings beyond the time limit for
realization Procedures
46
7 13 Reduction in Value : Exchange Control Regulations 49
7 14 Export of Goods on Consignment Basis 52
7 15 Advance against Foreign Bills sent for Coll (AFDBC) 55
7 16 Advance against undrawn Balance 58
7 17 Advance against Duty Drawback 60
4
7 18 Remittance of Agency Commission 62
7 19 Export Claims 64
7 20 Other Points 65
7 20 1 Change of Tenor 65
7 20 2 Change of Buyer 66
7 20 3 Change of Buyer and Country 67
7 20 4 Return of Documents 68
7 20 5 Protesting/Noting 69
7 20 6 Legal Action for Recovery in Importer’s country 70
7 20 7 Advance payment against Exports 70
7 20 8 Payment for Export from NRE/FCNR Accounts 71
7 20 9 Payment for Exports in the form of FC/TC/DD etc. 72
7 20 10 Delay in Releasing proceeds of Collection Bills 72
7 20 11 Present Handling Charges / Comm on Export Bills 73
7 20 12 Guarantee for Discrepant Documents 73
7 20 13 T.T. Reimbursement under LC 74
7 20 14 Bills drawn in a curr, Bank don’t maintain a position 75
7 20 15 Write off of unrealized Export Bills 75
7 20 16 Gift Parcels 76
7 20 17 Shipments lost in Transit 76
7 20 18 Set-off of export receivable against import payables 77
7 20 19 Balancing 77
7 21 Addendum 7.1.2 Period 78
5
Annex No Annexure Page No
1 SPECIMEN of undertaking to be obtained from
export customers 79
2 PROCESS NOTE for EXPORT BILLS 81
3 Indemnity for discrepant EXPORT BILLS drawn under LC 83
4 Covering letter to EXPORTER'S BANKER in the case of LC
restricted to our bank for negotiation
86
5 Seeking permission to negotiate discrepant EXPORT BILL 88
6 Regarding NON PAYMENT of EXPORT BILL by LC opening bank 90
7 Letter to the bank to whom the EXPORT LC is restricted 92
8 Bill of Exchange for lodging REIMB. CLAIM under LC 94
9 Forwarding Letter for negotiation 96
10 Request for sending the documents by Courier Service 98
11 Letter regarding bill status 99
12 Covering letter cum processing schedule 100
13 Intimation to A CAT Branch of early realisation 103
14 Follow up letter for unpaid export bill 104
15 Request for reduction in value of our Invoice 105
16 Specimen Appl. Form for Remit of Agency Commission 108
17 Letter to 'A' CAT BR for details of debit to EEFC A/C 110
18 Specimen Application for Remittance of Export Claims 111
19 Request letter to make a Rupee Advance against a bill drawn
In 'Non-Position' Currency
114
20 Request for Write Off of Export Bills 115
6
7. INTRODUCTION
Post-shipment finance is an advance normally granted to an exporter of goods and
services after shipment from India, till the date of repatriation of the export
proceeds. The advance may be against shipping documents or on the security of
duty drawback or export related receivables from Government of India.
Post-shipment finance is generally a short term working capital finance. However, depending
upon the credit terms e.g. deferred export, it can also be granted for longer periods. As a
general rule in case of physical exports, post-shipment finance is extended to the actual
exporter who has exported the goods or to an exporter in whose name the export documents
are transferred subject to conditions mentioned as per Article 38 of UCP600. Post-shipment
finance is also granted for deemed exports in which the goods do not leave the country and
the proceeds for deemed exports are received by the supplier in India itself.
7.1. TYPES OF POST-SHIPMENT FINANCE
Post-shipment finance can be granted as follows:
a. Negotiation/payment of export documents under LC.
b. Purchase/discount of export documents under confirmed export contracts/orders.
c. Advance against Foreign Documentary Bills sent on Collection basis (AFDBC).
d. Advance against export on consignment basis
e. Advance against undrawn balances on exports/retention money relating to export/
incentives receivable from Govt. of India.
f. Exports on elongated credit terms.
g. Advance against deemed exports.
h. Exports on deferred payment terms(project/service exports)
For details of g) and h) refer Chapter no.13 and 15
7.1.1 PURPOSE
Post-shipment credit is a finance against export receivables granted after the shipment of
goods / services till the date of repatriation of the export proceeds.
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7.1.2 PERIOD (Please refer Addendum 7.21)
In case of cash exports, the maximum period allowed for realisation of export proceeds is
the due date or six months from the date of shipment whichever is earlier. Status holder in
terms of EXIM policy are allowed to realise the exports within 12 months from the shipment
date for shipment.
In case of exports through Indian owned warehouses established abroad with prior approval
of AD / RBI, maximum period of realisation of export proceeds is 15 months.
In case of exports on consignment basis maximum period of realisation is 180 days except
exports to CIS & East European countries.
In case of exports denominated in permitted currencies to CIS & East European countries,
elongated period of realisation will be upto 12 months, subject to prior approval of Reserve
Bank of India.
In case of exports to Russian Federation on consignment basis against repayment of State
Credit in Rupees, Status Holders are allowed elongated period of realisation of 360 days from
the date of shipment for export of permitted goods (announced by RBI from time to time)
with prior approval of RBI.
In case of deferred payment exports period of realisation can be extended beyond 180 days,
subject to RBI approval.
In case of deemed exports, realisation period from the date of supply till the date of receipt
of payment should not exceed 30 days.
In case of cash exports, the maximum period allowed for realisation of export proceeds is the
due date or six months from the date of shipment whichever is earlier.
7.1.3 PERIOD AND NOTIONAL DUE DATE
As per FEDAI guidelines if export bills drawn in foreign currency are ‘at sight’ or ‘on demand’
the Normal Transit Period (NTP).i.e. presently 25 days.
8
In case of usance bills, rate of interest as directed by the RBI on export bills is applicable for
the normal transit period plus usance period. e.g. A foreign currency bill payable at 60 days
after sight will attract interest for 60 days usance plus the normal transit period of 25 days
i.e. a total number of 85 days.
FIXED DUE DATE
In case of export usance bills (foreign currency and rupee bills) where due dates are reckoned
from date of shipment or date of bill of exchange etc. no Normal Transit Period shall be
applicable, since the actual due date is known.
7.1.4 RATE OF INTEREST
The Base Rate System is applicable with effect from July 1, 2010. Accordingly, interest rates
applicable for all tenors of rupee export credit advances sanctioned on or after July 01, 2010
are at or above Base Rate.
In case of export bills, the rate of interest decided by the bank will apply upto the due date
of the bill (upto NTP in case of demand bill and specified period in case of usance bills).
For the period beyond the due date viz. for the overdue period, the prescribed interest rate
as applicable to post-shipment rupee export credit (not exceeding BPLR minus 2.5 percentage
points) may be applied upto 180 days from the date of advance.
In the case of advances against demand bills, if the bills are realised before the expiry of the
normal transit period (NTP), interest at the prescribed rate shall be charged from the date of
advance till the date of realisation of such bills. The date of realisation of demand bills for
this purpose would be the date on which the proceeds get credited to the banks' Nostro
accounts.
In the case of advance / credit against usance export bills, interest at prescribed rate be
charged only upto the notional / actual due date or the date on which export proceeds get
9
credited to the bank’s Nostro account abroad, whichever is earlier, irrespective of the date of
credit to the borrower's / exporter's account in India. In cases where the correct due date can
be established before / immediately after availment of credit due to acceptance by overseas
buyer or otherwise, prescribed interest be applied only upto the actual due date, irrespective
of whatever may be the notional due date arrived at, provided the actual due date falls
before the notional due date.
Where interest for the entire NTP in the case of demand bills or upto notional / actual due
date in the case of usance bills as stated at above, has been collected at the time of
negotiation / purchase / discount of bills, the excess interest collected for the period from
the date of realisation to the last date of NTP / notional due date / actual due date should be
refunded to the borrowers.
7.1.4.1 Interest on Post-shipment Credit Adjusted from Rupee Resources
Following guidelines to be adopted in charging interest on post-shipment advances which are
not adjusted in an approved manner due to non-accrual of foreign exchange and advances
have to be adjusted out of the funds received from the Export Credit Guarantee Corporation
of India Ltd. (ECGC) in settlement of claims preferred on them on account of the relevant
export consignment :
i) In case of exporters who are unable to realise export proceeds due to non-expatriation
of the foreign exchange by the Governments / Central Banking Authorities of the
countries concerned as a result of their balance of payment problems even though
payments have been made locally by the buyers. In these cases ECGC offer cover to
exporters for transfer delays. Where ECGC have admitted the claims and paid the
amount for transfer delay, banks may charge interest as applicable to 'ECNOS' - post-
shipment even if the post-shipment advance may be outstanding beyond six months
from the date of shipment. Such interest would be applicable on the full amount of
advance irrespective of the fact that the ECGC admit the claims to the extent of 90
percent / 75 percent and the exporters have to bring the balance 10 percent / 25
percent from their own rupee resources.
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ii) In a case where interest has been charged at commercial rate or 'ECNOS', if export
proceeds are realised in an approved manner subsequently, we should refund to the
borrower the excess amount representing difference between the quantum of interest
already charged and interest that is chargeable taking into account the said realisation
after ensuring the fact of such realisation with satisfactory evidence. While making
adjustments of accounts it would be better if the possibility of refund of excess
interest is brought to the notice of the borrower.
7.1.5 NORMAL TRANSIT PERIOD
Concept of normal transit period and notional due date are linked to concessional interest
rate on export bills. Normal transit period comprises of the average period normally involved
from the date of negotiation / purchase / discount till the receipt of bill proceeds. Normal
transit period for different categories of export business are :
i) Fixed Due date : In case of export usance bills, where due dates are fixed or
are reckoned from the date of shipment or date of bill of exchange etc., the
actual due date is known. Therefore, in such cases, normal transit period is not
applicable.
ii) Bills in Foreign Currencies .. .. 25 days
iii) Exports to Iraq under UN guidelines – max .. 120 days
iv) Bills drawn in rupees under L/C :
- Reimbursement provided at centre of negotiation .. 3 days
- Reimbursement provided in India at a centre different from centre of negotiation .. 7 days
- Reimbursement provided by banks outside India .. 20 days
- Exports to Russia under L/C where reimbursement Is provided by RBI .. .. 20 days
v) Bills in Rupees not under L/C .. .. 20 days
vi) TT reimbursement under L/C :
- Where LC provides for reimbursement by electronic means 5 days
- Where LC provides reimbursement claim after certain Number of days from date of negotiation .. 5 days + this Additional period
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7.1.6. USANCE BILLS
In the case of usance bills which are realised before NDD, apart from refunding proportionate
interest, branches have to recover or pay swap cost.
7.2. EXPORT DOCUMENTS
Following are the basic documents which are normally tendered by the exporters:
Bill of Exchange ( in sets)
GR Form / EDF/ SDF /SOFTEX / PP
Commercial invoice
Transport documents * Bill of Lading
* Airway Bill
* Post Parcel Receipt
Packing list
Weight list
Insurance policy (in the case of CIF contract)
Certificate of Origin
Health Certificate / Inspection certificate
GSP certificate, if applicable
Any other documents as called for in LC/contract
7.3. SCRUTINY OF DOCUMENTS
Under LC backed transactions, scrutiny of documents plays a vital role as payment of bill
under the LC is subject to the documents being in strict compliance with LC terms. Following
are the checkpoints for scrutiny of some of the important export documents such as Bill of
Exchange, Invoice, Bill of Lading, AWB etc. These checkpoints by and large apply to bills
under contract as well. Particularly branches may also refer to ISBP (International Standard
Business Practice).
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7.3.1 EXAMINATION OF DRAFT OR BILL OF EXCHANGE (B/E)
Ensure that the BE drawn by the beneficiary of the credit is duly signed by him and is
drawn as per the stipulations of LC / Contract
Ensure that the BE is not post dated
Ensure that the BE is marked "Drawn under LC. No…………… dated ………………of ……………
if drawn under L/C
Ensure that the currency, the amount and the tenor of the BE are as per the terms of
the LC / Contract
If the LC calls for usance BE to be drawn, ensure that the same is adequately stamped
as per the Stamp Act in force in the state where the BE is executed and the branch
which is forwarding the documents should ensure that proper stamp duty is paid. (For
details refer Chapter 23.6 of Imports)
Ensure that the amount in words and figures tally.
If the LC is confirmed by our Bank, BE is to be drawn on us
Ensure that all alterations / corrections are properly authenticated by full signatures
7.3.2 EXAMINATION OF INVOICE
Ensure that the invoice is issued by the beneficiary. (or 2nd beneficiary in case of
transferable LC) and the original plus required number of copies are submitted. As per Article
17(c) of UCP600, A Bank shall treat as an original any document bearing an apparently
Original signature, mark, stamp or label of the issuer of the document, unless the document
itself indicates that it is not an original.
Bank will accept one original and remaining number in copies. Besides, unless, otherwise
specified in the LC, banks will accept as copy of document either labelled copy or not
marked as an original. Document may be signed by handwriting, by fascimile signature, by
perforated signature, by stamp, by symbol or by any other mechanical or electronic method
of authentication, if LC states so. These provisions equally apply to invoices also.
Ensure that the invoice is dated and made out in the opener's name or as required in
the LC / Contract
Ensure that the description of merchandise corresponds with the description given in
the LC / Contract and GR form / SDF / EDF / SOFTEX / PP
13
Ensure that the contract or indent reference number, if so required as per the LC, is
correctly stated in the invoice.
Ensure that the unit price, quantity, quality etc. mentioned in the invoice correspond
with those indicated in the LC / Contract
Ensure that the calculations in the invoice are correct with reference to the quantity,
price etc.
Ensure that the amount mentioned in the invoice and that in the draft agree and that
the amount is within the LC value or as otherwise stated in the LC / Contract. Branch
should also take into account the tolerance level, if any, prescribed in the LC. If the
contract terms are on FOB and freight is paid locally, the same has to be included in
the invoice. Conversely in the case of CIF / C&F etc. contracts where freight is not
paid but made payable at destination, branches can allow deduction from invoice only
to the extent of freight declared on GR form / SDF / EDF / PP or the actual freight
indicated in BL / AWB, whichever is less
Similarly if exporter takes insurance cover on behalf of buyer, the insurance premium
so paid has to be included in the invoice
Branch has to obtain copy of Custom certified invoice and ensure that description of
goods, unit price, quantity, total value and other details tally with the commercial
Invoice
Ensure that the shipping marks on the invoice agree with those shown in other
documents, such as Bill of lading, Packing list etc.
Ensure that BL No., carrying vessel name etc. shown in the invoice tally with those in
the Bill of lading
Ensure that the country of origin of goods as stated in the invoice is as required in the
LC / Contract
Ensure that the terms of contract such as CIF, C&F, FOB etc. are properly mentioned
in the invoice as required in the LC / Contract
Ensure that any adjustments / deduction / addition made in the invoice are only those
permitted in the LC / Contract
If LC permits any deduction towards agency commission / discount, ensure that the
same is declared in the relative GR / SDF / EDF / SOFTEX / PP form and accepted by
Customs
All corrections /alterations are to be duly authenticated
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7.3.3 EXAMINATION OF TRANSPORT DOCUMENTS –
BILL OF LADING :
The Bill of Lading, in addition to being an evidence of the contract of affreightment and
receipt for goods shipped, issued by shipping company, is also a document of title to goods.
B/L is normally issued in more than one original and delivery of goods can be taken on
production of any single original negotiable copy.
Ensure that the full set of B/L with as many non-negotiable copies as required under
the LC / Contract are submitted. Full set means all negotiable copies issued by the
shipping company as indicated in the BL itself
Ensure that the date of shipment shown in the BL is not later than the date stipulated
in the LC / Contract as last date for shipment. The date on which the goods are placed
' On Board ' is treated as the actual date of shipment
Ensure that the goods are shipped ' On board on named vessel ' only unless LC permits
shipment on deck. 'Loaded on Board, or 'shipped on named vessel' is indicated by pre-
printed words on the BL, in which case the date of issuance of the BL is deemed as the
date of shipment. In all other cases e.g. 'Received for loading on Board a named vessel'
received for shipment must be followed by a subsequent notation on the BL showing
the date on which the goods have actually been 'Loaded on Board' in which case the
subsequent date duly authenticated will be deemed as the date of shipment, whether
or not the on board date is before or after the issuance date of the bill of lading (ISBP
78)
If BL indicates the name of ' intended vessel' there should be an authenticated
notation to the effect that goods have been actually loaded on the named vessel
Ensure that the BL indicates the name of the carrier and is manually signed or
authenticated by :
the carrier or a named agent for or on behalf of the carrier or
the master or a named agent for or on behalf of the master.
Receipt issued by a Freight Forwarder (FCR) is not a document of title to goods and
hence is not to be accepted unless the LC specifically provides for such acceptance. In
the case of contract backed export bills, freight forwarders (FCR) receipts cannot be
accepted" (Refer Para 7.3.6).
15
Any signature or authentication of the carrier or the master must be identified as
signature of carrier or master, as the case may be. An agent signing or authenticating
for the carrier or master must also indicate the name and his capacity i.e. carrier or
master on whose behalf that agent is acting
Ensure that the BL indicates the name of the shipper and is made to the order of the
shipper and blank endorsed or is made to the order of the overseas bank or any other
party as mentioned in the LC. Under contract bills, blank endorsement is to be
followed by full endorsement of the branch in favour of the correspondent bank.
Ensure that the port of loading and the port of discharge of final destination of goods
given in the BL are as per the requirements of LC / Contract.
Ensure that the quantity / weight shown in the BL agree with the invoice / weight list
etc.
Ensure that the BL clearly indicates ‘Freight Paid' or ‘Freight Payable at destination' as
the case may be. If the value of goods is ‘CIF’ or ‘C&F’, BL must show, ' Freight Paid'
and if on FOB basis, it must show 'Freight Payable at destination' .The payment terms
must also match with those given in the GR form / SDF / EDF / SOFEX / PP
Ensure that the shipping marks in the BL are as required in the LC / Contract.
Ensure that the BL indicates 'Notify Party's' name and address wherever stipulated in
the LC / Contract.
Ensure that, if the LC calls for a certificate that the vessel will not touch certain
specified ports, such a certificate is given. If LC calls for legalization / notarisation of
such certificates by named authorities, the same has to be got done.
Ensure that the certificate of the vessel carrying the goods is not older than the
specified number of years as furnished, if so required in terms of the LC / Contract.
Ensure that the BL is 'Clean' and not claused. (A clean BL is one which bears no clause
or notation expressly indicating defect in the merchandise or in its packing which will
affect the condition of the merchandise e.g. ' Bales torn', Drums leaking etc.)
Ensure that the BL is not 'stale'. According to Article 14 of the UCP600, unless
otherwise stipulated in the LC, Bank can refuse documents presented to it later than
21 days after the date of issuance of BL or other shipping documents.
Also, if at the time of presenting the documents, the normal period required for the
particular voyage calculated from the date of BL has expired, such BL is treated as
'Stale' (e.g. it takes only a short period for a steamer to reach a Sri Lankan port or
16
Pakistani port). This applies more to contract backed documents. In the case of LC
backed documents, such documents may be accepted if negotiation period provided
for in the LC has not expired.
If the LC prohibits transhipments and the BL indicates that the goods will be
transhipped, ensure that the entire ocean voyage is covered by one and the same BL.
If the relevant cargo is shipped in a container(s) or trailer(s) or 'LASH' barge(s) as
evidenced by the BL, Bank can accept a BL which indicates that transhipment will take
place even if the LC prohibits transhipment provided that the entire ocean carriage is
covered by one and the same BL.
The following types of BL are not to be accepted unless specifically called for in the
LC / Contract.
i) BL issued by a forwarding agent
ii) Charter Party BL
iii) Country Craft or Sailing Vessel BL
iv) BL evidencing shipment 'On DECK'
If LC / Contracts calls for LASH documents, branch may accept the same provided,
insurance covers shipment by LASH. Under LASH shipment, the cargo will be first
loaded on light vessel which will be taken alongside the ship and then light vessel
itself will be loaded on to the ship.
7.3.4 AIRWAY BILL (AWB) / AIR CONSIGNMENT NOTE
Airway Bill is an acknowledgement issued by an Airline Company or their authorised agents
(and not forwarding agents) stating that they have received the goods detailed therein
(number of packages, quantity and nature of goods) for despatch by Air to the named
consignee at the address stated therein. Unlike a Bill of Lading, AWB is not a document of
title to goods because it is merely an acknowledgement of goods. When it is not a title to
goods naturally it is not a negotiable document.
AIR CONSIGNMENT NOTE
It is otherwise called as Air Receipt. This is issued generally by forwarding agents. This
document shows the departure and the destination stations as well as the name of the shipper
and the addressee. It must also indicate forwarding station and date stamp. This document
17
also gives the description of goods etc. and their apparent good order and condition (or
otherwise).
HOUSE AIRWAY BILL (HAWB)
HAWB is a receipt for goods issued on the same lines as AWB by cargo consolidating agents.
When Air cargo is shipped under consolidation, the Airline company issues an AWB called
Master AWB to the consolidating cargo agent and he in turn issues his own HAWB to individual
shippers. Thus, HAWB is a receipt for goods issued not by the actual carriers or their agents
but an intermediary cargo consolidating agent. A HAWB is not as safe a document as an
AWB. In case the consolidating agent fails to pay the freight, the carriers will have the right
over the goods and the holder of HAWB will not get his goods.
An AWB is not a document of title to the goods, it is not necessary for a consignee to possess
the AWB for taking delivery of goods. Thus, for shippers the AWB is not as safe a document
as a BL. Further, in case of AWB it is obligatory on the part of the Airlines to notify the
consignee on arrival of goods and they will normally deliver the goods to the consignee or his
order on proper identification. Branches should be very cautious while handling the same.
Ensure that the original consignee copy (3rd copy) of AWB is submitted.
Ensure that the AWB issued by the Airway Company is either signed or otherwise
authenticated by the carrier or by its named agents on behalf of the carrier.
Where the signature is of an agent, it should indicate the name of the carrier on
whose behalf he is signing and the capacity in which he is signing.
Ensure that the goods are consigned favouring the bank or as stipulated in the LC.
Ensure that the AWB bears the flight number and date of flight. Normally for
shipment under contract, the flight date will be considered as date of shipment.
However, in case of bills under LC, date of issue of the AWB shall be treated as the
date of shipment unless the air transport document contains a specific notation of
the actual date of shipment, in which case the date stated in the notation will be
deemed to be the date of shipment. Any other information appearing on the air
transport document relative to the flight number and date will not be considered
in determining the date of shipment (Art. 23 {a} iii UCP 600)
Ensure that the particulars of shipment, such as, description of goods, weight,
quantity etc. are as per LC / Contract
18
Ensure that the AWB indicates whether freight has been 'Paid' or 'to Pay' as per the
terms of the LC / Contract
Ensure that the AWB shows the airport of departure and airport of discharge as
indicated in the LC / Contract
If AWB indicates transhipment is likely, the entire carriage should be covered by
one and the same AWB and can be accepted even if the LC prohibits transhipment
(Article 23 {c}ii UCP 600).
Ensure that the document, in all other respects, meets the stipulation/s of the LC
/ Contract
Ensure not to accept House Airway Bill (HAWB) unless LC / Contract calls for the
same
In case of non-LC documents HAWB may be accepted depending upon the normal
practice of the trade, with the approval of Head of the branch / or in charge of
Foreign Exchange department in case of ELB / VLB branches
7.3.5 POST PARCEL RECEIPT (PPR)
As the name indicates it is a receipt issued by postal authorities. It can be a Sea Mail receipt
or Airmail receipt depending upon the mode by which they are sent. Postal receipt is also an
acknowledgement of receipt of goods for delivery to a named consignee hence, it is not a
document of title to goods nor is it a negotiable instrument. Though the postal receipt is not
a must for taking delivery of goods in certain countries, receipt must be shown to the
Customs and postal authorities for clearance and delivery. Postal regulations in certain
countries allow senders to issue and authenticate their own certificates of posting.
Considering all these, it is not considered a safe document from the banker's point of view
Ensure that the guidelines contained in Para 2.2.9 of Chapter 2 – Exim Policy and
Fema Guidelines, are complied with
Ensure that PPR is properly dated and stamped by the post office of issue
Ensure that the place of post office of issue corresponds to the place of shipment
stipulated in the LC
The consignee named in the PPR should be as per LC terms. In the case of non LC bills
to be purchased, the consignee should invariably be the correspondent bank
Ensure that it evidences postage
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7.3.6 FORWARDER’S CARGO RECEIPT
Forwarder’s Cargo Receipt (FCR) is a receipt issued by the Forwarder Company, acting
as an agent for the Consignee, that the goods are in his custody. FCR is not an
evidence of contract of carriage. It does not confirm shipment and these can be issued
before the ocean carrier Bill of Lading has been issued. FCR is not a document of title
to the goods. As FCR is not a negotiable document, it cannot be negotiated or
endorsed to other parties. Release of goods at the destination takes place based on
the BL and FCR is seldom used for this purpose.
In terms of extant FEMA guidelines, Authorised Dealers may accept Forwarder’s Cargo
Receipt (FCR) issued by IATA approved agents, in lieu of Bill of Lading, for
negotiation/collection of shipping documents, in respect of export transactions backed
by letters of credit, if the relative letter of credit specifically provides for negotiation
of this document in lieu of Bill of Lading even if the relative sale contract with the
overseas buyers does not provide for acceptance of FCR as a shipping document, in
lieu of bill of lading. Further Authorised Dealers at their discretion may also accept
FCR issued by Shipping companies of repute / IATA approved agents, in lieu of bill of
lading for purchase / discount / collection of export documents even in cases where
export transactions are not backed by letter of credit, provided the relative sale
contract provides for acceptance of FCR as a shipping document in lieu of bill of
lading.
BANK’S GUIDELINES : In the light of the risks involved, FGMs may permit acceptance
of FCRs in lieu of Bill of Lading while handling export documents / granting post
shipment credit for proposals falling upto the delegation of FGMs provided :
i) Accounts have good track record with minimum of 3 years of banking
relationship under Standard Category with credit rating upto CR3.
ii) No waiver of Buyer wise ECGC Standard Policy to such exporters to be
permitted.
iii) Prior approval of FGM to be taken every time when bills are purchased /
discount against FCR.
Matters for accepting FCR in lieu of bill of lading in proposals beyond the Delegation of
FGMs will be considered by Central Office.
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7.3.7 EXAMINATION OF INSURANCE DOCUMENTS
Ensure that insurance policy is dated, stamped and signed.
If the LC / Contract specifically calls for an insurance policy do not accept a
certificate of insurance (cover note)
Where the LC stipulates an insurance certificate or a declaration under an open
insurance cover, an insurance policy tendered by the exporter is acceptable (Art.
28(d) UCP 600).
Ensure that the amount insured for is that stipulated in the LC or for the full value of
the consignment plus 10 per cent over the invoice value.
Ensure that the date of insurance policy is not later than the date of BL/ AWB. If the
policy bears a subsequent date, it should cover risks commencing from date of
shipment
Ensure that the policy relates solely to the goods mentioned in the BL/AWB and covers
the entire transit/voyage. Insurance must cover warehouse to warehouse risks, unless
otherwise specified in the LC / Contract
Ensure that it is issued in the same currency as that of the LC / Contract .Ensure that
it covers all risks specified in the LC / Contract
Ensure that there is no qualifying clause that could adversely affect the Bank's interest
Ensure that the name of the ship/airlines, BL/ AWB number/date, shipping marks and
description of the merchandise, number of packets / cartons etc. mentioned in the
insurance policy are identical to those given in the BL/AWB and the invoice
If the BL is claused 'Shipped on Deck', ensure that the policy covers deck shipment
risks like jettisoning, washing overboard etc.
Ensure that the port of shipment and the destination given in the policy are identical
to those in the BL/AWB
Ensure that transhipment risk is covered under the policy, if transhipment is indicated
in the BL/ AWB
If the LC stipulates 'All Risks' clause, ensure that the policy contains this clause. In
case of shipments under contract, obtain insurance cover as per "Institute Cargo
Clause-A" (refer chapter No.32 on Marine Insurance)
If the insurance document indicates that it has been issued in more than one original,
all the originals must be presented unless otherwise authorised in the LC. If issued to
order, all originals are to be blank endorsed
21
It must be issued by Insurance Company or under writer or their agents and should not
be issued by brokers.
Cover notes issued by brokers are not to be accepted unless specifically authorised in
the LC / Contract
If LC contains terms which are not precise such as 'Usual Risks or 'Customary' Risks,
branches can accept insurance documents as presented
7.3.8 OTHER DOCUMENTS
Ensure that the 'Certificate of Origin' is issued by the authority specified in the LC / Contract.
If legalisation is required, the same is done.
In case a consular invoice is called for in the LC, ensure that the same bears the seal
of the local consulate of the country to which the goods are exported and is properly
signed
Ensure that each one of the other documents e.g. Weight List, Packing List, Inspection
Certificate, Certificate of Analysis etc. relate to the goods described in the invoice
and their contents are not inconsistent with any other stipulated document (Art.14(d)
UCP 600)
Ensure that documents as called for in the LC / Contract are tendered and they meet
in all respects the stipulations of the LC / Contract
7.3.9 DIRECT DESPATCH OF SHIPPING DOCUMENTS
AD should normally dispatch shipping documents to their Overseas branches/correspondents.
However, ADs are permitted to dispatch shipping documents direct to the consignees or their
agents resident in the country of final destination of goods in in cases where :
i. Advance payment or an irrevocable letter of credit has been received for the
full value of the export shipment and the underlying sale contract/letter of credit
provides for dispatch of documents direct to the consignee or his agent resident
in the country of final destination of goods.
ii. AD may also accede to the request of the exporter provided the exporter is a regular
customer and the AD is satisfied, on the basis of standing and track record of the
exporter and arrangements have been made for realisation of export proceeds.
22
iii. AD may also permit `Status Holder Exporters’ (as defined in the Foreign Trade Policy),
and units in Special Economic Zones (SEZ) to dispatch the export documents to the
consignees outside India subject to the terms and conditions that:
a. The export proceeds are repatriated through the AD banks named in the EDF / SDF
form.
b. The duplicate copy of the EDF/SDF form is submitted to the AD banks for
monitoring purposes, by the exporters within 21 days from the date of shipment of
export.
iv. AD Category – I banks may regularize cases of dispatch of shipping documents by the
exporter direct to the consignee or his agent resident in the country of the final
destination of goods, up to USD 1 million or its equivalent, per export shipment,
subject to the following conditions:
a. The export proceeds have been realised in full.
b. The exporter is a regular customer of AD Category – I bank for a period of at least
six months.
c. The exporter’s account with the AD Category – I bank is fully compliant with the
Reserve Bank’s extant KYC / AML guidelines.
d. The AD Category – I bank is satisfied about the bona-fides of the transaction.
e. In case of doubt, the AD Category – I bank may consider filing Suspicious
Transaction Report (STR) with FIU_IND (Financial Intelligence Unit in India).
7.4. NEGOTIATION OF EXPORT BILLS DRAWN UNDER
IRREVOCABLE LETTER OF CREDIT
When an overseas bank opens a LC at the instance of its customer in favour of an exporter for
import of goods, it irrevocably commits itself to honour the drawings of the exporter, subject
to the condition that all the terms stipulated in the LC are complied with. Branches should
leave no room for any deviation whatsoever from such stipulations, as even a minor
discrepancy can result in rejection of documents by the issuing bank. Exporters from India are
governed by the trade control and the FEMA Guidelines. Therefore the bank which negotiates
a bill drawn under a LC has to ensure strict compliance not only with the terms and conditions
of the LC but also that there is no violation of the above mentioned regulations. This also
applies to cases where export bills have been purchased without the backing of a LC or are
taken for collection only.
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Branches negotiate sight export documents drawn under Letter of Credit [ L/C] opened in
favour of exporters and claim reimbursement from the Reimbursing Bank stated in the L/C.
After receipt of payment of the reimbursement claim, the outstanding Export Credit
Advance in the branch books is adjusted. The payment received in such cases is against
the reimbursement claim lodged with the reimbursing Bank and does not denote the final
acceptance of the documents by the L/C opening Bank. The transaction is complete only
after the L/C opening Bank accepts the documents. Branches are, therefore, expected
to follow-up with the L/C opening Bank for acceptance of documents even after the payment
is received from the reimbursing Bank.
PROCEDURE:
Export documents should be received under cover of forwarding letter in Form F.E.521
duly signed by the exporter or his authorised agent
Verify if all documents mentioned in the covering letter have been received
Ensure that the original LC including all amendments are submitted. Obtain from the
exporter declaration to the effect that all amendments to the relevant LC have been
submitted to the Bank
If Packing Credit is availed, collect details of outstanding Packing Credit and original
LC contract from PC dept.
Ensure all documents called for in the LC are submitted together with relevant
GR/SDF/EDF/PP/SOFTEX form and short shipment notice, if applicable. Ensure that
the exporter has given the necessary undertaking in the Bank's format on his letter
head for crystallisation of overdue bill (Ann No.7(1)) and instructions for credit of
export realisation to EEFC account, if any.
Ensure that the exporter submits one copy of invoice for office record and other for
keeping with the GR form /SDF/EDF/PP/SOFTEX in addition to the invoices to be sent
to LC opening Banks / correspondent.
Check whether the Customs authorities have indicated and certified the value and the
quantity of the goods passed for shipment in the exchange control copy of G.R. form /
SDF/EDF/PP/SOFTEX. Scrutinise documents as per guidelines given in paragraphs Nos.
7.3. to 7.3.7 above.
Prepare process sheet (Ann No.7(2)) incorporating discrepancies, if any, noted during
scrutiny. The process sheet which gives a profile of the account including limit,
24
present outstanding, overdue, need for excess if any etc. is to be signed by the
processing officer and forex department in-charge.
Bring discrepancies to the attention of the exporter customer for immediate
rectification.
Branches are not permitted to negotiate/ purchase documents drawn in contravention
of trade control / exchange control regulations.
'Under Reserve' negotiation requires duly stamped counter guarantee (FE596) (Ann No.
7(3)) to be executed by the exporter. Such 'Under Reserve' negotiation can be done
only if LC does not prohibit the same. Reserve is to be lifted only after documents are
accepted up by the LC opening Bank, (and not on receipt of reimbursement from the
reimbursing Bank). Follow up is to be made for receipt of intimation, for having
accepted the documents.
Where the documents are received for negotiation from another bank under a LC
restricted for negotiation to our bank, inform the discrepancies to the bank from
which the documents are received and obtain its authority in writing to negotiate and
effect payment 'UNDER RESERVE'. In case discrepant documents are tendered by other
banks under LCs restricted for negotiation to our Bank the counter guarantee is to be
signed by the presenting bank. After receipt of counter guarantee, pay order /
demand draft representing export bill proceeds ( less charges) and margin 5% is to be
forwarded to exporter's bank under cover of letter in form No FE 627(E) (Ann No. 7(4))
in duplicate and acknowledgement obtained on the second copy. In case the
exporters bank is not willing to sign indemnity, the branch must not negotiate the bill
and may return the same to the exporter’s bank or handle on collection as per the
exporter’s bank’s instructions
In case of discrepancies requiring reference to LC opening bank, obtain confirmation
by Authenticated Swift at the exporter's cost from the LC opening bank for negotiation
of the bill. (Ann No 7(5)). In the meantime, advise the exporter that the documents
are being held at his risk and responsibility. If the documents are acceptable to the LC
opening bank despite the discrepancies, negotiate the documents and while
forwarding the documents to the opening bank, make sure to quote in the forwarding
schedule that the documents are negotiated as per its authorisation dated
______________ . Wherever the authorisation from LC opening bank to take up the
documents notwithstanding the discrepancies, is received after expiry of last date of
25
negotiation, branches should, in the covering schedule, provide a certificate to the
effect that export documents were tendered for negotiation before the last date. If
the discrepant documents are negotiated 'under reserve' without the approval of the
LC opening bank, fact of 'under reserve' negotiation has to be clearly written on the
covering schedule.
If the last date for presentation of documents as per LC falls on a day on which the
negotiating bank is closed except for reasons such as acts of God, riots, civil
commotions, war or any other causes beyond their control, the stipulated expiry date
/ last day for presentation of documents shall be extended to the first following day
on which the negotiating bank is open, Article 29(a) of UCP 600. Suitable notation to
the above effect is to be made in the covering/forwarding schedule.
If documents already negotiated are not acceptable to the issuing bank and if further
fresh discrepancies are pointed out by them, demand refund from the exporter. (Ann
No 7(6))
The sanction of the Head of the branch (BH) / officer not below the rank of scale III,
should be obtained for all export bills which are purchased / negotiated / discounted.
If documents are discrepant, sanction of the BH is to be obtained. If PC is availed
against underlying LC / order, BH should grant only AFDBC to the extent of outstanding
PC and freight / insurance premium payable by the exporter. Branch should
necessarily grant AFDBC and not handle the discrepant documents on collection
basis, as ECIB(WT-PC) cover ceases once export documents are tendered. Similarly
sanction of BH is to be obtained for granting of excesses. If export bills are tendered
by non-customers through their bankers, under LCs restricted to our Bank for
negotiation, only those forex dealing branches headed by scale IV and above are
authorised to handle such transactions, up to USD 1 mio. Details of negotiations made
are to be reported to DFB&IBD for monitoring our Bank's exposure to presenting bank.
Negotiations in excess of USD 1 mio need prior approval of DFB&IBD. If such LC are
opened by banks in restricted cover countries, with the consent of forwarding bank,
the documents may be sent to LC opening bank on approval basis. Payment should be
effected only after funds are received in our Nostro account. Bills under LC available
by acceptance should be negotiated after receipt of acceptance from the LC issuing
bank.
Negotiation of bills under delegated authority of the BH and in excess of sanctioned
limits also require entry in the Sanction Register.
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Enter in Safe-in Safe-out Register (BK 2153) and allot bill number from Export Bill
Register.
Report the transaction to Dealing Room through RET-AD. Obtain and note on process
sheet the rate, the serial number / ID allotted by the Dealing Room, time of reporting
and name of the official quoting the rate from Dealing room / Dealer's Desk. If a
forward contract has been booked, negotiate the documents at the contracted rate
and inform the same to Dealing Room. Work out Rupee equivalent of the bill at quoted
rate (bill buying rate) / contracted rate (forward contract rate).
Branches should ensure that the bill amount reported to the Dealing Room is net of
amount to be credited to EEFC account, if any. EEFC component is also to be
intimated to the Dealing Room separately.
In case commission is to be paid by deduction from invoice value, the net amount of
bill is to be reported to Dealing Room for exchange rate. Suitable instruction is to be
given to the correspondent bank for deduction of commission amount from gross
realisation proceeds and payment thereof to the overseas agent (less charges).
The Merchant suspense statement sent by Dealing Room to the reporting branch
should be scrutinised and discrepancies ,if any, brought to the notice of the
Dealing Room on the same day of receipt of statement.
Enter the export bill in Finacle by invoking Menu ‘FBM’. Ensure to fill in all relevant
information in the respective fields / options. Amount of commission / discount, if
any declared in the GR Form and accepted by Customs.
Diarize Due Date for realization / Follow up.
Diarize Date of crystallization. In case the export bill purchased / negotiated is not
realised on due date it is necessary to convert the foreign currency liability into Rupee
liability which is referred to as crystallisation. Crystallisation in case of export bills is
to be done on the 45th day in case of Gems and Jewellery bills and in case of all other
export bills 30th day after notional transit period / notional due date /actual due
date.
Refer to para No.7.10. for full details on procedure for crystallisation.
If there is any undrawn balance, the same is to be noted in a separate Undrawn
Balance Register with details such as date, name of exporter, bill no., name of
importer, contract value, bill amount, undrawn balance, date of realisation of
undrawn balance etc.
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Usual Accounting entries to be passed are :
Dr : Customer’s Foreign Bill Purchased / Discounted account
Cr : a) Packing Credit account to the extent of PC availed and/ or CD a/c
b) Rebate a/c Int. on Foreign Bills purchased / discounted
c) Income a/c Commission on Foreign Bills purchased/discounted
d) Expenditure a/c Postages (recovery of courier/postage charges)
If there is no outstanding in Packing Credit, the credit may be afforded to
the exporter's Current Deposit a/c/CC a/c instead of Packing Credit a/c. as
stated above.
Make suitable entries in contractwise PC Register.
Interest is to be charged at appropriate rates as given in para No. 7.1.3 upto NTP /
NDD / actual due date, which will be done by the system automatically, which should
not modified.
Bill Forwarding schedule should be generated through the system.
Negotiation made has to be endorsed on the reverse of the Original LC. In the case of
freely negotiable LC which permits partial shipment, original LC may be parted with,
retaining photocopy for branch records, provided no Packing Credit is outstanding
there against. However, if LC is fully utilised, the original LC should be kept along with
bill folder. In case exporter needs, he may be provided with photocopy of the LC.
7.4.1 NEGOTIATION UNDER RESTRICTED LC
If LC is restricted to another bank for negotiation, following points are to be borne in mind :
Delivery of full set of export documents within the validity at the counters of the bank
to whom the LC is restricted, will be deemed as due presentation. Hence, it is not
enough for documents to be received by our branches within validity period. On
receipt of documents at our counters, the same are to be sent to negotiating bank
under cover of letter as per Ann. No 7(7) expeditiously. Extra care is to be taken when
such negotiating bank is at a outside place. Export documents together with GR must
be sent to such bank if the LC is restricted for negotiation (in India). In case LC is
restricted for negotiation at foreign country, GR must be retained at our end.
As reimbursement is normally received in Indian Rupees, the branch is to charge a flat
amount of commission of Rs.750/- plus service tax in lieu of exchange.
28
If exporter desires to avail EEFC facility, the same is to be intimated to the
negotiating bank, to enable them to deliver the required foreign currency funds to us.
If documents are discrepant, branch should obtain under reserve indemnity from the
exporter and only thereafter should give indemnity to negotiating bank by earmarking
FDBP /FUDBP (contracts)/LC limits. Reserve is to be lifted only on receipt of
acceptance advice in the case of DA bills and payment advice in the case of sight bills.
For issuing 'Under Reserve' Indemnity to other banks, commission of 0.125% minimum
Rs.250/- is to be recovered.
Unless negotiating bank has confirmed the LC, it has recourse-to the beneficiary/
beneficiary's bank, even in the case of clean negotiation (documents without
discrepancies) if LC opening bank rejects the documents. This is to be borne in mind
by the branches while handling documents under restricted LC.
If LC states that the claim is available only at the opening bank's counters, any other
bank cannot negotiate the documents. In such cases, documents should be presented
to issuing bank within validity period for payment/acceptance.
Branches should not negotiate the documents in the case of LC restricted to other
banks and can grant only AFDBC by earmarking FDBP /FUDBP limits. If post shipment
limits are fully availed, packing credit limit is to be earmarked. Branches should allot (
NA Collection) numbers to such cases. Care is to be taken not to report these bills in
ENC statement. All remittances such as agency commission, export claims etc., should
be made through the bank to whom LC is restricted.
7.4.2 NEGOTIATION UNDER RED CLAUSE LC
'Red Clause' LC provides for payment of part of LC value in advance against production
of receipt / undertaking of the beneficiary. Such advance acts as pre-shipment finance
extended by importer to the exporter and is at par with advance payment for exports,
which is permitted under Foreign Exchange Management Act (FEMA). Interest is
permitted to be paid for such advance payment. The advance is adjustable against
final bills at the time of shipment. AD through whom the advance payment is received
should monitor the shipments made under advance payment received.
Red Clause LC should provide for immediate TT reimbursement of advance released.
Branches can in such an event release advance payment, subject to complying with LC
terms. If reimbursement is only against submission of final export documents,
29
branches should not handle such LCs without prior approval of IBD, as it amounts to
taking an exposure on the LC opening bank. However, there is no bar on the branch
granting Packing Credit advance (under sanctioned limit) against such LCs to their
exporters.
At times, Red Clause LCs calls for undertaking from exporters to repay the advance
availed and stipulate that exporter's banker has to countersign such undertaking.
Branches should not agree to such requests, as it amounts to issuance of bank
guarantee. All such requests should be referred to their Regional office.
On receipt of final bills, the same is to be scrutinised as per check points already
explained. If found in order, the same be negotiated and net amount claimed as per
reimbursement instructions.
7.4.3 NEGOTIATION UNDER REVOLVING LC
Revolving LCs provide for repeated utilisation of the LC during its validity.
Normally limits are stipulated both for individual and total utilisation. For example
amount of credit USD 100,000 to be utilised 5 times upto a maximum of USD 500,000. At
times, LC provides for subsequent utilisation no sooner documents of previous utilisation
are negotiated free of discrepancies. This is called as automatic reinstatement of LC
value. LC may also stipulate that further utilisation is subject to payments /
acceptance and documents under the earlier utilisation. In such cases negotiating bank
should wait for receipt of payment / acceptance advice before they take up subsequent
document. Documents are to be scrutinised as per checkpoints already explained.
7.5. CHECKPOINTS WHILE PREPARING FORWARDING SCHEDULE
Branch should use covering schedule generated through the system. It should be
properly addressed to the overseas LC opening bank.
All the documents called for under the LC are to be attached to the covering schedule
after ensuring that Bank's bill numbering stamp is affixed on them.
Ensure that proper endorsement on BE (draft) / BL / insurance policy are made,
wherever applicable.
All documents and numbers thereof should be properly indicated in the relevant
boxes.
30
Care to be taken while feeding, tenor and terms of delivery against payment /
acceptance in the system.
Care to be taken while feeding the Nostro a/c to which the realisation proceeds are to
be credited by the LC opening bank.
The manner in which reimbursement has been claimed has to be indicated in the
schedule.
If prior approval for negotiating discrepant documents is obtained from LC opening
bank, the reference number and date of their approval are to be written on the
covering schedule. If no prior approval is obtained, fact of under reserve negotiation is
to be clearly disclosed on the covering schedule.
In case of sight bills, claim reimbursement by SWIFT or tested telex or in the manner
stipulated in the LC. Appropriate message should be sent in case of LC requiring pre-
debit notification.
In case of usance bills, diarise for claiming reimbursement prior to the due date as
required by Article 11 of Uniform Rules for Reimbursement 525 (URR 525). Article 11,
amongst other conditions requires that the reimbursement claim should not be
presented to the reimbursement bank more than 10 days prior to the due date.
Further reimbursing bank shall have a reasonable time not exceeding three banking
days following the day of receipt of the reimbursement claim to process the claim. All
reimbursement claims should specifically conform to Article 10 of URR 525,
If the LC stipulates reimbursement to be claimed by airmail from a third bank, draw a
BE on that bank (in Form FE 542) Ann. No.7(8) and forward the same under covering
letter (in Form No. FE 632) (Ann. No.7(9)).
If the LC stipulates remittance on receipt of documents at their counters, make sure
to mention in the forwarding schedule the name of our correspondent and our nostro
account number to which the amount is to be credited.
Make entry in 'Safe-In Safe-Out' register (Book No 2153). Documents are to be
despatched as instructed in the LC.
Despatch first set of documents expeditiously by courier or mail to LC opening bank or
as stated in the LC .The second set of documents are to be similarly couriered/mailed
on the following day or as directed in the LC preferably by a different courier.
In view of the limited liability of courier agencies it is advisable to take an undertaking
as per Ann No 7(10) from the exporter that they will not hold the Bank responsible for
31
any delays/ lapses on the part of the courier agency. File the courier's receipt in the
folder. Mail the Advice and certified copy of invoice to the customer.
Diarise for receipt of acknowledgement/advice of acceptance from issuing/ confirming
bank. Diarise for payment on due date in the case of DA bills
Diarise for notice of crystallization to be sent to exporter 10 days prior to date of
crystallization.
Diarise separately the due date for crystallisation of the bill.
After despatch of requisite documents, the remaining papers including duplicate GR
form and office copies of forwarding schedule are to be filed and kept number wise in
folder form.
Ensure that acknowledgement for having received the documents is received from
confirming / LC opening bank for both usance and sight bills.
In case of usance bills follow up for advice of acceptance and maturity date. On
receipt of advice of acceptance, inform maturity date to exporter and note in process
note / covering schedule.
7.6. HANDLING OF EXPORT DOCUMENTS NEGOTIATED/ PURCHASED BY
‘C’ CATEGORY BRANCHES.
PROCEDURE TO BE FOLLOWED BY ‘C’ AND ‘B’ CATEGORY BRANCH.
The C category branches are required to :
Verify if all documents mentioned in forwarding letter FE 521 have been submitted by
the customer.
Ensure original LC including all amendments are submitted. Declaration that all
amendments to the LC are submitted to the Bank, is to be obtained from the exporter.
Verify if all documents called for in the LC /contract along with relevant GR form /
SDF / EDF / PP / SOFTEX /short shipment notice, necessary undertaking for
crystallisation of overdue bill, instruction for credit to EEFC a/c along with two extra
copies of Invoice have been submitted by the exporter. Branch has to ensure that
customer's endorsement on BL, insurance policy etc. wherever applicable, have been
properly made and all documents are properly signed.
The C category branch is required to undertake a preliminary scrutiny of the
document.
32
Prepare process note in quadruplicate as given in Ann.No.7(12) Discrepancies if any
observed during preliminary scrutiny should be got rectified by the exporter
immediately, before despatch of the documents to the B category branch.
Necessary sanction on process note/sanction register is to be obtained at the C
category branch itself.
Affix round stamp on BE and BL/ AWB.
Allot bill no. such as FDBP /FUDBP etc. in a running order from the foreign bills
numbering register. (C Category branch running serial no.)
Pass contra entries as applicable for collection bills at provisional bill buying rate:
Dr. Foreign Bills Receivable a/c (FE No.571)
Cr. Foreign Bills for Collection a/c
First 3 copies of process note cum covering schedule containing a specific request for
purchase/discount/negotiation of the foreign bills is to be forwarded along with the
full set of documents to the designated B category branch against acknowledgement.
In case B category branch is situated at an upcountry centre, send the documents by
registered mail / courier and diarise for acknowledgement of the documents.
Process note cum covering schedule should contain details of appropriate sanctioned
limits, outstanding and specific authority to negotiate/discount/purchase the bills in
case of excess over limit/delegated authority.
The B category branch, on receipt of documents will thoroughly scrutinise the same as
given in para no.7.3.l to 7.3.7. It is the primary responsibility of the B category
branch to ensure that the documents etc. are in consonance with the LC/contract,
trade /exchange control regulations, UCP 600 etc.
The B category branch will notify the discrepancies if any on second copy of
Ann.No.7(12) and advise the C category branch to obtain necessary indemnity (FE596)
from their clients. The C category branch will obtain the indemnity bond and authorise
the B category branch in writing to negotiate the documents 'Under Reserve' .
The B category branch will report the transaction to the Dealing Room and inform the
rate/amount, interest, processing charge, postage etc to the C category branch in the
third copy of Ann.No.7(12).
B category branch will raise POB claim in respect of processing charges / postages.
The B category branch will forward the documents to the overseas bank directly and
send two copies of FE 560 A to C category branch, one for branch records and the
33
other for exporter, along with a copy of the covering schedule and POB claim/local
branch debit advice for charges.
The branch wise ledger for controlling foreign bills sent by C category branches should
be maintained by the B category branch. Entries are also to be made in Safe-in Safe-
out Register.
Procedure of ‘C’ category branch will pass following entries based on the third copy of
Ann.No.7(12) received from 'B' category branch and post in party wise purchase ledger:
1) Dr: FDBP/FUDBP a/c.
Cr. a) Packing Credit a/c and/or CD a/c
b) Rebate account interest on FDBP /FUDBP.
Entry is also to be posted in Contract wise Packing Credit Register. Honour POB claim /
respond local branch debit advice for charges sent by B category branch as under.
2) Dr. : CD a/c
Cr. : DAC – B Category branch.
If there is no outstanding Packing Credit advance, credit may be afforded to Current
account /Cash Credit a/c.
The control contra entry passed while forwarding bills to 'B' category branch is now to
be decontrolled by the 'C' category branch as under:
Dr. : Foreign bills for collection account (FE no.572)
Cr. : Foreign bills receivable account
7.7. REALISATION OF EXPORT BILLS NEGOTIATED
The A / B category branches are required to verify the daily statement of a/c everyday in
respect of major currencies pertaining to the Nostro accounts to which the proceeds of export
bills are credited through SWIFT. The credit pertaining to the bills negotiated by them
including those on behalf of 'C' category branches are to be picked up and duly listed. The
extent of short realisation, if any, is to be noted and listed branch wise and date wise in the
following format :
a. Bill No.
b. Value date .
c. Bill amount
d. Amount realised
34
e. Short realisation
f. Late / early realisation.
The 'A' category branch will pick up such entries on its own and send Digital authority
cheque.
The 'B' category branch should inform the 'C' category branch particulars of realisation
/ short realised amount. The 'B' category branch should also simultaneously pass
decontrolling entries (FE630B)
Dr. : Liability for 'C' branches foreign bills purchased account
Cr. : Customer's liability for 'C' branches foreign bills purchased account
In case of early realisation of an usance bill, the branches should work out and refund
the excess interest collected at the time of purchase / discount / negotiation. If the
bill pertains to 'C' category branch, details of interest refundable are to be advised to
them by 'B' category branch.
The 'B' category branch should report in Ann.No.7(13) early realisation of usance bills
to the Export Realisation Section of the' A' category branch so that the Dealing Room
can work out the swap cost, if any, which is to be recovered from their exporter
customer / 'C' category branch customer.
At the time of purchase/discount of the export bill the amount reported to the Dealing
Room would have been net of EEFC amount, if any. Hence, the local branch credit
advice/authority cheque will be for the originally quoted rate/amount net of EEFC.
However, the EEFC amount will be indicated for passing necessary entries.
Mark the realisation of the bill in the Bill Numbering Register (Manual).
The vouchers for realisation are to be prepared as given below:
B Category Branch
Dr. : a) POB a/ c FEX (803/3000) Bill amount less EEFC (if any)
b) CD/CC a/c (for short realised amount)
Cr : FDBP /FUDBP (DAC in case of bill pertaining to C Category Branch)
2. Entries for EEFC
Dr : Foreign Currency Settlement a/ c
Cr. : EEFC a/c
POB claim is to be reversed on receipt of DAC from ‘A’ category branch.
35
At ‘C’ Category Branch :
On receipt of credit from B category branch following entry is to be passed.
1.Dr. :a) DAC a/ c
Dr. :b) CD/CC a/c of exporter (for short realisation, if any)
Cr : FDBP /FUDBP a/c.
2.Dr. Rebate a/c
Cr. Income a/c Interest on FDBP / FDBP
EEFC a/c of exporter of C category branch will be controlled at B category
Branch itself.
EARLY REALISATION
Refund of interest excess charged by passing following entry :
Dr. Rebate a/c
Cr. Income a/c Interest on FDBP / FUDBP
Cr. CD/CC a/c.
Inform Dealing Room about early realisation of usance bills by letter( Ann.No.7(13) and
ascertain swap cost recoverable or swap gain payable. On receipt of reply, branches
would recover or pay swap cost/gain and respond to Debit/Credit advice received
from Dealing Room.
Note in the Export Bill Numbering Register (Manual) date of realisation, value date,
date of certification of GR form, date of payment of agency commission (if paid) and
round off the bill.
Certify the GR form
In case EEFC a/ c has been credited, make a suitable notation in the GR form.
If bill pertains to C category branch, details of swap cost, amount of interest to be
refunded etc. are to be intimated to them
The folder of the realised export bill is to be filed bill number wise serially.
Duplicate copies of GR/SDF/PP/SOFTEX from duly certified after realisation of export
proceeds should be kept at the branch for inspection by auditors.
36
7.8. PURCHASE / DISCOUNT OF EXPORT BILLS UNDER CONTRACT LODGEMENT /REALISATION
The procedure outlined below relates to purchase / discount of export bills drawn under
contracts.
PROCEDURE:
Verify whether all documents mentioned in the covering letter FE 521, in particular,
the following, have been received.
- Bill of Exchange (in duplicate).
- Invoices (with 2 extra copies for Bank)
- BL/ AWB (full set)
- Insurance Policy (in duplicate).
- ECGC Standard Policy, if applicable with drawee wise cover.
- GR /SDF/ PP/SOFTEX Form (exchange control copy)
Certificate of Analysis, Inspection Certificates, Weight Certificate, Packing List etc. in
as many copies as called for.
Clear written instructions of the exporter regarding delivery terms, collection of
charges, interest etc. should be obtained in FE521.
Check, if documents are in order and also whether they comply with FEMA Guidelines.
Where necessary (i.e. in case of discrepancies) take up the matter with the exporter
and have the discrepancies rectified.
Subject the documents to detailed scrutiny as per para 7.3 to 7.3.7.
Check whether the exporter enjoys limit with the Bank for purchase/discount of
export bills and if so, whether bills tendered are within limit. Obtain approval of
higher authority for excess, if any. If within sanctioned limit, if there are no overdues
and where all sanction terms have been duly complied with, decision to
purchase/discount can be taken by officer in charge of forex dept in the case of
smaller branches and Senior Manager (Exports) in the case of larger branches.
However, at the end of the day, Head of the branch or AGM/CM Incharge of forex
dept, should ratify the action, by counter signing the process note. (Ann.No.7(2)).
37
Cases not conforming to the above, should be placed before the Head of the branch
or AGM/CM in charge of forex dept for sanction.
Ensure that eligible buyer wise limit is available on drawee. If not, exporter has to
approach ECGC for enhancement / sanction of limit. Refer Chapter No.8 – ECIB(WT-
PS) for detailed guidelines.
Enter in 'Safe in Safe out' Register and allot uniform bill number and record the bill
number in all export documents.
Report the transaction to Dealing Room by giving gross bill value, EEFC component,
net value and obtain exchange rate.
Enter details of bill in the System by invoking menu FBM.
Calculate NTP /NDD and diarize.
Pass entries at exchange rate obtained from Dealing Room as under:(FE 522)
Dr. FDBP/FUDBP a/c
Cr. PC a/c and / or CD a/c
Cr. Rebate a/c Interest on FDBP /FUDBP
Cr. Income a/ c Commission on foreign bills
Cr. Expenditure a/c Postages
Make note in Contractwise Packing Credit register.
If bills are of C category branch mail 3rd copy of Ann.No.7(12). Forward the same to C
category branch together with POB claim for processing charges/ postages.
If there is any undrawn balance, note details in Undrawn Balance Register.
Generate Export Bill forwarding schedule through system and indicate therein precise
remittance instructions. Despatch the documents, the original first and the duplicate
on the next working day in those cases involving B/L. In other cases, document can be
despatched in one lot. Mail the customer's copy (acknowledgement) and one extra
copy for C category branch records together with certified copy of invoice to be
forwarded to the customer.
File office copies of documents and duplicate GR Form.
Report the purchase in the ENC statement to RBI in the appropriate R Return.
38
If the bill remains unpaid after 30 days from the expiry of transit period for demand
bills or notional due date/actual due date whichever is earlier for usance bills, follow
crystallisation procedure as given in para 7.10. and pass necessary entries.
B category branches should pick up credits representing export bills, from Nostro a/c.
statement and report to Realisation Section of A category branch. Thereafter,
realisation entry as given below is to be passed :
Dr. POB a/ c FEX (803/3000)
Cr. FDBP /FUDBP / C category Br.
Fill in the certificate portion in GR form.
Post the entries in Export Bill Numbering Register and 'Safe-In and Safe-Out' Register.
If EEFC component is there, pass necessary entry as below :
Dr. : Foreign Currency Settlement a/ c
Cr. : EEFC a/c
For short realisation, if any, recover the amount from the exporter at TT selling rate.
In the case of early realisation, refund proportionate interest. Recover swap cost / pay
swap gain, if any, in the case of usance bills. In case of C category branch bills inform
full details to enable them to pass entries.
If realised after NTP /NDD, recover overdue interest at rate applicable. In case of C
category branch bills, inform details to enable them to recover the interest.
If bill is returned unpaid/dishonored, recover advance (together with interest) at TT
selling rate from the exporter. Documents are to be thereafter transferred to
collection and given fresh clean collection number (NA) and suitable remark is to be
made in Export Bill Numbering Register.
Sight bills/usance bills overdue beyond 45 days and 15 days respectively are to be
reported to the concerned controlling office in M2 statement.
Exporter has to apply in form ETX for extension of time. Report overdue bill in XOS
statement, if outstanding in June/December.
All overdue bills (including bills overdue but not crystallised and AFDBC) to be
reported to IBD on monthly basis.
39
7.9. FOLLOW UP OF EXPORT BILLS PURCHASED/NEGOTIATED
The 'B' Category Branch will follow up with the overseas LC issuing/collecting bank for
receipt of acknowledgement, in case the same is not received within a reasonable
time.
The 'B' category branch will advise the customer/'C' category branch the acceptance
and the due date of the usance export bill immediately on receipt of advice of
acceptance from the overseas bank. (FE 554 -Ann.No.7(11))
Diarise the due date, date for issuance notice for crystallisation and crystallisation
date.
In case of the LC bills, if the LC opening bank points out discrepancies, the details
thereof are to be brought to the notice of the exporter and he is to be advised to
contact the buyer for immediate settlement. Disposal instructions are also to be
sought from the exporter. If the LC opener has totally rejected the documents,
exporter is to be called upon to repay the advance at TT selling rate ( format of Letter
Ann No 7(6) )
In case of non receipt of advice of acceptance, the 'B' category branch should seek
fate of the bill in the most expeditious manner. Simultaneously inform the drawer/ 'C'
category branch of the non receipt ( Ann No 7(6)) of advice of acceptance and seek
the drawer's help for obtaining the same.
In case of advice of non acceptance, the branch is required to take a credit decision
whether the amount advanced against the unaccepted bill is to be recovered
immediately. If branch decides to recall the advance, bill is to be crystallized
immediately without waiting for 30 days. Exporter has to be called upon to arrange for
repayment.
If the bill remains unpaid after NTP /NDD/ Actual due date, the fate of the bill is to be
enquired from the overseas bank through Swift. Simultaneously the 'B' /'C' category
branch should put their exporter customer on notice regarding the non payment of the
bill and ask the customer to remit/arrange funds for adjusting the advance given
against the unpaid bill. The exporter has to be put on notice of impending
crystallisation of the export bill on 30th day from NTP /NDD (Ann No 7(14)).
Where the export bill proceeds are not received within due date, the exporter has to
make an application to the branch for extension of the period. In case the bills remain
unpaid for a period exceeding 6 months the procedure relating to detailed exchange
40
control guidelines on extension (ETX) formalities are given in para no.2.2.36 of
Chapter 2 – Exim Policy and Fema Guidelines.
For extension of due date beyond 180 days from Shipment date, Approval of ECGC for
extension in due date is to be made to ECGC in their prescribed format.
On receipt of notice of dishonour of a sight bill or advice of non acceptance of an
usance bill, steps are to be taken to protect the exported goods which forms security
for the Bank's advance. The branch in its notice of dishonour / non acceptance should
also seek instructions from the exporter for protection of the exported goods. In case
no response is received from the exporter, the branch after due permission from the
Regional office, may take necessary steps including seeking the assistance of the
correspondent bank for making arrangements to clear and store the goods duly insured
on our behalf, if the situation so demands or follow-up with the Shipping Company /
inform them not to release the consignment / marking lien on the consignment /
notifying Bank’s interest on the consignment.
Ensure that the bill proceeds have not been credited into the relevant Nostro a/c
before crystallisation steps are actually undertaken.
In case of non-payment /non-acceptance of the bills :
Put the exporter on notice
Inquire with the shipping agents, local or abroad for status of goods, with
corporate details of delivery.
Seek assistance of correspondent bank for storage and insurance of goods.
Inform controlling office, in case the goods are taken delivery without
payment/acceptance and seek further instructions.
7.10. CRYSTALLISATION
The proceeds of all export bill negotiated / purchased / discounted should be
repatriated on or before due date. The Branch will transfer the exchange risk to the
exporter by crystallising the foreign currency liability into rupee liability on the 30th
day after the NTP /NDD or actual due date whichever is earlier. In case the 30th day
falls on a holiday / Saturday, the crystallisation will be done on the next working day.
41
In view of the normal trade practice in Gems and Jewellery exports, an extended
crystallization period of 45 days for these exports are permitted, as normally payment
is done after due date. This extended period is, however to be considered only at the
request of the exporter and may considered for all the bills tendered by the customer.
Branches are advised to obtain specific undertaking in writing from the Gems and
Jewellery Exporter for crystallization of the unpaid bills on the 45th day after expiry of
normal transit period in case of demand bills / due date in case of usance bills.
For crystallisation into Rupee liability, the branch will report notional sale to the
Dealing Room and crystallise the bill at TT selling rate.
If the crystallised Rupee liability is more than the amount originally advanced,
branches will not pass on the surplus to the customer.
If the crystallised Rupee liability is less than the amount originally advanced branches
will recover the shortfall from the customer.
Example
Amount originally advanced Rs.10.00 lac
i) Crystallised Rupee liability is Rs.10,21,000/-
Dr. Overdue FDBP/FUDBP Rs.10,2l,000/-
Cr. a) FDBP/FUDBP Rs.10,00,000/
Cr. b) DAC – Treasury branch Rs.21,000/-
ii) Crystallised Rupee liability is Rs.950,000/-
Dr. a) O/D FDBP/FUDBP a/c Rs.950,000/-
Dr. b) C/D, C/C a/c Rs.50,000/-
Cr. FDBP/FUDBP a/c Rs.10,00,000/-
iii) On receipt of credit advice of ' A' category branch, pass following entry :
Dr. DAC - 'A' category br. Rs.50,000/-
Cr. Income a/c Exchange earnings Rs.50,000/-
42
(Please note that in the above examples, interest on FDBP /FUDBP which is to be
recovered from NTP /NDD till crystallisation is not included. The same is to be recovered
by the branches)
If the bills are of 'c' category branches, details such as the TT selling rate, entries to
be passed, difference amount to be recovered, interest to be levied etc. are to be
informed to them by writing a letter.
For bills crystallised which are more than Rs.25.00 lacs, a monthly statement is to be
sent to IBD.
7.10.1 REALlSATION ON OR AFTER NOTIONAL DUE DATE / ACTUAL DUE DATE BUT
BEFORE CRYSTALLlSATION
Branches must reverse FDBP /FUDBP by raising POB claim on 'A' category branch at the
rate bill was purchased.
Debit or Credit the shortfall / excess amount received (excess may be representing
interest or other charges etc. collected) to the customer's a/c
Charge overdue interest from NDD / due date to the value date, which will be charged
at the appropriate rate by the system automatically while realizing the Bill.
If in case of usance bills, if actual due date falls before NDD, originally charged
interest from actual due date to notional due date is to be refunded, which also will
be taken care by the System while realizing the Bill.
7.10.2 REALISATION OF BILL AFTER CRYSTALLlSATION
On Crystallising the Bill, the system will automatically transfer the Bill to Collection
portfolio, which has to be realized on receipt of export proceeds / credit to our
Nostro account.
Report as ready purchase to Export Realization Section of Treasury branch, Mumbai,
who will apply TT buying rate and send proceeds by DAC.
Raise a POB claim on Treasury branch, Mumbai to the extent of the INR realization
and Reverse the overdue FDBP outstanding.
Charge overdue interest from date of crystallisation till value date.
43
Recover / pay difference between OD FDBP/FUDBP and the realised amount converted
at the buying rate.
7.10.3 RECOVERY OF ADVANCE IN CASH BEFORE CRYSTALLISATION ON
DISHONOUR OF DOCUMENTS
Report transaction to Treasury branch, Mumbai and reverse the FDBP advance at the TT
selling rate. If the converted rupee amount is more than the original advance, recover the
enhanced amount inclusive of original advance from the exporter. The difference will be
passed to 'A' category branch as mentioned in Para 7.10. Similarly, if the converted rupee
amount is less, the short fall is to be recovered from our customer. 'A' category branch will
pass on the difference to 'B' category branch. which amount is to be credited to the Income
account.
Charge interest at ECNOS from date of advance till date of recovery, netting interest
already debited / recovered.
If such bills are realised subsequently, interest is to be reworked as applicable to OD
bills and excess debited is to be refunded.
Recovery is to be done through the Bill Menu only by using option ‘O’, the unpaid bill
will be reversed to collection portfolio by the system and Contra entry will be passed
for controlling the bill under collection portfolio. Make entry in the Export Bill
Collection / Purchase Register. Documents are not to be parted with and disposal
instructions are to be sought from the customer / branch.
7.10.4 RECOVERY OF ADVANCE IN CASH AFTER CRYSTALLISATION
Apply Interest at ECNOS from date of advance (netting interest already debited till
crystallization) till date of recovery of advance through Bill Menu only by using option ‘O’.
Pass following entry
Dr. CD/CC a/c
Cr. FDBP/FUDBP a/c
Cr. Income a/c Int. on FDBP/FUDBP
Do not part with the documents (if returned unpaid)
Seek disposal instructions from the exporter, care of goods etc.
If the bill is of 'C' Category Branch, seek disposal instruction from them.
44
Mark necessary remarks in the Export Bill Numbering Register.
7.11. EXPORT DOCUMENTARY BILLS FOR COLLECTION
Foreign bills collection business is accepted by the Bank only on the condition that the
Bank is not liable for loss, damages or delay, howsoever caused, except directly due to
the negligence or default of it's Officers / Employees. Bank is also not responsible for
acts of omission or commission of its agents / correspondents and for the
consequential losses/delays.
The establishment of these conditions is a necessary protection against the serious
risks to which the Bank would otherwise be exposed for no fault of its own in the
conduct of such business. It is essential to be able to prove that the customer is aware
of these conditions and that, by implication, he accepts them. With this object in
mind, Form No. FE 506 has been devised which should be completed and signed by the
customer for all foreign bills collection items. Besides, foreign bills for collection are
governed by Uniform Rules for Collection I.C.C. Brochure No. 522 (URC)
When the bank accepts export bills on collection basis, the customer is given credit
only after the bills are realised. Though exporter is primarily responsible for
repatriation of export proceeds, Bank also has to take all reasonable precautions/
steps for realization / follow up of bills.
The exchange control/trade control rules and regulations applicable to collection bills
are the same as those applicable to bills negotiated under irrevocable LC or
purchased/discounted against confirmed orders.
PROCEDURE:
Take application in form FE 506 from party alongwith full set of documents.
Verify whether all relevant documents have been submitted as mentioned in the
application, particularly the following:
Bill of Exchange (in duplicate)
Invoices (with two extra copies for the bank & Invoice certification)
BL (full set) / A WB
Insurance Policy
45
ECGC Policy (if given)
Other documents called for by the buyers.
GR / SDF / / EDFC / PP/ SOFTEX Form
Ensure that party's instructions are clear regarding delivery of documents, collection
of proceeds / charges, interest etc. in FE 506
Scrutinise the documents from exchange control and export trade control angles.
Make sure that the documents are in order. (Refer check list given under 'Negotiation
under Irrevocable LC ' for guidance-Para 7.3 to 7.3.7). Many a times customers
subsequently request the bank to purchase / discount export bills already sent for
collection as soon as FDBP / FUDBP limit becomes available or the branch has to give
AFDBC (Advances Against Foreign Documentary Bills sent for Collection) to adjust the
outstanding pre-shipment advance. Branch must, therefore, thoroughly scrutinise the
documents and ensure that they are in order and whether advance can be made
against them, if required. Discrepancies, if any, should be got rectified by the
exporter.
Enter in 'Safe in Safe out' Register and allot number to export bill as per Uniform
System for Numbering of Export Bills (Prefix C).
Control the bill in the system invoking menu ‘FBM’.
If there is any undrawn balance, note the details in Undrawn Balance Register as well
as Export Bill Numbering Register.
Record the bill number on all documents.
Generate bill forwarding schedule through the system for sending documents to be
sent to correspondent bank or drawee bank as per the instructions received from the
exporter. Further, ensure that our instructions to the collecting bank are clear and
precise.
The documents may be dispatched directly to the consignee or their agents resident in
the country of final destination of goods in case where advance payment is received or
an irrevocable Letter of Credit has been received for full value of the exports and the
LC stipulates direct dispatch of documents to the consignee or his agent resident in
the country of final destination of goods. Documents must be free from discrepancies
in such cases.
In cases not covered by the aforesaid provision the Authorised Dealer (AD) may accede
to the request of the customer for dispatch of documents for whatever reasons direct
46
to the consignee / agent provided the exporter is a regular customer and AD is
satisfied on the basis of standing and track record of the exporter and the
arrangement made for realisation of export proceeds that the request can be acceded
to (Also refer to 2.2.44 of 2 Chapter 2 – Exim Policy and Fema Guidelines).
Mail the documents to the correspondent in 2 sets if BL is involved. Despatch the 2nd
set on the following day. In the case of bills accompanied by AWB, all documents can
be sent in one set. Enter in Safe in Safe out register.
Send certified copy of the invoice to the customer along with Customer advice
generated through the system.
Report the transaction in ENC statement and prepare a folder with office copy of
forwarding schedule and other documents such as invoice, GR form etc.
On verification of the bill, system will pass the following entries :
i) Dr. Foreign Bills Receivable a/ c
Cr. Foreign Bills for Collection a/c (Contra Voucher)
ii) Dr. Customer’s CD / CC a/c
Cr. Income a/c Commission on Export Bills
Cr. Expenditure a/c Postage
Recover commission upfront.
In case of a purchased/discounted/negotiated bill [both in foreign currency as well as
in rupee] is later converted into a collection item, branches will recover charges
applicable for collection bills or charges already recovered for purchase / discount /
negotiation of bills, whichever is higher.
In case of an export bill for collection [both in foreign currency as well as in rupee] is
subsequently purchased/discounted/negotiated, the branch will recover the charges
applicable to export bills purchased/discounted/negotiated or the collection charges
that are already recovered whichever is higher.
Keep a watch for receipt of the acknowledgement and file in the folder when
received.
Advise due date of payment / non-acceptance / non-payment to the customer, in FE
554 (Ann No 7(11)) and seek his disposal instructions. if any.
47
On receipt of proceeds in Nostro a/c, ‘B’ category branches should pickup credit
entries pertaining to export collection bills and report the same to Dealing Room of ‘A’
category branch with full details, such as utilization of forward contract / EEFC if any.
B category branch has to pass the following entry :
Dr. POB a/c FEX
Cr. CD/CC a/c or
Cr. 'C' Category Branch
Cr. Exp. a/c Postage, if any
POB entry will be reversed on receipt of DAC from 'A' category branch.
If forward contract is booked, realistion entry is to be passed at forward contract rate
and ‘A’ category branch is to be informed. Even if party has not availed any Packing
Credit, but authorises in writing to appropriate the collection bill proceeds to packing
credit availed against other orders, the same may be acceded to.
For EEFC portion, if any pass following entry :
Dr. : Foreign Currency Settlement a/ c
Cr. : EEFC a/c
Decontrolling entry is to be passed by both ‘B’ and ‘C’ category branches. If bills are
paid in part, only proportionate contra liability is to be reversed.
Mark off the item in the Export Bill Numbering Register. Round off in Safe in safe out
Register.
Complete certification of the G.R. form and hold in record for inspection.
Follow-up in case of delay in payment beyond due date and report in XOS statement if
outstanding in June/Dec.
If exporter authorises payment of commission by deduction from invoice on
realisation, then only net amount is to be converted at TT buying rate.
7.12. EXPORT BILLS OUTSTANDINGS BEYOND THE TIME LIMIT FOR
REALlSATION :
48
PROCEDURE:
Scrutinise the Export Bills Outstanding at periodical intervals say, once a week and
note down the bill No. exporters name etc. of export bills which have not been
realised within the due date or six months from date of shipment whichever is earlier.
Ascertain from the exporter the reasons for non-realisation and steps taken by him and
follow up the procedure outlined in para 2.2.36 of Chapter 2 – Exim Policy and Fema
Guidelines.
Check if the application in ETX is signed by an authorised official on behalf of the
exporter and whether the details given therein tally with those in the Export Bill.
See whether in the opinion of the branch, reasons adduced by the exporter for delay
in realisation are reasonable. .
Verify the office records to see if the bill has been paid in local currency and whether
the delay in realisation is due to externalisation difficulty in the buyer's country,
settlement of claims by ECGC etc.
Record observations, in ETX Form . AD Bank who has handled the export document
may extend upto a period of 6 months at a time the period of realisation beyond 6
months from date of shipment irrespective of the invoice value subject to the
following conditions :
i) The export transactions covered by the invoices are not under investigation
by Directorate of Enforcement / Central Bureau of Investigation or other
investigating agencies,
ii) The AD Category - I bank is satisfied that the exporter has not been able to
realise export proceeds for reasons beyond his control,
iii) The exporter submits a declaration that the export proceeds will be realised
during the extended period,
iv) While considering extension beyond one year from the date of export, the
total outstanding of the exporter does not exceed USD one million or 10 per
cent of the average export realizations during the preceding three financial
years, whichever is higher.
v) All the export bills outstanding beyond six months from the date of export may
be reported in XOS statement. However, where extension of time has been
granted by the AD Category - I banks, the date up to which extension has
49
been granted may be indicated in the ‘Remarks’ column.
vi) In cases where the exporter has filed suits abroad against the buyer, extension
may be granted irrespective of the amount involved / outstanding.
In cases where an exporter has not been able to realise proceeds of a shipment made
within the extended period for reasons beyond his control, but expects to be
able to realise proceeds if further extension of the period is allowed to him, as well
as in respect of cases not covered under above, necessary application (in duplicate)
should be made to the Regional Office concerned of the Reserve Bank in form ETX
through his AD Category - I bank with appropriate documentary evidence.
In case the exporter is non co-operative in complying with ETX formalities, report full
details to RBI and seek instructions.
Besides, branches may stop both pre/post shipment advances if deemed fit, after
obtaining necessary approval from Regional offices and after giving due notice to the
exporters.
In case Bank's advance is involved under contracts, application to be made to ECGC for
extension of time beyond 180 days as per ECIB (WT-PS) norms.
Report outstandings in XOS statement till realization.
Branches should diarise due dates of bills to ensure prompt follow up for timely
realisation of bills.
The exporters should be put on notice about their obligation to arrange for
repatriation of export proceeds as per the undertaking given by them in the GR form.
The requests of exporter for change of tenor of bill, change of buyer, reduction in
value etc. should be attended to promptly as per the delegated authorities and in line
with FEMA guidelines for speedy realisation of export bills.
Follow up on write off of eligible overdue export bills failing within the purview of AD
be initiated. AD branches are empowered to write off eligible overdue export bills
without referring to their Controlling Office.
The help of Indian Embassy is to be sought wherever required.
Services of Debt Collection Agencies abroad may also be utilised.
50
7.13. REDUCTION IN VALUE:
FEMA GUIDELINES:
Bank is authorised by RBI to allow reduction in value upto 10% of the invoice value subject to
certain conditions and without ceiling in certain other cases. For further details refer para
No. 2.2.25 of Chapter 2 – Exim Policy and FEMA Guidelines.
REDUCTION IN INVOICE VALUE ON ACCOUNT OF PREPAYMENT OF USANCE BILLS
Exporters may approach AD Category - I banks for reduction in invoice value on
account of cash discount to overseas buyers for prepayment of the usance bills. AD
Category - I banks may allow cash discount to the extent of amount of proportionate
interest on the unexpired period of usance, calculated at the rate of interest
stipulated in the export contract or at the prime rate/LIBOR of the currency of
invoice where rate of interest is not stipulated in the contract.
REDUCTION IN INVOICE VALUE IN OTHER CASES
a) If, after a bill has been negotiated or sent for collection, its amount is to be reduced
for any reason, AD Category - I banks may approve such reduction, if satisfied
about genuineness of the request, provided:
i) The reduction does not exceed 25 per cent of invoice value
ii) It does not relate to export of commodities subject to floor price stipulations
The exporter is not on the exporters’ caution list of the Reserve Bank, and
iii) The exporter is advised to surrender proportionate export incentives availed
of, if any.
b) In the case of exporters who have been in the export business for more than three
years, reduction in invoice value may be allowed, without any percentage ceiling,
subject to the above conditions as also subject to their track record being
satisfactory, i.e., the export outstanding do not exceed 5 per cent of the average
annual export realization during the preceding three financial years
c) For the purpose of reckoning the percentage of export bills outstanding to the
average export realizations during the preceding three financial years, outstanding of
exports made to countries facing externalization problems may be ignored provided
the payments have been made by the buyers in the local currency.
51
PROCEDURE
A. WHERE REDUCTION IS UPTO 25%
Obtain request letter in duplicate as per Ann No 7(15).
Confirm that the relevant export documents have been handled by the branch.
Make sure that in the case of goods subjected to floor price stipulations, reduction in
value should not lead to realisation below the stipulated floor price.
Make sure the exporter is not on the' Exporter's Caution list' of RBI.
Make sure that the documentary evidence produced in support of the request is
satisfactory and that the exporter has acted bonafide in acceding to the buyer's
request for reduction in value.
Where satisfied, advise correspondent bank by cable/telex/SWIFT to accept short
realisation in invoice value, if no advance is involved.
If Bank's advance is involved, recover the reduction allowed from the exporter in
Indian Rupees after reporting the notional sale to Dealing Room. Where advance is
involved, SWIFT authorisation to receive reduced amount is to be sent only on
recovery.
Also recover interest on the value so reduced after netting the interest already
charged.
Record the details of reduction allowed in Export Bills Numbering Register.
On receipt of realisation advice from correspondent, record the reduction details in
G.R. duplicate form & duly certify.
Advise exporter to surrender proportionate export incentives, if availed of.
B. WHERE THE REDUCTION IN VALUE SOUGHT FOR EXCEEDS 25%
Make sure that the exporter has been in export business for at least three years
( in such cases reduction is permissible without any percentage ceiling).
Call for and obtain from the exporter declarations, on half yearly basis as at the end
of June and December, duly certified by his auditor or Chartered Accountant showing
the export realisation during the previous three calendar years and the export bills
outstanding beyond the period prescribed for realisation (6 months), after giving
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allowance for payments made in local currency for exports to countries facing
externalisation problems.
Work out the average outstandings in percentage terms and absolute terms and make
sure that the export outstandings do not exceed 5% of the average annual export
realisations during the previous three calendar years.
Follow the steps given under sub-para (A) above.
C. REQUEST FOR REDUCTION IN VALUE REQUIRING REFERENCE TO AND PRIOR
APPROVAL OF RESERVE BANK:
Take application in duplicate from the exporter as per Ann No 7(15).
Verify if it is signed by an authorised person.
Peruse the correspondence between the exporter and the overseas party for reduction
in value and make sure that the ground on which reduction sought is genuine and
satisfactory.
Obtain data on the party's export performance in the last three years and details of
past-requests for reduction in value.
Make sure that the minimum floor price stipulations (if any) applicable to the
commodity exported will be complied with, even after reduction sought for is allowed.
Forward the application together with documentary evidence to the Regional Office of
the RBI, Foreign Exchange Department for approval.
Follow-up with RBI for approval.
On receipt of RBI approval, verify the extent of reduction approved.
Make suitable notings in the Export Bills Numbering Register / corresponding bill.
Advice correspondent bank to allow reduction in value (to the extent approved by RBI)
and to accept short payment after complying with additional conditions, if any,
stipulated by RBI while according approval.
In case advance is involved, recover to the extent of reduction in value allowed, after
reporting the notional sale to Dealing Room. Record entries in FDBP/FUDBP ledger.
Charge interest on value so reduced, after netting the interest already charged.
On receipt of realisation advice, certify G.R. duplicate form quoting RBI letter No. and
date and the extent of reduction in value allowed.
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Exporter to be advised to surrender proportionate export instructions availed if any
and an undertaking to that effect to be obtained from the exporter (Incorporated in
Annexure 7(15))
7.14. EXPORT OF GOODS ON CONSIGNMENT BASIS:
EXCHANGE CONTROL REGULATIONS:
The maximum time limit for realisation of export proceeds in the case of consignment exports
is six months from the date of shipment. However, in case of exports to warehouses
established abroad with the permission of AD / RBI, a time limit of 15 months is allowed for
realisation of export proceeds. On application, RBI may allow exporters with a good track
record, a maximum time limit of twelve months from the date of shipment. Exporters who
have set up branches / trading offices / subsidiaries abroad can export goods to them on
consignment basis. ADs may consider the application received from the exporter and grant
permission of opening / hiring warehouse abroad subject to the following conditions:
a) Applicant’s export outstanding does not exceed 5% of exports made during the previous
year.
b) Applicant has a minimum export turnover of UD1,00,000/- during the last financial year.
c) Period of realisation should be as applicable.
d) All transactions should be routed through the designated branch of AD.
e) The above permission may be granted to the exporters initially for a period of one year
and renewal may be considered subject to the applicant satisfying the requirement
above.
f) AD Category - I banks granting such permission/approvals should maintain a proper
record of the approvals granted.
Freight and Marine Insurance must be organised in India i.e. the consignment exports should
be on CIF basis.
PROCEDURE :
Accept exporter's application and documents.
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Verify if all documents mentioned in the covering letter have been received, in
particular,
Agreement between exporter and overseas agent/RBI approval, if applicable.
Bill of Exchange (for acceptance purpose)
Invoices.(with 2 extra copies)
Bill of lading (Full set)/ AWB with freight prepaid notation
Insurance policy (in duplicate).
Exchange Control Copy of GR / SDF / EDF / PP / SOFTEX Form.
Other documents as called for by the consignment agent
Scrutinise the documents from exchange control angle and export trade control angle
and see that they are in order.
Cross check details in Customs certified copy of G.R. form with other documents, such
as invoice etc. Confirm that sale is declared in GR form as consignment sale.
Take up with the exporter and have the discrepancies, if any, rectified.
Obtain instructions from party about delivery of documents against Trust Receipt/
Undertaking through correspondent bank, collection of charges, etc.(FE 521)
Enter details in 'Safe in Safe out' Register/allot bill No.(collection bill C) and control
the Bill in the System.
Diarize the due date for realisation of export proceeds.
Note the agency commission amount, if any, declared in the G.R. form.
Stamp all documents with the bill number.
Generate forwarding schedule through the system and mail the documents to
correspondent bank. Make entry in Safe-In Safe-Out Register. lf advance is granted
against such bills, note to maintain adequate margin as per sanction terms. Arrive at
Rupee equivalent by converting into Indian Rupee at the provisional bill buying rate
prevailing on the date of advance.
Pass the following entry :
Dr. Loan against Consignment Exports
Cr. PC / CC/ CD a/c
Cr. Rebate a/c Interest on FDBP / FUDBP
Cr. Income a/c Commission on export bills
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Cr. Expenditure a/c Postage
Branches are to charge interest only for unexpired NTP /NDD.
Keep a watch for receipt of correspondent bank's acknowledgement and file it with
the folder when received..
If BE is drawn for acceptance purpose, ensure receipt of acceptance advice.
Ensure receipt of confirmation from correspondent bank for having obtained Trust
Receipt/Undertaking from the agent for making payment within stipulated period,
even in case of bills where part of the estimated value is drawn in advance against the
exports.
Diarise due date for realisation of export proceeds.
Report the collection bill in the ENC Statement.
On realisation, B category branch has to report to Dealing Room of A category branch
and obtain TT buying rate and pass following entry :
Dr. POB FEX (803/3000)
Cr. Loan against Consignment / CD / CC / 'C' Category Br.
Cr. Income a/c. Int. on export bills (late realisation if any)
POB entry will be reversed on receipt of DAC from' A ' category branch.
System will decontrol collection bill contra entry.
Also round off the item in Export Bill Register/Safe in Safe out Register.
If proceeds are remitted in installments or proceeds realised are less than the advance
granted, such receipts are to be credited to Loan against Consignment a/c. C category
branch as the case may be and follow up made for receipt of balance amount. In case
of part payment, contra liability is to be proportionately reversed.
In case of short realisation, balance advance amount is to be recovered from a/c
levying interest at commercial rate from the date of advance.
Realisation proceeds should be accompanied by 'Account Sales' together with original
bills for all expenses except for certain petty expenses. Branch should scrutinise the
Account Sales/bills and ensure that only eligible expenses are deducted and proceeds
received are reasonable for the given line of trade.
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Report realisation in R Return and certify G.R. form. Retain account sales and
original bills pertaining to consignment sales for our records.
Follow-up overdue bill/part payment and report in XOS statement, where necessary.
If goods sent on consignment remain unsold, exporter has to arrange for re-import on
freight to pay basis.
If consignment exports for period beyond 6 months is approved by RBI, specific
approval of ECGC under WTPSG is also to be obtained.
7.15. ADVANCE AGAINST FOREIGN DOCUMENTARY BILLS SENT FOR COLLECTION
(AFDBC)
At times, FDBP /FUDBP limits sanctioned to exporters are found to be inadequate or
utilized fully. Consequently, bills tendered cannot be negotiated / discounted /
purchased. Branches are constrained to handle such export bills on collection basis
and to grant finance against such bills to the exporters only to a limited extent to
meet his emergent needs / to adjust the outstanding Packing Credit.
Often bills tendered under LC are found to be discrepant. In such cases, bills are sent
on collection / approval basis and advance is granted against them to adjust the
outstanding Packing Credit / to meet the exporter's urgent needs.
Advances of the above nature are controlled under 'Advance against Foreign
Documentary Bills Sent on Collection' (AFDBC). Such advances will be liquidated out of
realisation proceeds of export bills and balance after meeting interest/other charges
is released to the exporter.
Some exporters who are cash rich may not require any regular FDBP /FUDBP limits.
Such customers normally seek only AFDBC limit to cover their pressing needs, as and
when they arise. Some customers may seek regular AFDBC limit also. In all such cases
regular AFDBC limit can be sanctioned within the overall eligibility of Post Shipment
Finance worked out.
WHEN TO GRANT AFDBC?
In the case of sight bills, AFDBC can be granted only before expiry of NTP. Once NTP is
over, sight bills are treated as overdue and hence no advance can be granted.
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Even in the case of usance bills, AFDBC can be normally granted before expiry of NTP.
If NTP is over, then it is essential that BE is accepted and notice of acceptance is
received from overseas correspondent bank.
QUANTUM OF ADVANCE
Reasonable margin is to be maintained while sanctioning AFDBC limit on a regular
basis.
Where regular AFDBC limit is not placed at the disposal of the customer, but FDBP
/FUDBP limits are made available, which is fully utilised, branches can grant advance
to the extent required after keeping a margin (of say 15-25%), by earmarking
adequate amount in Packing Credit limit. Necessary ratification is to be obtained from
the Controlling Office. Hence this facility may be allowed sparingly.
If AFDBC is given against discrepant documents, then the quantum of advance should
not be more than outstanding Packing Credit plus freight/insurance charges to be met.
FDBP /FUDBP limit to the extent of AFDBC is to be earmarked, in case FDBP / FUDBP
limit is full, PC limit to be earmarked and ratification of controlling office to be
obtained.
PROCEDURE
Ensure all formalities for export bills sent on collection basis has been complied with.
Advance is granted bill wise and controlled in a system using option ‘H’. Customer
wise separate AFDBC account to be maintained.
Note on the folder / export bill numbering register that AFDBC has been granted.
Interest is to be charged upfront while granting advance for the unexpired NTP /NDD.
Rate of interest applicable to AFDBC is the same as that applicable for post-shipment
advances.
On realisation of bills, report to Dealing Room of A category branch and obtain TT
buying rate. Adjust AFDBC availed against the bill realised and release the balance
amount for credit of CC/CD account. Certify GR form as per procedure.
On realisation, excess interest charged or overdue interest leviable, is to be refunded
or levied, depending upon whether it is early/late realisation.
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If bills are not realised within 30 days after NTP /NDD, AFDBC portion is to be
recovered to the debit of CC / CD account. Recover interest as applicable.
Reporting to IBD :
In case the bills for Rs.25 lacs are not realised within 30 days after NTP/NDD, and the
same is not adjusted/request to the debit of CD/CC, then the details of the bills
should be reported to IBD through/by respective 'B' category branch under
crystallisation statement sent on monthly basis alongwith required follow up measures
initiated.
Comply with ETX formalities and follow up for repatriation of the export proceeds.
ACCOUNTING ENTRIES
1. GRANTING OF AFDBC
Arrive Rupee equivalent provisional OD buying rate and apply stipulated margin.
Pass following entry :
Dr. AFDBC a/ c
Cr. Exporter's CC/CD/PC a/c
Cr. Rebate a/ c Interest on export bills
Cr. Expenditure a/ c Postages
Cr. Income a/c commission on Export bills
Entries are to be made in Safe-in Safe-out register.
2. REALISATION OF BILLS
Report to Dealing Room of A category branch and obtain TT buying rate.
Dr. POB a/c FEX
Cr. AFDBC a/c
Cr. CD/CC a/c (surplus amount)
Dr. Rebate a/c
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Cr. Income a/ c Interest on Export bills
POB entry will be reversed on receipt of DAC from' A category branch.
Round off in Safe in Safe out register.
3. NON PAYMENT OF BILLS
If bills are not paid on due date, recover the advances. Pass following entry :
Dr. CD/CC a/c
Cr. AFDBC a/ c
Dr. Rebate a/c
Cr. Income a/ c Interest on export bills .
4. TRANSFER TO OVERDUE
If exporter fails to arrange funds is CD/CC a/c for recovery, the AFDBC is to be
transferred to overdue a/c on the 30th day from NTP /NDD by passing the following
entry .
Dr. Overdue AFDBC a/c
Cr. AFDBC a/ c
Follow up is to be made for early recovery of advance.
7.16. ADVANCE AGAINST UNDRAWN BALANCE
In certain lines of export, it is the trade practice that bills are not to be drawn for full
invoice value. A small portion of the gross invoice value is left undrawn for adjustment
due to difference in rates, weight, quality, defective nature of goods, etc. Final
amount is ascertained only after receipt of goods, its inspection and approval thereof.
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Such undrawn balances get accumulated thus affecting the liquidity/cash flows of the
exporters. They approach Bank for finance against undrawn balance.
As per FEMA guidelines, undrawn balance should not be more than 10% of the value of
the export and should be realised within a maximum period of six months from date of
shipment.
As amount realisable is not certain, we normally maintain margin of 50% while granting
advance against undrawn balance.
Advance is granted at concessional interest rate for a period of 90 days only.
PROCEDURE
Obtain application from the exporter on their letter head with full billwise details of
undrawn balance.
Application should be accompanied by additional copies of billwise invoices,
underlying contracts and GR / SDF / EDF / PP forms.
Scrutinise the invoice /GR / SDF / EDF / PP forms and satisfy that the undrawn
balance relates to current bills. Bills which are overdue, unaccepted DA bills, bills
returned unpaid
and bills older than 6 months will not rank for advance. Branches should avoid granting
advance against undrawn balances after expiry of the time limit laid down in the
contract for settlement of undrawn balance. Cross check the details with the Undrawn
Balance Register.
Apply stipulated margin and arrive at drawing power.
Note in the folder / Export Bill Numbering Register / Corresponding Bills in the System
that advance against undrawn balance has been granted.
Pass following entry for release of advance
Dr. Advance against undrawn balance a/c
Cr. Exporter's CC/CD a/c
Post in Advance against Undrawn balance Register
Diarise due date and follow up for realisation of undrawn balance. On realisation pass
following entry :
Dr. POB a/ c FEX
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Cr. Advance against undrawn bal. a/c
Cr. Income a/ c Interest on export bills.
POB entry will be reversed on receipt of authority cheque/ local branch credit advice
from' A ' category branch.
Post in advance against Undrawn Balance Register
Interest is to be charged at monthly rests or as and when advance is repaid.
If not realised within 90 days, advance is to be transferred to overdue a/c charge
interest on Over Due( OD) Account as applicable . On realisation, note the date of
realisation in Undrawn Balance Register also and round off the bill.
If advance is repaid in cash or to debit of CC / CD account, charge interest at
commercial rate from the date of advance as prescribed.
7.17. ADVANCE AGAINST DUTY DRAWBACK
Government of India provides various incentives, duty drawbacks etc. as an export
promotion measure and with a view to compensate loss incurred by the exporters in
export business. These incentives also aim at neutralising the incidence of duties etc.
Such incentives are receivable after shipment. The exporters may require funds at
pre-shipment stage to acquire raw materials, manufacture finished goods and to meet
other expenses. The exporters may approach banks to finance against Govt.
receivables. Such advances can be made available at the pre/post-shipment stages
depending upon the needs of the exporter. However, it is preferable advances are
granted at the post-shipment stage, when the actual amount of duty drawback is
ascertainable.
Normally margin of 25% is kept on such advances. Advance is granted at concessional
rate at post-shipment stage for a maximum period of 90 days.
Presently Duty Drawbacks and Advance Licences are the major incentives available to
the exporters. However, bank finance is extended only against drawback receivables.
Drawback is refund of excise or import (customs) duty paid on indigenous and
imported inputs (raw materials, components, parts, packing materials etc.) used in
export products.
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PROCEDURE
Exporters will directly lodge claim with Customs Dept. for payment of duty drawbacks
alongwith the following:
i. Triplicate Drawback copy of shipping bill
i. Contract/Letter of Credit
ii. Bill of Lading
iii. Custom certified invoice
iv. Weight List
Bank should obtain a separate application for advance against duty drawback
receivables together with photocopies of above listed enclosures. The exporter would
be required to submit only the proforma invoice, notification, calculation of eligible
claim and proposed shipping schedule, if application is made at the pre-shipment
stage.
Drawback claims are normally settled within 90 days by the Customs Dept. Branch
should ensure that the drawback shipping bill is normally not older than 30 days at the
time of submission to the Bank.
Branch to obtain copy of notification under which the duty drawback claim is made
and satisfy that the claim made is in order.
Exporter to declare that payment from customs has not been collected. A cross check
may be made to this effect from the exporter's operative CD/CC a/c.
Ensure that financing branch's name is mentioned in the shipping bill so that the
cheque is received directly from Customs Dept.
Apply stipulated margin and arrive at drawing power.
Disburse the amount by passing the following entry :
Dr. Advance against duty drawback a/c
Cr. Exporters CD/CC a/c
For recovery, pass the following entry :
Dr. CD/CC a/c (against cheque of customs)
Cr. Advance against duty drawback a/c
Cr. Interest on Advances
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If not repaid within 90 days from date of advance, transfer to overdue a/c.
Dr. Overdue advance against duty drawback a/c
Cr. Advance against duty drawback a/c
Charge interest at the rate applicable, for the overdue period. If drawback claim is not
settled within a reasonable time recover the OD advance to the debit of CD/CC
account in which case interest is to be recovered at commercial rate of interest as
prescribed from the date of advance.
7.18. REMITTANCE OF AGENCY COMMISSION:
EXCHANGE CONTROL REGULATIONS :
RBI has given general permission to banks to remit agency commission on exports or allow
deduction from invoice amount for the purpose, subject to certain conditions. (Refer para
2.2.41 of Chapter 2 – Exim Policy and FEMA Guidelines).
PROCEDURE:
Obtain from Exporter form A-2 and application together with documentary evidence, such as
agency agreement in original or correspondence between the exporter and the agent, in
support of the request, if the amount is not declared on GR / PP / SDF /EDF form. (Ann No.
7(16))
Scrutinise the exporter's application and see whether it contains information, such as,
IE Code Number allotted to the exporter, GR / PP / SDF /EDF number and date, details
of commodity exported, name and address of buyers/agent and export value.
Obtain from the exporter an attested copy of the export invoice.
Verify from the Export Bill Numbering Register / GR / PP / SDF /EDF form, whether
agency commission has been declared. In cases where the commission has not been
declared on GR / PP / SDF /EDF form, remittance of agency commission may be
allowed after satisfying about the reasons adduced by the exporter for not declaring
commission on export declaration forms, provided a valid agreement, written
understanding between the exporters and/or beneficiary for payment of commission
subsists.
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Make sure that shipment has already taken place. Cases where Agency commission is
not mentioned in the Invoice, it can be remitted only after realization of the export
bill.
Report the agency commission remittance to Dealing Room and obtain TT selling rate.
Pass following entries:
Dr. Customer’s a/c / C category branch
Cr. DAC a/c (A Category Br.)
Cr. Income a/c Exchange on foreign DD/TT/MT
Cr. Expenditure a/c Postages/telex/swift
Issue DD to exporter favouring overseas agent or send TT message to foreign
correspondent bank.
In case DD/TT is to be issued to the debit of EEFC a/c. inform A category branch by
letter (Ann. No.7(17)) and pass the following entries:
a) Dr. EEFC a/ c
Cr. Foreign Currency Settlement a/c.
b) Dr. Customers a/c / C Category branch
Cr. Income a/c exchange on Foreign DD/TT
Cr. Exp. a/ c Postage/telex/swift
Note the details of remittances in Export Bill Numbering Register/ Corresponding bill
in the System / Outward Remittance Register.
After remittance, complete Form A2 and attach the documentary evidence obtained
and report the transaction in R-Return.
If remittance of agency commission is to be made by deduction from invoice at the
time of purchase of the bill, only net amount shall be reported to Dealing Room at
spot bill buying rate/forward contract rate, as the case may be. Correspondent bank
to whom the bill is sent for collection is to be authorised to collect the gross bill
amount and to make payment of commission amount there from to the overseas agent
(less charges). Full address and other details of the agent are to be furnished to the
correspondent bank.
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Authorised Dealers may allow payment of commission by Indian exporters, in respect
of their exports covered under counter trade arrangement through Escrow Accounts
designated in USD Dollar subject to the following conditions :
a) The payment of commission satisfies the conditions as at (a) and (b) stipulated in
paragraph above.
b) The commission is not payable to Escrow Account holders themselves.
c) The commission should not be allowed by deduction from the invoice value.
NOTE : Payment of commission is prohibited on exports made by Indian Partners
towards equity participation in an overseas joint venture/wholly owned subsidiary as
also exports under Rupee Credit Route.
7.19. EXPORT CLAIMS
At times, the buyers may lodge claims related to quantity, quality, defective nature of
goods etc. Such claims can be honoured by branches on the written request of the
exporter after relative export bills are paid. Ensure that the exporter is not in the
caution list of RBI.
PROCEDURE
Receive application from Exporter together with documentary evidence/ form A2 in duplicate
duly filled in and signed. (Ann No 7(18)).
Confirm that the claim is reasonable/genuine and conforms to exchange control
regulations (Refer para 2.2.42 of Chapter 2 – Exim Policy and FEMA Guidelines).
Satisfy that bills to which claim pertains have actually been realised.
If the claim is found to be in order report the transaction to Dealing Room and obtain
TT selling rate and pass the following entry :
Dr. Customer’s a/c / C Category branch
Cr. DAC a/ c / A Category Branch
Cr. Income a/c Exchange on foreign DD/MT/TT.
Cr. Expenditure a/ c postage/telex/swift.
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Issue DD to the exporter favouring the overseas buyer or send TT to foreign
correspondent bank, as requested by the customer . Record details in Outward
Remittance Register.
If export claims are honoured to the debit of EEFC a/c, inform A category branch by
letter (Ann.No.7(17)) and pass entries:
a. Dr. EEFC a/c.
Cr. Foreign Currency Settlement a/c.
b. Dr. CD/CC a/c./C category br.
Cr. Income a/c. Exchange on Foreign DD/TT/MT
Cr. Expenditure a/c. Postage/Telex/Swift
Bank's commission charges wherever applicable should be recovered at prescribed
rates.
Complete form A2, attach documentary evidence and report the transaction in
R Return to RBI.
Enter details of export claim in Export Bill Numbering Register / Corresponding bill in
the System.
Advice exporter to surrender proportionate cash incentive, if any, availed.
7.20. OTHER POINTS
7.20.1 CHANGE OF TENOR
Exporters may at times approach branch for extension of usance period or conversion
of DP terms to DA terms. Such requests can be acceded to by the Authorised Persons
branch if reasons adduced are satisfactory and provided the due date/extended due
date falls within 6 months from date of shipment. If the exporter holds Standard
Policy, prior approval of ECGC is to be obtained for change of tenor.
Following procedure is to be adopted:
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Exporter to draw a fresh Bill of Exchange on the drawee with adequate stamp duty, if
applicable.
Branch has to forward fresh bills of exchange to correspondent bank with instruction
to obtain acceptance and payment on due date. Fresh extended due date is to be
intimated to exporter.
The concessive interest is to be charged upto revised notional due date, subject to a
maximum period of 6 months from date of shipment provided request for change in
tenor is received before the due date.
Bank shall also recover swap difference. Interest on outlay of funds if any shall also be
recovered from the customer at commercial rate.
Branch has to note all details in the Export bill Numbering Register / Corresponding
bill in the System / Bill folder.
Where extension in usance period or conversion from DP to DA is done before original
due date, the date of crystallisation will have to be revised to 30 days from extended
due date. In all other cases, bill is to be crystallised on the 30th day from original due
date.
Handling charges and out of pocket expenses are to be recovered upfront.
7.20.2 CHANGE OF BUYER
If export bills remain unpaid, exporter can arrange for sale of underlying goods to
alternate buyer without prior approval of RBI provided proceeds are realised within 6
months from date of shipment. If the exporter is holding Standard Policy of ECGC,
approval of the Corporation is to be obtained for change of buyer. In such cases
following procedure is to be adopted.
Exporter has to request branch for change of buyer
Exporter has to draw fresh B/E and Invoice on the new buyer.
Branch has to forward the same to correspondent bank with authorisation to present
the documents to the new drawee together with original shipping and other
commercial/insurance documents and deliver the same against payment/ acceptance,
as the case may be.
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In the case of bills purchased/discounted the bill will be treated as overdue after
expiry of NTP in the case of sight bills and NDD in the case of DA bills and bill will be
crystallised on 30th day after NTP /NDD, if still unpaid.
Handling charges and out of pocket expenses are to be recovered upfront.
Note changes in Export Bill Numbering Register / Corresponding bill in the System /
Bill folder.
Prior approval of RBI is not required if, after goods have been shipped, they are to be
transferred to a buyer other than the original buyer in the event of default by the
latter, provided the reduction in value if any, involved does not exceed 25% of the
invoice value and the realisation of export proceeds is not delayed beyond the period
of twelve months from the date of export. Where the reduction in value exceeds 25%,
all other relevant conditions stipulated in para 7.13 should also be satisfied.
7.20.3 CHANGE OF BUYER AND COUNTRY
If the new buyer happens to be in a country other than the original one, exporter must
obtain letter of consent from new buyer to take up the consignment at a mutually
agreed price and terms. The new due date for payment should be within 6 months
from date of shipment. If not, RBI approval is needed if the case does not fall within
the porvision of para 2.2.29 of Chapter 2 – Exim Policy and FEMA Guidelines.
Exporter has to lodge with the branch fresh BE and invoice on the new buyer with
precise instructions for reshipment of goods.
The correspondent bank to whom the original documents were sent for collection/
local shipping agent, has to be requested for arranging reshipment / insuring the
consignment.
If freight is borne by the new buyer and if insurance is arranged at destination his
consent letter referred to above should indicate the same.
Branch has to forward BE / invoice to the original correspondent bank with a request
to forward the same along with fresh BL / AWB (other earlier documents if needed) to
the new correspondent bank. Branch has also to write separately to new
correspondent bank giving background details and precise collection/settlement
instructions.
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In case reduction in value is involved branch to follow guidelines given in para 2.2.24
of Chapter 2 – Exim Policy and FEMA Guidelines and para no.7.13.
If after a bills has been negotiated or sent for collection, the amount thereof is
desired to be reduced for any reason, authorised dealer may approve such reduction,
if satisfied about genuineness of the request provided :
a. the reduction does not exceed 25% of invoice value.
b. It does not relate to export of commodities subject to floor price stipulations,
c. The exporter is not on the exporters' caution list of RBI and
d. The exporter is advised to surrender proportionate export incentives availed of, if
any.
In the case of exporters who have been in the export business for more than three
years, reduction in invoice value may be allowed, without any percentage ceiling,
subject to the above conditions as also subject to their track record being satisfactory,
i.e. the export outstandings do not exceed 5% of the average annual export realisation
during preceding three calendar years. For the purpose of reckoning the percentage
of outstanding export bills to average export realisations during the preceding three
calendar years, outstandings in respect of exports made to countries facing
externalisation problems may be ignored provided the payments have been made by
the buyers in the local currency.
Branch has to note the changes in Export Bill Numbering Register / Corresponding Bill
in the System / Bill folder.
Handling charges and out of pocket expenses are to be recovered upfront.
If the country of new buyer comes under restricted cover, prior approval of ECGC is to
be obtained under ECIB (WT-PS). If such clearance is obtained by the exporter under
Standard Policy, Bank need not obtain the Corporation's approval separately. Exporter
has to however obtain permission under Standard Policy for change of buyer.
7.20.4 RETURN OF DOCUMENTS
When the documents are returned unpaid from foreign correspondent banks ensure that:
All originals (full set) Bills of Lading (BL)/ AWB are returned. In case full set of BL is
not received, inform foreign bank.
70
Immediately on receipt of documents inform the exporters. If Bank's advance is
involved, recover the same with upto date interest as applicable.
Do not part with the documents. They are to be controlled under collection giving NA
number.
Seek instructions from exporters to arrange for storing the goods and/or re-importing
the goods on 'Freight to pay' basis.
If goods are to be stored, ascertain from the correspondent bank, the estimated
expenses and advise the exporter of the same. The required amount is to be provided
for in the exporter's account. The exporter should also simultaneously look for an
alternate buyer.
In case goods are re-imported obtain exchange control copy of Bill of Entry for having
re-imported and cleared the consignment. Satisfy that goods re-imported are the same
as declared in the GR / SDF / EDF / PP form.
Note the details in the Export Bill Numbering Register / Corresponding Bill in the
system and bill folder.
Complete GR form without certifying the receipt of proceeds and certifying for the re-
import of exported goods alongwith bill of entry.
Advise the exporter to surrender export incentive, if availed.
Recover charges and close the files.
7.20.5. PROTESTING / NOTING
In the case of unpaid foreign bills/protesting/noting is necessary for initiation of legal
action. The unpaid bills will be presented to the drawee by Notary. The dishonour will
be recorded and protest note will be issued by the Notary.
Protesting and Noting is a legal formality. So specific instructions from the exporters
have to be obtained.
Ascertain whether ‘Protesting and Noting’ is available in the country to which export
document have been sent by us, either through our Correspondent Bank or the Drawee
Bank.
Necessary instructions should be given to correspondent bank while forwarding the
export document on collection or thereafter.
On receipt of protest note, inform the exporter of the same and forward photocopy of
the protest note for his record and instruct him to take necessary remedial measures.
71
In the case of collection bills, original protest note may be furnished to the exporter
on request retaining photocopy for branch records.
Remit charges claimed by foreign bank to the debit of exporter's account.
In case foreign bank asks charges in advance arrange to remit the same to the debit of
exporter's a/c.
7.20.6 LEGAL ACTION FOR RECOVERY IN IMPORTER'S COUNTRY
Exporters can institute legal action overseas against the drawees of unpaid bills. The
selection of legal counsel, determining the legal fee etc. is left to the exporter. If Bank's
advances are involved the same is to be recovered upfront. We can seek the assistance of the
local Indian Embassy in the Importer’s Country.
7.20.7 ADVANCE PAYMENT AGAINST EXPORTS
At times exporters receive part or full advance remittance from overseas importers.
If part remittance is received and exporter gives export documents only for balance
amount together with FIRC ensure that invoice is drawn for gross amount and advance
received is shown as deduction. After payment of the documents, certify GR form
making suitable notation for realisation of proceeds including the part advance
remittance received. Endorse the FIRC.
Even where full advance payment has been received, the exporter has to route the
documents through the branch for delivery to the importer free of payment. Branches
have to allot M number and note details in export bills register. Branches can certify
GR form after endorsing the FIRC as stated above and recover collection commission as
applicable to collection bill. Refer Para 2.2.15 of Chapter 2 – Exim Policy and FEMA
Provisions.
Branch has to ensure that
a. Inward remittance advice should normally contain details such as name and
address of the remitter, proforma invoice number to which the advance pertains to
etc.
b. Export documents should have been drawn on the remitter of advance payment.
72
c. If Inward Remittance advice does not contain details, branch has to call for
separate confirmation from the remitting bank /remitter furnishing details stated
in (a) above. If not received, beneficiary is to be asked to take up the matter with
the remitter for required details.
d. Beneficiary of Inward remittance and the exporter should be the same.
7.20.8. PAYMENT FOR EXPORT FROM NRE / FCNR ACCOUNTS
It is possible that importer is a NRI maintaining NRE / FCNR accounts in India.
As per FEMA regulations payment for exports can be made to the debit of NRE / FCNR
accounts.
Branches can accept such payments in respect of export bills handled by them
provided paying bank issues a certificate stating that payment is made by debit to a
NRE / FCNR account and confirms the NRI status of the account holder.
While certifying the GR / SDF / EDF / PP / SOFTEX form suitable notation to the effect
that payment has been received from NRE/FCNR account is to be made and copy of
certificate issued by the paying bank is to be enclosed with G R Form & retained at
Branch.
In the case of payment of export bill purchased/discounted to the debit of NRE a/c,
the FC amount should first be crystallised at TT selling rate, by reporting the notional
sale to Dealing Room of A category branch. The Rupee equivalent should thereafter be
debited to NRE a/c, as per authorisation. Short fall if any is to be recovered from the
exporter. If the crystallised Rupee amount is more than the FDBP /FUDBP amount, the
surplus is to be passed on to Dealing Room, as in the case of crystallisation. Besides,
commission in lieu of exchange @ 0.125% is to be separately recovered from the
exporter.
If the export bill is handled on collection basis, the FC amount is to be converted to Rupee
@ TT buying rate and Rupee equivalent is to be debited to NRE a/c as per authorisation.
Commission in lieu of exchange @ 0.125% is to be recovered from the exporter.
When certifying GR / SDF / EDF / PP/ SOFTEX form, branch has to ensure that the amount
declared therein is fully realised.
73
7.20.9. PAYMENT FOR EXPORTS IN THE FORM OF CURRENCY NOTES AND
TRAVELLERS CHEQUES, BANK DRAFTS, CHEQUES ETC.
As per exchange control regulations, authorised dealers can handle export documents
where exporter has received payment in the form of Foreign Currency Notes, FCTC,
DDs, cheques, etc. without any monetary limit provided :
a) exporter's track record is good
b) he is a customer of the Bank
c) prima-facie the instrument represents payment for exports.
Branches should not handle third party DDs / cheques.
FCTC should be those purchased by the importer and made payable to the
exporter.
FC should have been tendered to the exporter by the importer during his visit
to India. Documentary evidence such as passport photocopy (with visa pages
evidencing entry into India), letter from importer, Currency Declaration Form
etc. are also to be obtained. In the case of foreign currency notes exceeding
USD5000/ or its equivalent and/ or FCTC and currency notes exceeding USD
10,000/- or equivalent, the person who brings FCTC/FC Notes, should declare
the same in Currency Declaration Form (CDF). FC is to be surrendered by the
exporter to Authorised Dealers within 7 days from receipt thereof.
7.20.10 DELAY IN RELEASING PROCEEDS OF COLLECTION BILLS
Banks have to pay interest for delay in payment to exporter on the export bills sent for
collection as per following time limits for affording credit after receipt of credit advice /
statements from overseas bank :-
1. Where payment is to be effected 1 working day
in the same branch
2. Where payment is to be effected 2 working days
74
at the same centre but to another
branch of the same bank or another bank.
3. Where payment is to be effected 3 working days
to a branch of the same bank or
another bank at outstation centre
NOTE : Branches are advised to ensure that there is no delay in crediting the proceeds to
the exporter’s account on realisation of export bills sent for collection. In case of delay
beyond their control, the interest for such delayed period after the time schedule fixed
for the execution of payment as specified under FEDAI Rules being the minimum interest
rate charged on the export credit facility is invariably paid to the exporters without
waiting for such claims to be lodged by them.
If credit entries in Nostro account do not have full details, and if branch is not able to
apply the funds, matter is to be taken expeditiously with the correspondent bank for
obtaining necessary details. Any delay in follow up or lack of response from overseas
correspondent bank, may lead to interest claims. All such claims are to be dealt with on a
case to case basis and should be referred to IBD for instructions.
7.20.11 PRESENT HANDLING CHARGES / COMMISSION ON EXPORT BILLS
Charges / Commission to be recovered for various types of Foreign Exchange
transactions have been detailed in Instruction Circular No.9237 dt.27th March 2012.
7.10.12 GUARANTEE FOR DISCREPANT DOCUMENTS
A commission of 0.25% with minimum of Rs.250/ shall be charged for joining in the customers
guarantee/indemnity and for giving guarantee/indemnity on behalf of customers to other
banks for discrepancies in documents negotiated under LC.
Sr.
No.
Type of Transaction Charges Subsequent
Revision
75
1. For joining customer’s
guarantees/indemnities and giving
guarantees/indemnities on behalf of
customers in respect of discrepant
documents
0.25% with minimum
Rs.250/-
7.20.13. T. T.REIMBURSMENT UNDER LC
1) In case of bills where reimbursement is to be obtained by SWIFT/TT/TELEX (i.e.
where the reimbursing bank is other than the one where the negotiating bank
maintains its nostro Account), the authorised dealer will recover at the time of
negotiation transit period interest for 5 days and SWIFT/TT/TELEX charges from the
customer.
2) Where the negotiating bank is authorised to claim reimbursement by SWIFT/TT/TELEX
directly (i.e. where the reimbursing Bank maintains the negotiating bank’s Nostro
Account ) no interest will be charged to the customer. In case the reimbursement
instructions stipulate claiming of SWIFT/TT/TELEX/ reimbursement after a certain
period from the date of negotiation/despatch of documents, this additional period
shall be added to the permitted normal transit period for recovery of concessive rate
of interest for TT reimbursement.
3) In case of bill negotiated under a Letter of Credit and reimbursement claimed by
SWIFT/TELEX/TT from opening Bank, which arranges reimbursement through another
bank, interest for 5 days, shall be recovered from the customer. Overdue interest
shall be recovered at appropriate rate in case claim is not paid / honoured before the
expiry date of NTP.
76
7.20.14. BILLS DRAWN IN A CURRENCY IN WHICH OUR BANK DOES NOT MAINTAIN A
POSITION
At times clients may lodge export bills drawn in a non-position currency. Branches can accept
such bills and grant Rupee advances as per the following procedure:
Exchange risk will be borne by the exporter. He should agree to our realising the bill in
one of the foreign currencies in which we maintain position. Suitable undertaking to
the above effect is to be obtained. ( Ann No 7(19))
Rupee advance (FDBP in Rupee) is to be granted at provisional cross currency rate.
Interest for transit period to be recovered.
Bill is to be forwarded to correspondent bank with instructions to convert the proceeds
to the foreign currency of customer's choice at the rate prevailing on the date of such
conversion and to credit the same to concerned nostro account of A category branch.
On sighting credit in the nostro account, amount is to be credited at TT buying rate.
The advance already made is to be deducted and balance, if any, is to be released to
the exporter. Shortfall, if any, is to be recovered. Interest to be refunded/additional
interest to be collected depending upon the date of payment.
Alternatively the exporter can also instruct that the proceeds may be credited to the
nostro a/c. of any other bank operating in India and maintaining a position in the
concerned currency, who in turn will make the payment to us after conversion to
Indian Rupees. The consent/details of the nostro a/c. of that bank is to be obtained
before giving the instructions. Commission in lieu of exchange @ 0.125% is to be
levied.
7.20.15 WRITE OFF OF UNREALISED EXPORT BILLS
For exchange control regulation regarding Write off, please refer to Para No 2.2.38 of
Chapter 2 – Exim Policy and FEMA Guidelines.
Obtain request letter from the exporter in duplicate in Ann No 7(24) together with
documentary evidence .
Branch should satisfy that request for write off confirms to exchange control
regulations, that the exporter has taken reasonable steps for realisation of proceeds.
77
If the exporter has availed any post-shipment advance, the same is to be recovered.
before finally considering the write off.
The condition of obtaining controlling offices approval for write off is waived. Now AD
branches are empowered to consider write off of eligible overdue export bills.
Branch will certify the GR/PP forms by furnishing following certification.
‘Write off of ___________________________________(Amount in words and figures)
permitted in terms of FEMA Guidelines para C.18.
Date: Stamp/ Signature
Details are to be noted in Export bill Register and bill is to be rounded off. .
Approval and other documentary evidence furnished by the exporter to be kept along
with the folder and is to be preserved for 2 years or till verification by RBI auditors,
'which ever is later.
A yearly statement as of 31st December in form EBW,' giving particulars of bills
written off is to be submitted to RBI within 15 days from the close of the year.
7.20.16 GIFT PARCELS
At times customers may approach for issuance of certificates requesting for sending
gift parcels/ publicity materials. For Exchange Control Guidelines refer exceptions
given under Para 2.2.4 of Chapter 2 – Exim Policy and FEMA Guidelines. Branch should
obtain request letter as per Ann No 7(20) together with invoice / cash memo
representing cost of the gift article/ publicity material. After satisfying that the
transaction does not involve foreign exchange .' branch may issue certificate as per
format provided in Ann No 7(20).
7.20.17 SHIPMENTS LOST IN TRANSIT
When shipments from India for which payment has not been received either by
negotiation of bills under letters of credit or otherwise are lost in transit, the AD
Category I banks must ensure that insurance claim is made as soon as the loss is
known.
In cases where the claim is payable abroad, the AD Category - banks must arrange to
78
collect the full amount of claim due on the lost shipment, through the medium of
their overseas branch / correspondent and release the duplicate copy of EDF/SDF
form only after the amount has been collected.
A certificate for the amount of claim received should be furnished on the reverse of
the duplicate copy.
AD Category - I banks should ensure that amounts of claims on shipments lost in
transit which are partially settled directly by shipping companies/airlines under
carrier’s liability abroad are also repatriated to India by exporters.
7.20.18 ‘SET-OFF’ OF EXPORT RECEIVABLE AGAINST IMPORTS PAYABLE
Requests for set-off of export receivable against import payables may be permitted by the AD
Banks subject to :
Import is as per Foreign Trade Policy in force.
Invoices / BL / AWB and Exchange control copies of Bill of Entry for Home consumption
have been submitted
Payment for the import is still outstanding in the books of the importer
Both the transactions of sale and purchase to be reported separately in ‘R’ Return
The relative GR forms to be released only after the entire export proceeds are
adjusted / received
The ‘set-off’ of export receivable against import payments should be in respect of the
same overseas buyer and supplier and that consent for ‘set-off’ has been obtained
from him
The export / import transactions with ACU Countries should be kept outside the
arrangement
All the regulatory requirements relating to the transactions are to be complied by the
Authorised Dealer
7.20.19 BALANCING
FDBP and FUDBP balancing is to be done daily customer wise. However, billwise /
currency wise balancing is to be done once in a month.
In the case of collection bills monthly balancing is to be done both customer wise/ 'C'
category branch wise as well as billwise / currency wise.
79
7.21. Addendum
7.1.2. Period
The time limit for realization and repatriation of export proceeds has been reduced from
twelve months to nine months from the date of exports for all exports including Units in SEZs,
Status Holder Exporter’s, EOUs, Units in EHTPs, STPs and BTPs. The provision in regard to
period of realisation and repatriation to India of the full exports made to warehouses
established outside India remain unchanged, which is 15 months. (DFB & IFB CIR 6579 DT
24.11.2014):
80
ANNEXURE 7(1)
SPECIMEN OF UNDERTAKING TO BE OBTAINED FROM EXPORT
CUSTOMERS
From
To :
The Manager
_____________________Bank
Dear Sir,
As per the arrangements separately, I/We have with you, you have agreed to
purchase/negotiate/ discount/have been at our request purchasing/negotiating/discounting,
foreign currency export bills either under regular limits or under your discretionary powers, as
the case may be.
I/We hereby declare and agree to abide by and follow at all times the procedure laid down by
FEDAI for crystallisation of export bills and accordingly hereby authorise you to delink without
any further reference to me/us the foreign currency element from the export bills in case
they remain unpaid, within the time stipulated, according to the nature of the bills.
I/We hereby further authorise you in the case of bills remaining unpaid or for which you have
not received the communication regarding payment of amount/s of the bills for a period of 30
days after the transit period in case of demand bills and due date in case of usance bills, to
reverse from the 'Export bills purchased" portfolio on the 30th day and in case the 30th day
happens to be a holiday or Saturday, it shall be reversed on the next following working day
and the rate applicable to such reversal shall be the ready TT selling rate of exchange on the
date of such reversal and such conversions made from time to time shall be fully and
81
completely binding on me/us.
As and when bills are realised and advice of realisation either by cable or mail is received,
you are requested to apply the TT buying rate on that date and adjust my/our liabilities
against such bill so drawn from time to time and any shortfall/excess shall be recovered
from/paid to me/us in terms of the entries so passed by you in my/our account. However,
Bank will be at full liberty to recall the advance against such export bills at any time, without
waiting for actual realisation of the export bills. I/We undertake to repay the advance
forthwith on demand from the Bank, without delay or demur.
The above being the understanding already arrived at, I/We have had with you, the same is
put hereby on record.
Thanking you,
Yours faithfully,
82
ANNEXURE 7(2)
UNION BANK OF INDIA
_____________ BRANCH
PROCESS NOTE FOR EXPORT BILLS
EXPORT SECTION
SCRUTINY OF DOCUMENTS
Date :
RECEIVED FROM: M/S.
BILL FOR TENOR
LCNO. BANK FOR
DRAWINGS SO FAR LAST DATE OF SHIPMENT
LC. BAL. LAST DATE FOR NEGOTIATION
LIMIT RS. OUR BILL NO.
OUTSTANDING RS. OVERDUE RS.
DOCUMENTS
I Set II Set I Set II Set
B/E
Invoice
Packing List
83
Cert of Origin
BL / AWB
Insurance
DISCREPANCIES / OBSERVATIONS:
DOCUMENTS IN ONE/TWO LOTS Commission
Pls. Despatch by Cert. Charges
Regd. Air mail/courier Documents LC Comm.
presented within-days of transport doc Postages
and within LC validity Swift Charges
SPECIAL INSTRUCTIONS : REIMBURSEMENT INSTRUCTIONS IN THE LC
CHECKED BY
RECOMMENDED
MANAGER (EXPORTS)
SANCTIONED/DECLINED /PAY UNDER RESERVE
CHIEF MANAGER/BRANCH MANAGER
84
ANNEXURE 7(3)
________________________BRANCH DATE_____________
INDEMNITY FOR DISCREPANT EXPORT BILLS DRAWN UNDER LC
DEAR SIRS,
IN CONSIDERATION OF YOUR AGREEING TO NEGOTIATE OUR DOCUMENTARY BILL OF
EXCHANGE, YOUR NO. _________________ FOR ________________
DATED________________DRAWN ON _______ UNDER COMMERCIAL LETTER OF CREDIT NO.
______ ISSUED BY ______FOR ACCOUNT OF _____________________
WE HEREBY AUTHORIZE YOU TO INSTRUCT YOUR COLLECTING OFFICE, BRANCH,
CORRESPONDENT OR AGENT TO ISSUE ITS GUARANTEE OR OTHER INDEMNITY ON OUR
RESPONSIBILITY TO THE DRAWEE BANK IN ORDER TO SECURE ACCEPTANCE AND/OR PAYMENT
OF THE BILL NOTWITHSTANDING ANY DISCREPANCY OR DISCREPANCIES BETWEEN THE BILL
AND/OR THE RELATIVE SHIPPING DOCUMENTS AND THE TERMS OF THE COVERING COMMERCIAL
LETTER OF CREDIT INCLUDING THE FOLLOWING :-
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
__________________________________________________________________________
IN CONSIDERATION OF YOUR NEGOTIATING THE ABOVE CITED DRAFT AND DOCUMENTS AND
COMMUNICATING THE FOREGOING AUTHORITY TO ISSUE GUARANTEES AND/OR INDEMNITIES TO
THE DRAWEE BANK, WE THE DRAWERS AND/OR ENDORSERS HEREBY UNCONDITIONALLY AGREE
TO REIMBURSE YOU UPON DEMAND THE LOCAL CURRENCY EQUIVALENT OF THE AMOUNT OF
THE SAID BILL AS ALSO THE AMOUNT OR AGGREGATE AMOUNTS OF ALL CLAIMS INCLUDING
COSTS LEGAL OR OTHERWISE PAID BY YOUR COLLECTING BRANCH. THE CORRESPONDENT OR
85
AGENT OR WHICH YOUR COLLECTING BRANCH, OFFICE CORRESPONDENT OR AGENT MAY BE
CALLED UPON OR COMPELLED TO PAY IN CONNECTION WITH THE GUARANTEES AND/OR
INDEMNITIES GIVEN BY IT OR IN RELATION TO THE SAID BILL OR THE RELATIVE SHIPPING
DOCUMENTS AT YOUR PREVAILING RATE OF EXCHANGE AT TIME OF DEMAND FOR
REIMBURSEMENT, TOGETHER WITH INTEREST AT A RATE TO BE DETERMINED BY YOU, PLUS THE
AMOUNT OF ALL COSTS, CHARGES AND EXPENSES OF WHATSOEVER NATURE, INCURRED BY
YOU, YOUR COLLECTING BRANCH, OFFICE CORRESPONDENT OR AGENT IN CONNECTION WITH
THE SAID BILL OR THE SAID CLAIM OR CLAIMS. WE THE DRAWERS AND/OR ENDORSERS
EXPRESSLY AGREE THAT THE AMOUNT OF CLAIM AND/OR CLAIMS PAID BY YOU, YOUR
COLLECTING BRANCH, OFFICE, CORRESPONDENT OR AGENT IN CONNECTION WITH THIS BILL
WILL BE ACCEPTED BY US WITHOUT EQUIVOCATION, DISPUTE OR, DELAY AS CORRECT AND
JUST, AND WE HEREBY WAIVE ALL RIGHTS TO CONTEST THE AMOUNT OR NATURE OF
CLAIMS PAID UNDER SUCH GUARANTEES OR INDEMNITIES.
Rs.2/- REVENUE STAMP
____________________________________
AUTHORISED SIGNATURE OF EXPORTER
WE HEREBY GUARANTEE FULFILMENT OF THE CONDITIONS OF THE ABOVE UNDERTAKING OUR
GUARANTEEE IS NOT TO BE AFFECTED BY THE TIME OR INDULGENCE GRANTED TO THE PARTY
WHO HAS SIGNED THE ABOVE UNDERTAKING OR BY ANY ALTERATION OR VARIATION IN THE
TERMS OF THE SAID UNDERTAKING OR OF ANY BILL OF EXCHANGE OR DOCUMENT COVERED BY
IT.
OUR LIABILITY UNDER THIS GUARANTEE IS LIMITED TO
____________________________MONTHS FROM THE DATE HEREOF.
86
G.LNO._____________________
________________________________________________
AUATHORISED SIGNATURE OF THE GUARANTOR
F.E.596
87
ANNEXURE 7(4)
UNION BANK OF INDIA
__________________________________Branch
COVERING LETTER TO EXPORTER'S BANKER IN THE CASE OF LC RESTRICTED TO OUR BANK
FOR NEGOTIATION
Date :
Dear Sir,
Re. Bill [email protected]……………..
Under L/C No.....................................of......…………
Your Ref.....................................Our Ref.......………..
We refer to your drawer's letter dated ________________ enclosing above-referred shipping
documents. As desired by you/your customers, we advise having effected payment to you and
enclose our PO No._________________ dated ________________ for Rs.
________________arrived as follows :
This payment is being made to you under reserve on account of the under noted discrepancies
and also for any other discrepancies that may be pointed out by the opening Bank irrespective
of whether or not they have been pointed out by us.
88
Please note that payment is made to you on the strict understanding that :
1. If the foreign currency bill is paid after the normal transit period/notional due date, you
will pay us overdue interest for the delayed period, and/or any other charges incurred by
us and/or by our principals
2. Please note that the payment has been released to you with full recourse and we reserve
our right to recall the bill amount, interest and other charges should our claim be
dishonoured by the Credit Opening Bank for whatsoever reason. You will pay us without
demur on demand any charges that may be incurred by us during the course of realisation
of proceeds or any claim made by foreign bank in terms of Letter of Credit.
3. If the relative documents are not accepted by L/C Opening Bank for any reason whatsoever
in terms of Article 13 and 14 of the Uniform Customs and Practice for Documentary
Credits ICC Brochure No. 500, you will arrange to repay to us without demur on first
demand the amount of the bill at our T.T. selling rate ruling on the date of the refund
alongwith overdue interest and other charges as per R.B.I. Directives.
4. As per R.B.I. Directives W.E.F. 1-1-1984 Foreign Currency liability under the captioned bill
will be crystallised on the 30th day after expiry of Normal Transit period / due date in
case the proceeds are not credited to our NOSTRO account as per reimbursement
instruction,
5. We reserve, as a negotiating bank our right to recourse against you and the drawers.
6. We note to advise you when the RESERVE is lifted/indemnity is released. The L/C in
Original, Form-1 and invoice copies duly certified by us are enclosed with the duplicate
copy of this letter.
7. Please acknowledge receipt.
8. If these conditions are not acceptable to you, the enclosed cheque may be returned
immediately at your risk and responsibility.
Yours faithfully
MANAGER
89
ANNEXURE 7(5)
LETTER TO LC OPENING BANK FOR SEEKING PERMISSION TO NEGOTIATE DISCREPANT
EXPORT BILL
Date :
To : M/s.
Dear Sirs,
Your LC no.____________________________
dt. __________________for_______________
fvg.______________________
The beneficiaries of the captioned LC have submitted to us document
for____________________. On scrutinising the documents, we observe the following
discrepancies :
i)
ii)
iii)
iv)
90
v)
vi)
Kindly inform us whether we may negotiate the documents and claim reimbursement as per
LC terms, despite the discrepancies stated hereinabove. Your reply be sent to us by
authenticated SWIFT/tested telex.
MANAGER
CC. :
Pending receipt of instructions from LC opening bank the documents are held by us at
your risk and responsibility.
91
ANNEXURE 7(6)
LETTER TO EXPORTER REGARDING NON PAYMENT OF EXPORT BILL BY
LC OPENING BANK
Ref : FEX.EXP.REAL / Date :
Dear Sirs,
Our Bill ref. No. ………………………………. For ……………………………
Drawn on ………………………………………………………………………………
In respect of the above bill, we have now received a telex from LC issuing bank. pointing out
following discrepancies in the documents/informing us as under:
QUOTE :
UNQUOTE:
You are therefore, requested to take up the matter with your overseas buyers for immediate
settlement of the above bill. In the meantime, give us your disposal instructions in the
matter.
In the event, documents are finally refused by the LC openers, we shall look
to you for repayment of our advance at the TT selling rate ruling on the
date of repayment together with interest as applicable from time to time and
other charges.
92
Documents are refused by LC openers. We, therefore, call upon you to
Repay our advance at TT selling rate ruling on the date of repayment
together with interest as applicable from time to time and other charges.
Kindly expedite your reply.
Thanking you,
Yours faithfully,
MANAGER
93
ANNEXURE 7(7)
LETTER TO THE BANK TO WHOM EXPORT LC IS RESTRICTED REQUESTING FOR
NEGOTIATION OF EXPORT BILL
Ref : ……………………….. Date : ………………….
To,
_____________________Bank
_____________________
Dear Sirs,
Sub : Export Documents for _______________with GR/PP Form No. _________
Of M/s._____________________drawn under LC No._______________
dt. ____________ issued by ________________________________________
Our Ref. No.________________________
We present the captioned documents drawn under the above said LC as the negotiation is
restricted to your Bank/your Bank has added confirmation to the said LC. We request you to:
a) Negotiate the documents under the said LC
b) In case the Documents are discrepant, please permit the exporter to rectify the
discrepancies and to resubmit the documents within the presentation period.
Mr…………………………….representative of the exporter is authorised to rectify the
discrepancies. His signature is attested herein below :
c) Negotiate documents under reserve in case any discrepancy(ies) are observed, against the
indemnity to be executed by the exporter,
d) Remit the Rupee proceeds by way of DD in our favour payable at ___________
after deducting your charges and/or interest, as applicable.
OR
Remit the entire proceeds in foreign currency to our Nostro A/c. No. __________
With ____________________________________________ quoting our reference number
94
OR
Remit _______________% of proceeds to the credit of our Nostro A/c. No.______________
with __________________________towards EEFC component quoting our reference
number and the balance in Indian Rupees by DD in our favour payable
at_____________________
Yours faithfully,
for UNION BANK OF INDIA
MANAGER
Mr. …………………………….. will sign as
Signature Attested
(Bank Seal/Signature)
95
ANNEXURE 7(8)
BILL OF EXCHANGE FOR LODGING REIMBURSEMENT CLAIM UNDER LC
No. ________________ Dt. ________________
EXCHANGE FOR
___________________________________________ pay this First of Exchange
___________________(Second of the same tenor and date being unpaid) to the Order of
Union Bank of India, the sum of _________________________________
___________________________________________________________________
for value received and charge the same to the account of ______________________
___________________________________________________________________
For Union Bank of India
Accountant Manager To, _________________________ For Ex. Dept.
_________________________
_________________________
96
BILL OF EXCHANGE FOR LODGING REIMBURSEMENT CLAIM UNDER LC
No. ________________ Dt. ________________
EXCHANGE FOR
___________________________________________ pay this First of Exchange
___________________(First of the same tenor and date being unpaid) to the Order of
Union Bank of India, the sum of _________________________________
___________________________________________________________________
for value received and charge the same to the account of ______________________
___________________________________________________________________
For Union Bank of India
Accountant Manager To, _________________________ For Ex. Dept.
_________________________
_________________________
97
ANNEXURE 7(9)
UNION BANK OF INDIA
(Head Office : 239, Vidhan Bhavan Marg, Mumbai - 400 021)
Ref. : Date _____________20
The Manager,
________________
________________
Dear Sir,
We give below the particulars of bill/s negotiated by us, in respect of which we seek
reimbursement from your goodselves, in terms of the Letter of Credit.
Our Bill(s) No.(s) ___________________ Amount(s) _._________________________
Drawn under LC No. __________________________ of _________________________
We certify that the relative documents conform to terms to the subject credit (save in the
following respects),and they have been disposed of in accordance with the terms of the
credit.
Kindly favour us with the payment of ___________________________________ including
our charges __:_________________ in the manner indicated below, under advice to us.
( ) Credit account No. _________ of our Treasury Branch with you.
( ) Credit our account No. ______________________________ with you.
98
( ) Remit to ______________________ for credit of account No._________________ of our
Treasury Branch with them.
( ) Remit to ______________________ for credit of our account No. _____________ with
them.
Discrepancies:
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
99
ANNEXURE 7(10)
Date:
To
The Chief Manager
Union Bank of India
__________________ Branch
Dear Sir,
Request for sending the documents by Courier Service
We enjoy FDBP/FUDBP/FDBD/FUDBD/FBP limits with you and have been submitting
documents / clean instruments for purchase /discount / negotiation / collection. We
authorise you irrevocably to forward such documents / instruments to your overseas
correspondents by courier service entirely at our risk and responsibility. We shall not hold
your Bank responsible for delay / loss / damage / non-delivery etc. by the couriers or their
agents.
Thanking you,
Yours faithfully,
100
ANNEXURE 7(11)
UNION BANK OF INDIA
(Central Office : 239, Vidhan Bhavan Marg, Mumbai - 400 021)
Ref : ……………………………………… Dr……………………..
Dear Sirs,
Our ______________No.__________for_____________
Drawn on ___________________________________
Your Ref._______________________________________
With reference to the above bill, we have to report as follows :
It has been paid.
It has been accepted by the drawees to mature on ____
It remains unpaid / unaccepted for the following reason/s.
Please instruct.
Please arrange for payment/repayment immediately.
Yours faithfully,
FE-554 Accountant
101
ANNEXURE 7(12)
COVERING LETTER CUM PROCESSING SCHEDULE
Name of the Branch: __________________________ Tel. No………………………………………..
Fax. No……………………………………..
To The Chief Manager/Branch Manager
____________________________ Branch
We forward herewith the Export Bill alongwith the documents as mentioned in party's
forwarding schedule for collection / purchase / negotiation / discount
The particulars of the account and the Bill are furnished as under:
Name of the party __________________ Bill amount _________________________________
Limit sanctioned ____________________ Less EEFC ___________________________________
FDBP/FUDBP/AFDBC _______________ Less Agency commission/discount __________________
Present outstanding __________________ Net amount _________________________________
Overdue, if any ____________________
Tenor of the Bill - DP, __________ days DA, _____________ days DADP terms
Export L/C No. ________________Value _____________ Balance under L/C ________________
Last date for shipment ____________________ L/C Expiry date __________________________
Reimbursement Mode ______________________________________________________________
Whether contract / L/C enclosed - Yes / No
ECGC status : __________ Limit on Buyer ___________ 0/s on buyer as on date __________
Forward cover if any ______________________________________________________________
102
Discrepancies observed:
1.
2.
3.
4.
We request you to purchase / negotiate / discount the bill under reserve. We confirm that
Letter of Indemnity (FE 596) has been obtained and held on record.
Processing Officer/ Chief Manager / Branch Manager Credit-in-charge
For 'B' category branch Bill No.:
On scrutiny of documents following additional discrepancies are observed
1.
2.
3.
4.
Please arrange to get the discrepancies rectified or else confirm whether document to be
negotiated under reserve.
Processing Officer Forex-in-charge
Date: ________
103
‘C’ Category Branch
Please purchase / negotiate documents under reserve.
Date: CHIEF MANAGER
B Category Branch Processing for Reporting
Net Amount reported _________________ Reporting No. __________________
Exchange Rate obtained _______________ Reporting time _________________
NTP/NDD ______________________ Crystallisation due on _______________
Bill amount FC __________________ @ _________ Rs……………………………..
Less: i) int. ________________days @___________ Rs……………………………..
ii) Processing Charges Rs……………………………..
iii) Postages Rs……………………………..
iv) Swift charges Rs……………………………..
Net payable ==================
====================
POB/LB
Respond our Advice No. ______________ for Rs.____________________
towards our charges.
Date: ___________ Forex-in-charge
104
ANNEXURE 7(13)
UNION BANK OF INDIA
INTIMATION TO A CATEGORY BRANCH OF EARLY REALISATION OF USANCE EXPORT BILLS
Inter-Office Letter
From:
___________________________________
To: The Chief Manager
__________________Branch
Ref. No. Date:
Early realisation of export bill
Our ref. no._______________ dtd.________
The aforesaid export bill drawn at _____________was covered through your branch on
at the rate of ___________________________
As against maturity date of _________________ as per original tenor of the draft, the
payment is received by credit to your Nostro account on _________. We request you to
inform us the early delivery charges, if any to enable us to recover the amount from
the customers and send you our credit advice / authority cheque for the same.
In case of swap gain payable, please send us your credit advice.
MANAGER
105
ANNEXURE 7(14)
UNION BANK OF INDIA
FOLLOW UP LETTER FOR UNPAID EXPORT BILL
Ref : Date ……………………..
To : M/s………………………………………
….………………………………………..
……………….…………………………..
Dear Sirs,
Bill dt. ___________for Rs.___________
drawn on _________________________
Our ref.___________________________
The captioned documents which were purchased /discounted / negotiated by us on
_____________were due for payment on _________ and are still unpaid. You are, therefore,
requested to follow up the matter with your overseas buyer for immediate payment.
Since the documents are unpaid, you are requested to refund the amount of advance at TT
selling rate alongwith interest and other charges.
In terms of the prevailing FEDAI guidelines, the foreign currency liability of the unpaid bill is
crystallized into Indian Rupees on 30th day from NDD/NTP or on the following working day in
case of 30th day happens to be a holiday at the TT selling rate ruling on that day. The foreign
currency liability of the captioned bill will be crystallized on ________ , in case the payment
is not received till that day.
The foreign currency declared by you on GR form was required to be repatriated by Since the
documents are unpaid, you are requested to complete the enclosed ETX form and submit the
same to us together with necessary documentary evidence to enable us to forward it to RBI
and seek extension to the period for realisation of export bill.
Your's faithfully,
106
ANNEXURE 7(15)
Specimen of request Letter for reduction in value
From : ……………………………………….
……………………………………….
……………………………………….
To : Branch Manager,
Union Bank of India,
………………………………………..
Dear Sir,
Request for reduction in value of our Invoice
No. ________ dated _______ for __________
Bank reference _________________________
We write to inform you that M/s. ________________________________________ Importers
/alternate buyers have sought reduction in value in respect of our following exports.
1. Name and address of exporters
2. IEC Number allotted by DGFT
3. Name & address of Overseas importer/alternate Buyer.
4. Commodity exported
5. Quantity exported
6. Date of shipment
7. Distinctive Number of GR / SDF / EDF / SOFTEX /PP forms(s)
107
8. Invoice Value
9, Country of destination
10. Terms of payment DP/DA, under L/C etc.
11. Export Bill Reference Number of the Bank.
12. Amount of Reduction sought
13. Percentage of reduction sought to Invoice value.
14. Mode of Remittance (FDD/FTT etc.)
If Reduction sought exceeds 10% of invoice value.
15.a. Number of years in the export line
15.b. Export Performance during last three calendar years. (Auditors Certificate)
Calendar Value of Total Amount o/s. % of o/s to
Year Exports made Realisation beyond 6 months. Total Realisation
(1) (2) (3) (4) (5)
16. Reasons for seeking reduction in value
We hereby declare that
(i) Commodity exported under our invoice No. ________ dated________ were not articles
made out of gold or silver or those made out of cut and polished diamonds.
(ii) Reduction in value sought does not lead to realisation below the stipulated floor price for
108
above commodity exported.
(iii) We are not on exporters caution list of RBI.
(iv) We shall surrender proportionate export incentive availed by us.
To enable you to take a decision on our request, we enclose the following.
(i) Letter of request from Importer/alternate buyers for reduction in value.
(ii) Copy of Invoice No. _____________dated _____________for______________
(iii) Chartered Accountants Certificate regarding export performance of last three
calendar years.
Please note that we have not availed any advance against the subject export Bill/We
authorise you to debit our CD/CC a/c. No. ________ with Rupee equivalent of reduction
sought together with interest and other charges.
Thanking you,
Yours faithfully,
Place :
Date :
109
ANNEXURE 7(16)
Specimen Application Form for Remittance of Agency Commission.
From : ……………………………………………………….
………………………………………………………..
………………………………………………………..
To : Branch Manager,
Union Bank of India,
…………………………………………………………
Dear Sir,
Request for remittance of Agency Commission…………………. (State amount)
We request you to remit _______________________________________to M/s.
_____________________________________________ being commission payable in respect of
the following exports.
1. Name and address of the overseas agent
2. Particulars of exporter:
(i) Name of the exporting firm/company
(ii) Address in full
(iii) I EC No. allotted by DGFT
3. Full particulars of shipment(s) :
(a) Name and address of the overseas
buyer/ consignee
(b) Commodity
(c) Quantity
(d) Distinctive Number/s of GR / SDF / EDF / SOFTEX / PP form(s).
110
(e) Date of shipment
(f) Invoice value
(g) Country of destination
(h) Terms of payments (specify whether D/P, D/A OR L/C etc.)
4. (a) Percentage of Agency Commission
(b) Whether the Agency Commission has been declared in GR form(s);
if not, reasons for non declaration :
(c) Amount of Commission to be remitted.
(d) Mode of remittance by FDD/FTT, Details of bank
account of the agent in case FTT is to be sent.
To enable you to do the needful we enclose the following :
i) Copy of Invoice.
ii) Copies of GR / SDF / EDF / SOFTEX /PP form where amount of Commission is
declared.
iii) If not declared in GR (Copy of Agency Agreement or correspondence
exchanged regarding booking of export order and Commission payable.
v) Form A2 in duplicate.
We authorise you to debit our EEFC a/c. with you / debit the Rupee Equivalent to our CD/CC
a/c. No. ____________with you together with charges.
Thanking you,
Place : Yours faithfully,
Date :
(signature with seal)
111
ANNEXURE 7(17)
UNION BANK OF INDIA
LETTER TO 'A' CATEGORY BRANCH FURNISHING DETAILS OF DEBIT TO EEFC A/C
Inter-Office Letter
From:
___________________________________
To: The Chief Manager
__________________Branch
Ref. No. Dt :
Debit to the EEFC A/c.
At the request of the customer, we have today effected the following payment by debiting
our EEFC A/c.
Name of the customer :
Currency & amount of DD/TT/TTCs issued/ import bill retired. :
DD /TT No./ import Bill no :
Nostro account :
Cross Rate (if applicable) :
Reporting ref no./date :
We authorise you to debit our FC Settlement A/c. for the above amount and credit Mirror
A/c. of
DY MANAGER / MANAGER (FEX)
112
ANNEXURE 7(18)
Specimen Application for Remittance of Export Claims.
From : …………………………………………..
……………………………………………
…………………………………………….
To : Branch Manager,
Union Bank of India,
…………………………………………….
Dear Sir,
Request for remittance of Export claims.
We have received an export claim in respect of our exports to M/s.__________________
as per details given below :-
1. Particulars of exporter:
(i)Name of the exporting
firm/company
(ii) Address in full
(iii) IEC No. allotted by DGFT
2. Full particulars of shipment:
(a) Name and address of the
overseas buyer/ consignee
(b) Commodity
(c) Quantity
(d) Distinctive Number/s of GR/PP
forms(s)
(e) Date of shipment
(f) Invoice value
(g) Country of destination
(h) Terms of payments (specify
113
whether D/P, D/A OR UC etc)
(i) Bill Reference No. of the Bank
3.(a) Date of Realisation of export
proceeds.
(b) Reasons for the Claim, whether
supported by documentary
evidence
(c) Amount of the Claim
(d) Percentage of © on invoice value
of the relative export bill
(e) Mode of remittance by FDD/FTT.
Details of beneficiary’s bank A/c.
in case of FTT
4. export performance during last 3
years (to be completed in case
percentage under 3 (d) above
exceeds 15%) duly certified by
chartered Accountant of the
Applicant.
Calendar
year
Value
Of
export
Total
Reali-
sation
Amount
O/S
Beyond
6 months
Rs. Rs. Rs. Rs.
We request you to remit the above amount by FDD/FTT and debit our EEFC a/c. or the Rupee
equivalent to our CD/CC a/c. No. __ with you together with your charges. To enable you to
do the needful, we enclose the following :
i. Claim letter from M/s. ________________________________________(buyer).
ii. Chartered Accountants Certificate regarding last three years exports made, amounts
realised and amount outstanding beyond 6 months.(if claim amount exceeds 10%)
114
iii) Copy of invoice/GR / SDF / EDFC / SOFTEX /PP form.
iv) Form A2 in duplicate.
We also undertake to surrender export incentive, if any, availed by us.
Thanking you,
Yours faithfully,
Place :
Date :
(Signature with Seal)
115
ANNEXURE 7(19)
Request letter to make a Rupee Advance
against a bill drawn In 'Non-Position' Currency
From : ………………………………………….. Place:
………………………………………….. Date:
……………………………………………
To : The Manager,
Union Bank of India,
……………………………………………
Dear Sir,
Request for rupee advance against our export bill
no.....................dt..................for………………………….
We understand that you are not in a position to purchase/discount our above bill since your
Bank is not maintaining position in the currency in which our above bill is drawn. Hence, we
request you to grant a rupee advance to us against the above bill. Further, we request and
authorise you to receive the payment in ....... (Name here any position currency of choice
of the customer in which the payment is to be received) and agree to accept the Rupee
equivalent thereof at the rate prevailing on the date of adjustment of the bill by you. We also
authorise you to deduct the amount of rupee advance made by you alongwith interest and
other charges from the proceeds of the bill. In the event the proceeds of our bill falling short
of the amount of rupee advance made by you, we authorise you to debit our account with
such amount. We further declare that the rupee advance is made at our risk and
responsibility and we undertake to bear exchange risks,
Yours faithfully,
Authorised signatory
116
ANNEXURE 7(20)
Draft Application to be obtained from Exporter Seeking Permission
to Write off Unrealised Export Dues
From : ………………………………………….. Place:
………………………………………….. Date:
……………………………………………
To : The Manager,
Union Bank of India,
……………………………………………
Dear Sir,
Request for Write Off of Export Bills
I/We hereby request you to permit us to write off the export dues as mentioned below, as we
could not realise the same despite our best efforts.
1. Name and address of the exporter.
2. IEC Number allotted by DGFT
3. GR Form No.
4. Customs Serial No.
5. Date of shipment
6. Name/address of the Overseas Buyer
7. Invoice value
8. Terms of payment (DP/DA under LC etc)
117
9. If usance bill, was it accepted by Drawee/Non-payment, protested. If
drawn under LC, reasons for non payment by issuing bank.
10. Amount realized
11. Amount of write off sought.
12. Export proceeds realised during the previous
calendar year through Union Bank of India.
13. a) Aggregate write off permitted earlier during
the calendar year.
b) Percentage of write off already approved (to
export realisation during previous calendar
year through us.)
14. Reasons for non realisation.
15. Steps taken for realisation.
16. Export Bill Reference No. of the Bank.
17. If present write off Request is granted, percentage of
total write off during the calendar year to previous
calendar years actual export realisation through us.
We furnish herewith the following documentary evidence to substantiate our request.
(i) Certificate of insolvency of the Buyer issued by official liquidator.
(ii) Certificate issued by Indian High Commission etc. that the Buyer is not traceable.
(iii) Certificate issued by Port/Customs/Health authority that goods have been
Destroyed / auctioned.
(iv) Estimate of cost of legal action issued by overseas solicitors, which is
disproportionate to amount unrealised.
(v) Any other documentary evidence as may be available / necessary in terms of Exchange
118
Control Regulations. (Please specify).
We further undertake to surrender relative export incentives received in connection with this
shipment to the authorities/agencies concerned. We also declare that the above export bills
are not subject matter of civil/criminal suit and that there are no cases against us by CBI,
Enforcement Directorate and such other agencies.
Thanking you,
Place : Yours faithfully,
Date :
(Signature with seal)
Space for branch use
M/s. _________________________________________ enjoy following limits with us.
Nature Limit Outstandings Overdue if any
Packing Credit
FDP/FUDBP
We certify that
i) The details as mentioned above by the exporter are correct.
ii) All the conditions as per relevant Exchange Control Regulation have been
complied with.
iii) Preshipment / post shipment finance against the relative shipment is recovered alongwith
interest and necessary charges.
iv) Their dealings with us are satisfactory.
119
We recommend for approval of write off the unrealised export dues by exporter.
For UNION BANK OF INDIA
Branch :
Date :
Dy. Manager/Manager(Forex)/Chief Manager
Space for Approving Authority
Write off of GR forms as detailed above approved.
For UNION BANK OF INDIA
Asst. General/Deputy General Manager