RBI/FED/2016-17/12

FED Master Direction No. 17/2016-17 January 1, 2016

(Updated as on March 01, 2024)
(Updated as on November 21, 2022)
(Updated as on May 31, 2022)
(Updated as on January 06, 2022)
(Updated as on December 07, 2021)
(Updated as on October 28, 2020)
(Updated as on January 27, 2020)
(Updated as on April 01, 2019)
(Updated as on February 02, 2018)
(Updated as on January 12, 2017)
(Updated as on October 20, 2016)
(Updated as on March 31, 2016)
(Updated as on February 04, 2016)
To

All Authorised Dealer Category – I banks and Authorised Banks

Madam / Dear Sir,

Master Direction – Import of Goods and Services

Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign
Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E)
dated May 3, 2000 viz. Foreign Exchange Management (Current Account Transaction)
Rules, 2000. These Regulations are amended from time to time to incorporate the changes
in the regulatory framework and published through amendment notifications.

2. Within the contours of the Regulations, Reserve Bank of India also issues directions to
Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA),
1999. These directions lay down the modalities as to how the foreign exchange business
has to be conducted by the Authorised Persons with their customers/constituents with a view
to implementing the regulations framed.

3. Instructions issued on import of goods and services into India have been compiled in this
Master Direction. The list of underlying circulars/ notifications which form the basis of this
Master Direction is furnished in the Appendix. Reporting instructions can be found in Master
Direction on reporting (Master Direction No. 18 dated January 01, 2016).
4. It may be noted that, whenever necessary, Reserve Bank shall issue directions to
Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the
Regulations or the manner in which relative transactions are to be conducted by the
Authorised Persons with their customers/ constituents. The Master Direction issued herewith
shall be amended suitably simultaneously.

Yours faithfully,

(Puneet Pancholy)
Chief General Manager

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 INDEX
Section I - Introduction
Section II - General Guidelines for imports
B.1. General Guidelines
B.2. Remittances for Import Payments
B.3. Import Licenses
B.4. Obligation of Purchaser of Foreign Exchange
B.5. Time Limit for Settlement of Import Payments
B.6. Import of Foreign exchange / Indian Rupees
B.7. Third Party Payment for Import Transactions
B.8. Issue of Guarantees by an Authorised Dealer
Section III - Operational Guidelines for Imports
C.1. Advance Remittance
C.2. Interest on Import Bills
C.3. Remittances against Replacement Imports
C.4. Guarantee for Replacement Import
C.5. Import of Equipment by Business Process Outsourcing (BPO)
Companies for their overseas sites
C.6. Receipt of Import Bills/Documents by the Importer Directly
from Overseas Suppliers
C.7. Evidence of Import
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C.8. Import Data Processing and Monitoring System
C.9. Verification and Preservation
C.10. Follow up for Import Evidence
C.11. Import of Gold
C.12. Import of Other Precious Metals
C.13. Import Factoring
C.14. Merchanting Trade
C.15. Import Payments through Online Payment Gateway Service
Providers
2
C. 16 Settlement of Import transactions in currencies not having a
direct exchange rate
Consolidated List of Circulars in the Master Direction

1
Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016 prior to modification it read as ‘’Issue of acknowledgement”
2 Inserted vide AP (DIR) Series Circular 42 dated February 4, 2016

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 Master Direction 17 – Import of Goods and Services

Section I - Introduction

(i) Import trade is regulated by the Directorate General of Foreign Trade (DGFT)
under the Ministry of Commerce & Industry, Department of Commerce, Government
of India. Authorised Dealer Category – I (AD Category – I) banks should ensure that
the imports into India are in conformity with the Foreign Trade Policy in force and
Foreign Exchange Management (Current Account Transactions) Rules, 2000
framed by the Government of India vide Notification No. G.S.R.381 (E) dated May
3, 2000 and the Directions issued by Reserve Bank under Foreign Exchange
Management Act, 1999 from time to time.

(ii) AD Category – I banks should follow normal banking procedures and adhere to
the provisions of Uniform Customs and Practices for Documentary Credits
(UCPDC), etc. while opening letters of credit for import into India on behalf of their
constituents.

(iii) Compliance with the provisions of Research & Development Cess Act, 1986
may be ensured for import of drawings and designs.

(iv) AD Category – I banks may also advise importers to ensure compliance with the
provisions of Income Tax Act, wherever applicable.

(v) Any reference to the Reserve Bank should first be made to the Regional Office
of the Foreign Exchange Department situated in the jurisdiction where the applicant
person resides, or the firm / company functions, unless otherwise indicated. If, for
any particular reason, they desire to deal with a different office of the Foreign
Exchange Department, they may approach the Regional Office of its jurisdiction for
necessary approval.

Section II - General Guidelines for Imports

B.1. General Guidelines

Rules and regulations to be followed by the AD Category – I banks from the foreign
exchange angle while undertaking import payment transactions on behalf of their
clients are set out in the following paragraphs. Where specific regulations do not

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exist, AD Category – I banks may be governed by normal trade practices. AD
Category – I banks may particularly note to adhere to "Know Your Customer" (KYC)
guidelines issued by Reserve Bank (Department of Banking Regulation) in all their
dealings.

B.2. Remittances for Import Payments

AD Category I Banks may allow remittance for making payments for imports into
India, after ensuring that all the requisite details are made available by the importer
and the remittance is for bona fide trade transactions as per applicable laws in
force.

B.3. Import Licences

Except for goods included in the negative list which require licence under the
Foreign Trade Policy in force, AD Category - I banks may freely open letters of
credit and allow remittances for import. While opening letters of credit, the ‘For
Exchange Control purposes’ copy of the licence should be called for and adherence
to special conditions, if any, attached to such licences should be ensured. After
effecting remittances under the licence, AD Category - I banks may preserve the
copies of utilised licence /s till they are verified by the internal auditors or inspectors.

B.4. Obligation of Purchaser of Foreign Exchange

(i) In terms of Section 10(6) of the Foreign Exchange Management Act, 1999
(FEMA), any person acquiring foreign exchange is permitted to use it either for the
purpose mentioned in the declaration made by him to an Authorised Dealer
Category – I bank under Section 10(5) of the Act or for any other purpose for which
acquisition of foreign exchange is permissible under the said Act or Rules or
Regulations framed there under.

(ii) Where foreign exchange acquired has been utilised for import of goods into
India, the AD Category – I bank should ensure that the importer furnishes evidence
of import viz., 3as in IDPMS as explained in para C.7, Postal Appraisal Form or
Customs Assessment Certificate, etc., and satisfy himself that goods equivalent to

3Modified vide AP DIR Series Circular No. 27 dated January 12, 2017 prior to modification it read as “Exchange Control
Copy of the Bill of Entry”

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 the value of remittance have been imported. 4AD bank should ensure that all import
remittances outstanding on the notified date of IDPMS are uploaded in IDPMS.
5
(iii) Notwithstanding anything contained in the Manner of Payment in foreign
Exchange (FEMA 14R/2016-RB dated May 02, 2016), a person resident in India
may make payment for import of goods in foreign exchange through an international
card held by him/in rupees from international credit card/ debit card through the
credit/debit card servicing bank in India against the charge slip signed by the
importer or as prescribed by Reserve Bank from time to time ,provided that the
transaction is in conformity with the extant provisions and the import is in conformity
with the Foreign Trade Policy in force.

(iv) Any person resident in India may also make payment as under:

(a) In rupees towards meeting expenses on account of boarding, lodging and

services related thereto or travel to and from and within India of a person resident
outside India who is on a visit to India;

(b) By means of a crossed cheque or a draft as consideration for purchase of

gold or silver in any form imported by such person in accordance with the terms and
conditions imposed under any order issued by the Central Government under the
Foreign Trade (Development and Regulations) Act, 1992 or under any other law,
rules or regulations for the time being in force;

(c) A company or resident in India may make payment in rupees to its non-
whole time director who is resident outside India and is on a visit to India for the
company’s work and is entitled to payment of sitting fees or commission or
remuneration, and travel expenses to and from and within India, in accordance with
the provisions contained in the company’s Memorandum of Association or Articles
of Association or in any agreement entered into it or in any resolution passed by the
company in general meeting or by its Board of Directors, provided the requirement

4
Inserted vide AP DIR Series circular No.5 dated October 06, 2016
5 Modified vide AP DIR Series circular No.11 [(1)/14(R)] dated October 20, 2016 prior to modification it read as “In addition
to the permitted methods of payment for imports laid down in Notification No.FEMA14/2000-RB dated 3rd May 2000,
payment for import can also be made by way of credit to non-resident account of the overseas exporter maintained with a bank
in India. In such cases also AD Category – I banks should ensure compliance with the instructions contained in sub-paragraphs
(i) and (ii) above.”

5
 of any law, rules, regulations, directions applicable for making such payments are
duly complied with.

B.5. Time Limit for Settlement of Import Payments

B.5.1. Time limit for Normal Imports

(i) In terms of the extant regulations, remittances against imports should be

completed not later than six months from the date of shipment, except in cases
where amounts are withheld towards guarantee of performance, etc. 6Further, in
view of the disruptions due to outbreak of COVID-19 pandemic, with effect from May
22, 2020, the time period for completion of remittances against normal imports
(except in cases where amounts are withheld towards guarantee of performance
etc.) has been extended from six months to twelve months from the date of
shipment for such imports made on or before July 31, 2020.

(ii) AD Category – I banks may permit settlement of import dues delayed due to
disputes, financial difficulties, etc. However, interest if any, on such delayed
payments, usance bills or overdue interest is payable only for a period of up to
three years from the date of shipment and may be permitted in terms of the
directions in para C.2 of Section III below.

B.5.2. Time Limit for Deferred Payment Arrangements

Any deferred payment arrangements (including suppliers’ and buyers’ credit) entered
into, for up to three years in case of import of capital goods and up to one year or the
operating cycle whichever is less, in case of import of non-capital goods, shall be
treated as trade credits for which the procedural guidelines as laid down in the Master
Direction on External Commercial Borrowings, Trade Credits and Structured
Obligations (updated from time to time) may be followed.7

6 Inserted vide AP DIR Series Circular No.33 dated May 22, 2020
7 Modified. Prior to modification it read as “Deferred payment arrangements (including suppliers’ and buyers’ credit) upto
five years, are treated as trade credits for which the procedural guidelines as laid down in the Master Circular for External
Commercial Borrowings and Trade Credits may be followed.”

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 B.5.3. Time Limit for Import of Books

Remittances against import of books may be allowed without restriction as to the

time limit, provided, interest payment, if any, is as per the instructions in para C.2 of
Section III of this Circular.
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B.5.4 Extension of Time
(i) AD Category – I banks can consider granting extension of time for settlement of
import dues up to a period of six months at a time (maximum up to the period of
three years) irrespective of the invoice value for delays on account of disputes
about quantity or quality or non-fulfilment of terms of contract; financial difficulties
and cases where importer has filed suit against the seller. In cases where sector
specific guidelines have been issued by Reserve Bank of India for extension of time
(i.e. rough, cut and polished diamonds), the same will be applicable.

(ii) While granting extension of time, AD Category –I banks must ensure that:
a. The import transactions covered by the invoices are not under investigation
by Directorate of Enforcement / Central Bureau of Investigation or other
investigating agencies;
b. While considering extension beyond one year from the date of remittance9,
the total outstanding of the importer does not exceed USD one million or 10
per cent of the average import remittances during the preceding two financial
years, whichever is lower; and

c. Where extension of time has been granted by the AD Category – I banks, the
date up to which extension has been granted may be indicated in the
‘Remarks’ column.

(iii) Cases not covered by the above instructions / beyond the above limits, may be
referred to the concerned Regional Office of Reserve Bank of India.
10
(iv) The above shall be reported in IDPMS as per message “Bill of Entry
Extension” and the date up to which extension is granted will be indicated in
“Extension Date” column.

8 Inserted vide AP DIR Series circular No.65 dated April 28, 2016
9 Clarification: may be considered as date of shipment
10 Inserted vide AP DIR Series circular No.05 dated October 06, 2016

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B.6. Import of Foreign Exchange / Indian Rupees

(i) Except as otherwise provided in the Regulations, no person shall, without the
general or special permission of the Reserve Bank, import or bring into India, any
foreign currency. Import of foreign currency, including cheques, is governed by
Foreign Exchange Management (Export and Import of Currency) Regulations 2000,
11
issued by Reserve Bank vide Notification No. FEMA 6(R)/2015-RB dated
December 29, 2015, as amended from time to time.

(ii) Reserve Bank may allow a person to bring into India currency notes of
Government of India and / or of Reserve Bank subject to such terms and conditions
as the Reserve Bank may stipulate.

B.6.1. Import of Foreign Exchange into India

A person may–

(i) Send into India, without limit, foreign exchange in any form other than currency
notes, bank notes and travellers cheques;

(ii) Bring into India from any place outside India, without limit, foreign exchange
(other than unissued notes), subject to the condition that such person makes, on
arrival in India, a declaration to the Custom Authorities at the Airport in the Currency
Declaration Form (CDF) annexed to these Regulations; provided further that it shall
not be necessary to make such declaration where the aggregate value of the
foreign exchange in the form of currency notes, bank notes or travellers cheques
brought in by such person at any one time does not exceed USD 10,000 (US
Dollars ten thousand) or its equivalent and/or the aggregate value of foreign
currency notes (cash portion) alone brought in by such person at any one time does
not exceed USD 5,000 (US Dollars five thousand) or its equivalent.

B.6.2. Import of Indian Currency and Currency Notes

(i) Any person resident in India who had gone out of India on a temporary visit, may
bring into India at the time of his return from any place outside India (other than
from Nepal and Bhutan), currency notes of Government of India and Reserve Bank

11Modified vide Notification No.6(R)/2015-RB prior to modification it read as “Notification No. FEMA 6/2000-RB dated
May 3, 2000”

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of India notes up to an amount not exceeding Rs.25,000 (Rupees twenty five
thousand only).

(ii) A person may bring into India from Nepal or Bhutan, currency notes of
Government of India and Reserve Bank of India for any amount in denominations
up to Rs.100/-.

B.7. Third Party Payment for Import Transactions

AD category I banks are allowed to make payments to a third party for import of
goods, subject to conditions as under:
a. Firm irrevocable purchase order / tripartite agreement should be in place.
However this requirement may not be insisted upon in case where
documentary evidence for circumstances leading to third party payments /
name of the third party being mentioned in the irrevocable order / invoice has
been produced.
b. AD bank should be satisfied with the bonafides of the transactions and
should consider the Financial Action Task Force (FATF) Statement before
handling the transactions;
c. The Invoice should contain a narration that the related payment has to be
made to the (named) third party;
d. Bill of Entry should mention the name of the shipper as also the narration that
the related payment has to be made to the (named) third party;
e. Importer should comply with the related extant instructions relating to imports
including those on advance payment being made for import of goods.

B.8. Issue of Guarantees by an Authorised Dealer

B.8.1 An authorised dealer may give a guarantee in respect of any debt, obligation
or other liability incurred by a person resident in India and owned to a person
resident outside India, as an importer, in respect of import on deferred payment
terms in accordance with the approval by the Reserve Bank of India for import on
such terms.

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B.8.2 An authorised dealer may give guarantee, Letter of Undertaking of Letter of
Comfort in respect of any debt, obligation or other liability incurred by a person
resident in India and owned to a person resident outside India (being an overseas
supplier of goods, bank or a financial institution), for import of goods, as permitted
under the Foreign Trade Policy announced by Government of India from time to
time and subject to such terms and conditions as may be specified by Reserve
Bank of India from time to time.

B.8.3 An authorised dealer may, in the ordinary course of his business, give a
guarantee in favour of a non-resident service provider, on behalf of a resident
customer who is a service importer, subject to such terms and conditions as
stipulated by Reserve Bank of India from time to time:

Provided that no guarantee for an amount exceeding USD 500,000 or its

equivalent shall be issued on behalf of a service importer other than a Public Sector
Company or a Department / Undertaking of the Government of India / State
Government:

Provided further that where the service importer is a Public Sector Company or a
Department / Undertaking of the Government of India / State Government, no
guarantee for an amount exceeding USD 100,000 or its equivalent shall be issued
without the prior approval of the Ministry of Finance, Government of India.

B.8.4 An authorised dealer may, subject to the directions issued by the Reserve
Bank of India in this behalf, permit a person resident in India to issue corporate
guarantee in favour of an overseas lessor for financing import through operating
lease effected in conformity with the Foreign Trade Policy in force and under the
provisions of the Foreign exchange Management (Current Account Transactions)
Rules, 2000 framed by the Government of India vide Notification No. G. S. R. 381
(E) dated May 3, 2000 and the Directions issued by Reserve Bank of India under
Foreign Exchange Management Act, 1999 from time to time.

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Section III - Operational Guidelines for Imports

C.1. Advance Remittance

C.1.1. Advance Remittance for Import of Goods

(i) AD Category – I bank may allow advance remittance for import of goods without
any ceiling subject to the following conditions:

(a) If the amount of advance remittance exceeds USD 200,000 or its equivalent, an
unconditional, irrevocable standby Letter of Credit or a guarantee from an
international bank of repute situated outside India or a guarantee of an AD Category
– I bank in India, if such a guarantee is issued against the counter-guarantee of an
international bank of repute situated outside India, is obtained.

(b) In cases where the importer (other than a Public Sector Company or a
Department/Undertaking of the Government of India/State Government/s) is unable
to obtain bank guarantee from overseas suppliers and the AD Category – I bank is
satisfied about the track record and bonafides of the importer, the requirement of
the bank guarantee / standby Letter of Credit may not be insisted upon for advance
remittances up to USD 5,000,000 (US Dollar five million). AD Category – I banks
may frame their own internal guidelines to deal with such cases as per a suitable
policy framed by the bank's Board of Directors.

(c) A Public Sector Company or a Department/Undertaking of the Government of

India / State Government/s which is not in a position to obtain a guarantee from an
international bank of repute against an advance payment, is required to obtain a
specific waiver for the bank guarantee from the Ministry of Finance, Government of
India before making advance remittance exceeding USD 100,000.

(ii) All payments towards advance remittance for imports shall be subject to the
12
specified conditions and AD banks are required to create Outward Remittance
Message (ORM) for all such outward remittances in IDPMS & follow other extant
IDPMS guidelines.

12 Inserted vide AP (DIR Series) Circular dated No.5 dated October 06, 2016

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C.1.2. Advance Remittance for Import of Rough Diamonds
a) AD category – I banks are permitted to take decision on overseas mining
companies to whom an importer (other than Public Sector Company or Department
/ Undertaking of Government of India / State Government) can make advance
payments, without any limit / bank guarantee/ stand-by letter of Credit. Banks must
ensure the following:
i. The overseas mining company should have the recommendation of GJEPC.
ii. The importer should be a recognised processor of rough diamonds and should
have a good track record.
iii. AD Category - I banks should, undertake the transaction based on their
commercial judgment and after being satisfied about the bonafides of the
transaction.
iv. Advance payments should be made strictly as per the terms of the sale contract
and should be made directly to the account of the company concerned, that is, to
the ultimate beneficiary and not through numbered accounts or otherwise and AD
banks should ensure that they have created the Outward Remittance Message
(ORM) for all such outward remittances in IDPMS.

v. Further, due caution may be exercised to ensure that remittance is not permitted
for import of conflict diamonds (Kimberly Certification).

vi. KYC and due diligence exercise should be done by the AD Category - I banks as
per the existing guidelines.

vii. AD Category - I banks should follow-up submission of the Bill of Entry /

documents evidencing import of rough diamonds into the country by the importer, in
terms of the Act / Rules / Regulations / Directions issued in this regard.

b) In case of an importer entity in the Public Sector or a Department / Undertaking

of the Government of India / State Government/s, AD Category - I banks may permit
the advance remittance subject to the above conditions and a specific waiver of
bank guarantee from the Ministry of Finance, Government of India, where the
advance payments is equivalent to or exceeds USD 100,000/- (USD one hundred
thousand only).

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13
viii. Based on the AD code declared by the importer, the banks shall download the
Bill of Entry (BOE) issued by EDI ports from “BOE Master” in IDPMS. For non-EDI
ports, AD banks of the importer shall upload the BoE data in IDPMS as per
message format “Manual BoE reporting” on daily basis on receipt of BoE from the
customer/Customs Office.

ix. AD banks will enter BOE details and mark off ORMs as per the message format
“BOE Settlement”

x. In case of payment after receipt of BoE, the AD bank shall generate ORM for
import payments made by the importer customer as per the message format “BOE
Settlement”

xi. Multiple ORMs can be settled against single BoE and also multiple BoEs can be
settled against one ORM.

C.1.3. Advance Remittance for Import of Aircrafts/Helicopters and other Aviation

Related Purchases

1. As a sector specific measure, entities which have been permitted under the
extant Foreign Trade Policy to import aircrafts and helicopters (including used /
second hand aircraft and helicopters) or any other person who has been granted
permission by the Directorate General of Civil Aviation (DGCA) to operate
Scheduled or Non-Scheduled Air Transport Service (including Air Taxi Services),
can make advance remittance without bank guarantee or an unconditional,
irrevocable Standby Letter of Credit, up to USD 50 million. Accordingly, AD
Category – I banks may allow advance remittance, without obtaining a bank
guarantee or an unconditional, irrevocable Standby Letter of Credit, up to USD 50
million, for direct import of each aircraft, helicopter and other aviation related
purchases.

2. Importers of Aircrafts/ Helicopters and other Aviation related Purchases, not

eligible under clause (1) above can make advance remittance without bank
guarantee, in terms of Para C.1.1 above.

13 Point viii to xi. Inserted vide AP (DIR Series) Circular No.5 dated October 06, 2016

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3. The remittances for the transactions at 1 and 2 above shall be subject to the
following conditions:

i. The AD Category - I banks should undertake the transactions based on their

commercial judgment and after being satisfied about the bonafide of the
transactions. KYC and due diligence exercise should be done by the AD Category-I
banks for the Indian importer entity and the overseas manufacturer company as
well.

ii. Advance payments should be made strictly as per the terms of the sale contract
and directly to the account of the manufacturer (supplier) concerned.

iii. AD Category - I banks may frame their own internal guidelines to deal with such
cases, with the approval of their Board of Directors.

iv. In the case of a Public Sector Company or a Department / Undertaking of Central

/State Governments, the AD Category - I bank shall ensure that the requirement of
bank guarantee has been specifically waived by the Ministry of Finance,
Government of India for advance remittances exceeding USD 100,000.

v. Physical import of goods into India is made within six months (three years in case
of capital goods) from the date of remittance and the importer gives an undertaking
to furnish documentary evidence of import within fifteen days from the close of the
relevant period. It is clarified that where advance is paid as milestone payments, the
date of last remittance made in terms of the contract will be reckoned for the
purpose of submission of documentary evidence of import.

vi. Prior to making the remittance, the AD Category – I bank may ensure that the
requisite in principle approval of the Ministry of Civil Aviation in case of Scheduled
Air Service Operators and in other cases approval of the Director General of Civil
Aviation / other agencies in terms of the extant Foreign Trade Policy has been
obtained by the company, for import.

vii. In the event of non-import of aircraft and aviation sector related products, AD
Category - I bank should ensure that the amount of advance remittance is
immediately repatriated to India.

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 Prior approval of the concerned Regional Office of the Reserve Bank will be
required in case of any deviation from the above stipulations.
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viii. Concerned AD Category I banks to ensure generation of ORMs, BoE entries
and BoE settlement with the respective ORMs etc. as per extant IDPMS guidelines.

C.1.4. Advance Remittance for the Import of Services

AD Category – I bank may allow advance remittance for import of services without
any ceiling subject to the following conditions:

(a) Where the amount of advance exceeds USD 500,000 or its equivalent, a
guarantee from a bank of international repute situated outside India, or a guarantee
from an AD Category – I bank in India, if such a guarantee is issued against the
counter-guarantee of a bank of international repute situated outside India, should be
obtained from the overseas beneficiary.

(b) In the case of a Public Sector Company or a Department/ Undertaking of the

Government of India/ State Governments, approval from the Ministry of Finance,
Government of India for advance remittance for import of services without bank
guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or
its equivalent would be required.

(c) AD Category – I banks should also follow-up to ensure that the beneficiary of the
advance remittance fulfils his obligation under the contract or agreement with the
remitter in India, failing which, the amount should be repatriated to India.

(d) AD Category – I banks should ensure generation of ORMs and marking off in
15

the IDPMS etc., as per extant IDPMS guidelines.

C.2. Interest on Import Bills

(i) AD Category – I bank may allow payment of interest on usance bills or overdue
interest on delayed payments for a period of less than three years from the date of
shipment at the rate prescribed for trade credit from time to time.

14
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016
15 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,

2016

15
 (ii) In case of pre-payment of usance import bills, remittances may be made only
after reducing the proportionate interest for the unexpired portion of usance at the
rate at which interest has been claimed or LIBOR/any other widely
accepted/Alternative reference rate of the currency in which the goods have been
invoiced, whichever is applicable. Where interest is not separately claimed or
expressly indicated, remittances may be allowed after deducting the proportionate
interest for the unexpired portion of usance at LIBOR/any other widely
accepted/Alternative reference rate16 of the currency of invoice.

17
(iii) In case of change in value due to (i) or (ii) above, the respective AD bank
should ensure proper remark/indicator is entered for ORM mark off in IDPMS etc. as
per extant IDPMS guidelines.

C.3. Remittances against Replacement Imports

Where goods are short-supplied, damaged, short-landed or lost in transit and the
Exchange Control Copy of the import licence has already been utilised to cover the
opening of a letter of credit against the original goods which have been lost, the
original endorsement to the extent of the value of the lost goods may be cancelled
by the AD Category – I bank and fresh remittance for replacement imports may be
permitted without reference to Reserve Bank, provided, the insurance claim relating
to the lost goods has been settled in favour of the importer. It may be ensured that
the consignment being replaced is shipped within the validity period of the license.
18
AD bank should ensure that proper remark/indicator is entered for ORM mark
off/closure of Bills in IDPMS etc. as per extant IDPMS guidelines.

C.4. Guarantee for Replacement Import

In case replacement goods for defective import are being sent by the overseas
supplier before the defective goods imported earlier are reshipped out of India, AD
Category-I banks may issue guarantees at the request of importer client for
dispatch/return of the defective goods, according to their commercial judgment.

16
Inserted vide AP (DIR Series) Circular No. 13 dated September 28, 2021
17
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016
18 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016

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 C.5. Import of Equipment by Business Process Outsourcing (BPO) Companies for
their Overseas Sites

AD Category – I bank may allow BPO companies in India to make remittances

towards the cost of equipment to be imported and installed at their overseas sites in
connection with the setting up of their International Call Centres (ICCs) subject to
the following conditions:

(i) The BPO company should have obtained necessary approval from the Ministry of
Communications and Information Technology, Government of India and other
authorities concerned for setting up of the ICC.

(ii) The remittance should be allowed based on the AD Category - I banks’

commercial judgment, the bonafides of the transactions and strictly in terms of the
contract.

(iii) The remittance is made directly to the account of the overseas supplier.

(iv) The AD Category – I banks should also obtain a certificate as evidence of

import from the Chief Executive Officer (CEO) or auditor of the importer company
that the goods for which remittance was made have actually been imported and
installed at overseas sites.
19
(v) The AD Category I bank should ensure compliance with IDPMS guidelines as
applicable.

C.6. Receipt of Import Bills/Documents

20
Concerned AD Category banks to ensure generation of ORMs, BoE entries and
BoE settlement with the respective ORMs in compliance with IDPMS guidelines as
applicable.

C.6.1 Receipt of import documents by the importer directly from overseas suppliers

Import bills and documents should be received from the banker of the supplier by
the banker of the importer in India. AD Category – I bank should not, therefore,

19
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016
20
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016
18
make remittances where import bills have been received directly by the importers
from the overseas supplier, except in the following cases:

(i) Where the value of import bill does not exceed USD 300,000.

(ii) Import bills received by wholly-owned Indian subsidiaries of foreign companies

from their principals.

(iii) Import bills received by Status Holder Exporters as defined in the Foreign Trade
Policy, 100% Export Oriented Units / Units in Special Economic Zones, Public
Sector Undertakings and Limited Companies.

(iv) Import bills received by all limited companies viz. public limited, deemed public
limited and private limited companies.

C.6.2. Receipt of import documents by the importer directly from overseas suppliers
in case of specified sectors

As a sector specific measure, AD Category - I banks are permitted to allow

remittance for imports by non-status holder importers up to USD 300,000 where the
importer of rough diamonds, rough precious and semi-precious stones has received
the import bills / documents directly from the overseas supplier and the
documentary evidence for import is submitted by the importer at the time of
remittance. Status holder importers as defined in the Foreign Trade Policy dealing
in the import of rough diamonds, rough precious and semi- precious stones can
receive import bills directly from the suppliers without any ceiling. AD Category - I
banks may undertake such transactions subject to the following conditions:

(i) The import would be subject to the prevailing Foreign Trade Policy.

(ii) The transactions are based on their commercial judgment and they are satisfied
about the bonafides of the transactions.

(iii) AD Category - I banks should do the KYC and due diligence exercise and
should be fully satisfied about the financial standing / status and track record of the
importer customer. Before extending the facility, they should also obtain a report on
each individual overseas supplier from the overseas banker or reputed overseas
credit rating agency.

19
 C.6.3. Receipt of import documents by the AD Category – I bank directly from
overseas suppliers
(i) At the request of importer clients, AD Category – I bank may receive bills directly
from the overseas supplier as above, provided the AD Category – I bank is fully
satisfied about the financial standing/status and track record of the importer
customer.

(ii) Before extending the facility, the AD Category – I bank should obtain a report on
each individual overseas supplier from the overseas banker or a reputed overseas
credit agency. However, such credit report on the overseas supplier need not be
obtained in cases where the invoice value does not exceed USD 300,000 provided
the AD Category – I bank is satisfied about the bonafides of the transaction and
track record of the importer constituent.

C.7. Evidence of Import

C.7.1. Physical Imports

21
(i) In case of all imports, irrespective of the value of foreign exchange remitted /
paid for import into India, it is obligatory on the part of the AD Category– I bank
through which the relative remittance was made, to ensure that the importer
submits:-
22

21
Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 prior to modification it read as “In case of all imports,
where value of foreign exchange remitted / paid for import into India exceeds USD 100,000 or its equivalent, it is obligatory on
the part of the AD Category– I bank through which the relative remittance was made, to ensure that the importer submits”
22 Sub points of point no. (i) and point no.(ii) modified vide AP (DIR Series) Circular No. 27 dated January 12, 2017 prior to

modification they read as “(a) The Exchange Control Copy of the Bill of Entry for Home Consumption, or
(b) The Exchange Control Copy of the Bill of Entry for warehousing, in case of 100% Export Oriented Units, or
(c) Customs Assessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities, where
import has been made by post, or Courier Bill of Entry as declared by the courier companies to the Customs Authorities in
cases where goods have been imported through couriers, as evidence that the goods for which the payment was made have
actually been imported into India, or
(d) The Exchange Control Copy of the Ex-Bond Bill of Entry or Bill of Entry issued by Customs Authorities by any other
similar nomenclature for goods imported and stored in Free Trade Warehousing Zone (FTWZ) or SEZ Unit warehouses or
Customs bonded warehouses, etc.
(ii) In respect of imports on Delivery against acceptance basis, AD Category – I bank should insist on production of evidence
of import at the time of effecting remittance of import bill. However, if importers fail to produce documentary evidence due
to genuine reasons such as non- arrival of consignment, delay in delivery/ customs clearance of consignment, etc., AD bank
may, if satisfied with the genuineness of request, allow reasonable time, not exceeding three months from the date of
remittance, to the importer to submit the evidence of import.

20
(a) The importer shall submit BoE number, port code and date for marking evidence
of import under IDPMS as detailed in para C.8.

(b) Customs Assessment Certificate or Postal Appraisal Form, as declared by the

importer to the Customs Authorities, where import has been made by post, or
Courier Bill of Entry as declared by the courier companies to the Customs
Authorities in cases where goods have been imported through couriers, as evidence
that the goods for which the payment was made have actually been imported into
India, or

(c) For goods imported and stored in Free Trade Warehousing Zone (FTWZ) or
SEZ Unit warehouses or Customs bonded warehouses, etc., the Exchange Control
Copy of the Ex-Bond Bill of Entry or Bill of Entry issued by Customs Authorities by
any other similar nomenclature the importer shall submit applicable BoE number,
port code and date for marking evidence of import under IDPMS as detailed in para
C.8.

(ii) In respect of imports on Delivery against acceptance basis, AD Category – I

bank shall verify the evidence of import from IDPMS at the time of effecting
remittance of import bill. However, if importers fail to produce documentary
evidence due to genuine reasons such as non- arrival of consignment, delay in
delivery/ customs clearance of consignment, etc., AD bank may, if satisfied with the
genuineness of request, allow reasonable time, not exceeding three months from
the date of remittance, to the importer to submit the evidence of import.
23
(iii) AD banks are required to create Outward Remittance Message (ORM) for all
such outward remittances irrespective of value and shall perform the subsequent
activity viz document submission, outward remittance data, matching with ORM,
closing of transactions etc. as per IDPMS guidelines.

C.7.2. Evidence of Import in Lieu of Bill of Entry

(i) AD Category – I bank may accept, in lieu of Exchange Control Copy of Bill of
Entry for home consumption, a certificate from the Chief Executive Officer (CEO) or

23 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016

21
auditor of the company that the goods for which remittance was made have actually
been imported into India provided:-

(a) The amount of foreign exchange remitted is less than USD 1,000,000 or its
equivalent and

(b) The importer is a company listed on a stock exchange in India and whose net
worth is not less than Rs.100 crore as on the date of its last audited balance sheet,
or, the importer is a public sector company or an undertaking of the Government of
India or its departments.

(ii) The above facility may also be extended to autonomous bodies, including
scientific bodies/academic institutions, such as Indian Institute of Science / Indian
Institute of Technology, etc. whose accounts are audited by the Comptroller and
Auditor General of India (CAG). AD Category – I bank may insist on a declaration
from the auditor/CEO of such institutions that their accounts are audited by CAG.
24
(iii) Outward Remittance Message has to be created & BoE has to be downloaded
from “BoE Master “in IDPMS (in case of EDI ports). In case of Non-EDI ports
duplicate copy/customs certified copy have to be submitted or BoE waiver obtained
from RBI.

C.7.3. Non-physical Imports

(i) Where imports are made in non-physical form, i.e., software or data through
internet / datacom channels and drawings and designs through e-mail / fax, a
certificate from a Chartered Accountant that the software / data / drawing/ design
has been received by the importer, may be obtained.

(ii) AD Category – I bank should advise importers to keep Customs Authorities

informed of the imports made by them under this clause.
25

24
Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06,
2016
25 Clarification: ORM not applicable for non physical imports

22
 26
C.8. Detailed Operational Procedures for IDPMS

The operational guidelines are summarised as below:

(i) AD banks are required to create Outward Remittance Message (ORM) for all
outward remittance/s for import payments on behalf of their importer customer for
which the prescribed documents for evidence of import have not been submitted.

(ii) Creation of ORM for all outstanding outward remittance/s for import payments
need to be completed on or before October 31, 2016

Settlement of ORM with BoE

(iii) Based on the AD code declared by the importer, the banks shall download
the Bill of Entry (BoE) issued by EDI ports from “BOE Master” in IDPMS. For non-
EDI ports, AD bank of the importer shall upload the BoE data in IDPMS as per
message format “Manual BOE reporting” on daily basis on receipt of BoE from the
27
customer/Customs office. In order to enhance the ease of doing business and
reduce transaction costs, submission of hardcopy of evidence of import documents
i.e., BoE Exchange Control copy has been discontinued with effect from December
1, 2016 as the same is available in IDPMS. The revised procedure is as under:

(iv) AD banks shall enter BoE details (BoE number, port code and date) for ORM
associated with the advance payments for import transactions as per the message
format “BOE settlement”.

(v) In case of payment after receipt of BoE, the AD bank shall generate ORM for
import payments made by its importer customer as per the message format “BOE
settlement”.

(vi) Multiple ORMs can be settled against single BoE and also multiple BoE can
be settled against one ORM.

26 Modified vide AP (DIR series circular) No.5 dated October 05, 2016 prior to modification it read as “Issue of
Acknowledgement : AD Category – I bank should acknowledge receipt of evidence of import e.g. Exchange Control Copy of
the Bill of Entry, Postal Appraisal Form, or Customs Assessment Certificate, etc., from importers by issuing acknowledgement
slips containing all relevant particulars relating to the import transactions.”
27 Inserted vide AP (DIR Series) Circular No.27 dated January 12, 2017

23
 28
(vii) On settlement of ORM with evidence of import AD Category – I bank shall in
all cases issue an acknowledgement slip to the importer containing the following
particulars:
a. importer's full name and address with code number;
b. number and date of BoE and the amount of import; and
c. a recap advice on number and amount of BoE and ORM not settled for
the importer.

29
(viii) The importer needs to preserve the printed ‘Importer copy’ of BoE as
evidence of import and acknowledgement slip for future use.

Extension and Write Off

(ix) AD Category I banks shall give extension for submission of BoE beyond the
prescribed period in terms of the extant guidelines on the matter, and the same will
be reported in IDPMS as per the message “Bill of Entry Extension” and the date up
to which extension is granted will be indicated in “Extension Date” column.

(x) AD Category I banks can consider closure of BoE/ORM in IDPMS that

involves write off to the extent of 5% of invoice value in cases where the amount
declared in BoE varies from the actual remittance due to operational reasons and
AD bank is satisfied with the reason/s submitted by the importer.

(xi) AD Category I banks may close the BoE for such import transactions where
write off is on account of quality issues; short shipment or destruction of goods by
the port / Customs / health authorities in terms of extant guidelines on the matter
subject to submission of satisfactory documentation by the importer irrespective of
the amount involved. AD Bank shall settle and close ORM/BoE with appropriate
“Adjustment Indicator” in IDPMS.

(xii) The above operational guidelines for extension and write off are meant to
facilitate closure of bills in IDPMS and will be subject to extant guidelines on the
matter and not absolve the importer from remitting / receiving the amount in case of
change in circumstances.

28
Inserted vide AP (DIR Series) Circular No. 27 dated January 12, 2017
29
Inserted vide AP (DIR Series) Circular No. 27 dated January 12, 2017
24
 (xiii) While allowing write off, AD Category - I banks must ensure that:

a. The case is not the subject matter of any pending civil or criminal suit;

b. The importer has not come to the adverse notice of the Enforcement
Directorate or the Central Bureau of Investigation or any such other law
enforcement agency; and

c. There is a system in place under which internal inspectors or auditors of the

AD category – I banks (including external auditors appointed by authorised
dealers) should carry out random sample check / percentage check of write-off
of import bills;

(xiv) Extension and write off cases not covered by the extant guidelines may be
referred to the concerned Regional Office of Reserve Bank of India for necessary
approval.
30(xv) The extant instructions and guidelines for Evidence of Import in Lieu of Bill of Entry
will apply mutatis mutandis. The evidence of import in lieu of BoE in permitted/approved
conditions will be created and uploaded by AD Category – I bank of the importer in the form
of BoE data as per message format “Manual BOE reporting” in IDPMS.

Follow-up for Evidence of Import

31
(xvi) AD Category – I banks shall continue to follow up for outward remittance made for
import (i.e. unsettled ORM) in terms of extant guidelines and instructions on the subject. In
cases where relevant evidence of import data is not available in IDPMS on due dates
against the ORM, AD Category – I bank shall follow up with the importer for submission of
documentary evidence of import. Similarly, if BoE data is not settled against ORM within the
prescribed period, AD Category – I banks shall follow up with the importer in terms of extent
instructions.

30 Inserted vide AP (DIR Series) Circular No. 27 dated January 12, 2017
31 Modified vide AP (DIR Series) Circular No. 27 dated January 12, 2017 prior to modification it read as “AD Category – I
banks are required to follow up for submission of prescribed documents for evidence of import in terms of extant guidelines on
the subject”

25
 32
C.9. Verification and Preservation

(i) Internal inspectors and IS auditors (including external auditors appointed by AD Category
– I bank) should carry out verification and IS audit and assurance of the “BOE Settlement”
process in IDPMS. Data and process followed by AD Category –I bank for “BOE
Settlement” should be preserved in terms of the guidelines under Cyber Security
Framework in the bank.

(ii) Internal inspectors or auditors (including external auditors appointed by AD

Category – I bank) should carry out verification of the documents evidencing import
other than which are available in IDPMS, e.g. Exchange Control copies of Postal
Appraisal Forms, or Customs Assessment Certificates, etc.

(iii) Documents evidencing import into India should be preserved by AD Category – I

bank for a period of one year from the date of their verification. However, in respect
of cases which are under investigation by investigating agencies, documents, and/or
data, process may be destroyed only after obtaining clearance from the investigating
agency concerned.

C.10. Follow-up for Import Evidence

(i) In case an importer does not furnish any documentary evidence of import, as
required under paragraph C.7. of Section III, within 3 months from the date of
remittance involving foreign exchange 33
irrespective of value, the AD Category – I
34
bank should rigorously follow-up for the next 3 months, by using various modes of
communications. It should, however, be ensured that atleast one communication
with the importer in this regard is by issuance of registered letter.

32 Modified vide AP (DIR Series) Circular No. 27 dated January 12, 2017 prior to modification it read as “(i) Internal
inspectors or auditors (including external auditors appointed by AD Category – I bank) should carry out verification of the
documents evidencing import, e.g. Exchange Control copies of Bills of Entry or Postal Appraisal Forms, or Customs
Assessment Certificates, etc.
(ii)Documents evidencing import into India should be preserved by AD Category – I bank for a period of one year from the
date of their verification. However, in respect of cases which are under investigation by investigating agencies, the documents
may be destroyed only after obtaining clearance from the investigating agency concerned.”
33 Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 prior to modification it read as “exceeding USD
100,000”
34 Modified. Prior to modification it read as “including issuing registered letters to the importer”

26
 35
(ii) In IDPMS, all outstanding import remittances, irrespective of the amount
involved, should be reported by the AD Category-I banks. Further, submission of a
separate BEF Statement by the AD Category-I bank would be required till the half
year ended December 2017 and discontinued thereafter.
36

C.11 Import of Gold

C.11.1 Import of Gold.

i. The 20:80 scheme of import of gold was withdrawn on November 28, 2014.
However, the obligation to export under the 20:80 scheme would apply to the
unutilised gold imported before November 28, 2014.
37
ii. Nominated banks and nominated agencies, as notified by DGFT, are
permitted to import gold on consignment basis. In addition to the above,
qualified jewellers as notified by International Financial Services Centres
Authority (IFSCA) will be permitted to import gold under specific ITC (HS)
Codes through India International Bullion Exchange IFSC Limited (IIBX). All
sale of gold domestically will, however, be against upfront payment.
Nominated banks are free to grant gold metal loans.
38
iii. The Status Holder Exporters shall adhere to the guidelines contained in extant
Foreign Trade Policy, as amended from time to time.
iv. The import of gold coins and medallions is permitted. However, prohibition on
sale of gold coins and medallions by banks continues pending further review.

35 Modified. Prior to modification it read as” On operationalization of IDPMS, all outstanding import remittances, irrespective
of the amount involved, will be reported into the system by banks and submission of a separate BEF statement would be
discontinued from a date, to be notified separately”. which was modified vide AP (DIR Series) Circular No.65 dated April
28, 2016 prior to modification it read as “AD Category - I banks should henceforth submit a statement on half-yearly
basis as at the end of June & December of every year, in form BEF furnishing details of import transactions, exceeding USD
100,000 in respect of which importers have defaulted in submission of appropriate document evidencing import within 6
months from the date of remittance using the online eXtensible Business Reporting Language (XBRL) system on a Bank-wide
basis instead of the present system of branch-wise submission, to the respective Regional Offices of the RBI. The Statement
should be submitted within 15 days from the close of the half-year to which the statement relates.”

36
Omitted
37
Inserted consequent to issuance of DGFT's Notification dated January 05, 2022 on Amendment in import policy conditions of
gold under Chapter 71 of Schedule-I (Import Policy) of ITC (HS), 2017
38 Modified. Prior to modification it read as “Star and Premier Trading Houses (STH/PTH) can import gold on Document against

Payment (DP) basis as per entitlement without any end use restrictions”.
Clarification: Import by such entities, if permitted under FTP shall be on Document against Payment (DP) basis.

27
 39
Head Offices / International Banking Divisions of AD Category - I banks shall
henceforth submit the following returns under Centralised Information Management
System (CIMS) having URL: [Link] from December 26, 2023
onwards.

(a) Return on half yearly basis (end March / end September), showing the quantity and
value of gold imported by the nominated banks/ agencies/ qualified jewellers/ EOUs/
SEZs in Gem & Jewellery Sector, mode of payment-wise under return code R133
named ‘Import of gold by EOUs, units in SEZ/EPZ and nominated agencies(HY)’

(b) Return on monthly basis showing the quantity and value of gold imports by the
nominated agencies (other than the nominated banks)/ EOUs/ qualified jewellers/
SEZs in Gem & Jewellery sector during the month under report as well as the
cumulative position as at the end of the said month beginning from the 1st month of
the Financial Year. The return code R132 is named as ‘Import of gold by EOUs,
units in SEZ/EPZ and nominated agencies(M)’. Both the returns shall be submitted,
even if there is 'Nil' position, by the 10th of the following month / half year, to which it
relates

C.11.2. Import of Gold Jewellery Including Jewellery Made of Precious Metals

or/and Studded With Diamonds / Precious Stones /Semi-precious.

Suppliers’ and Buyers’ credit (trade credit) including the usance period of Letters of
Credit opened for import of gold in any form, including jewellery made of
gold/precious metals or/and studded with diamonds/semi- precious/precious stones,
should not exceed 90 days from the date of shipment.

C.11.3. Import of Gold by Qualified Jewellers as notified by IFSCA

40
i. The following directions enable resident Qualified Jewellers to import gold
through IIBX or any other exchange approved by IFSCA and DGFT, Government
of India:

39
Inserted vide A.P.(Dir Series) Circular No. 12 dated December 22, 2023.
40
Inserted vide A.P.(Dir Series) Circular No. 04 dated May 25, 2022.
28
 a. AD banks may allow Qualified Jewellers to remit advance payments for
eleven days for import of gold through IIBX in compliance to the extant
Foreign Trade Policy and regulations issued under IFSC Act. AD banks
shall ensure that advance remittance for such import through
exchange/s authorised by IFSCA shall be as per the terms of the sale
contract or other document in the nature of an irrevocable purchase
order in terms of IFSC Act and regulations made thereunder by IFSCA.
AD bank shall carry out all the due diligence and ensure the
remittances sent are only for the bona fide import transactions through
exchange/s authorised by IFSCA.

b. The advance remittance for import of Gold should not be leveraged in

what-so-ever form for importing Gold worth more than the advance
remittance made.

c. In case the import of Gold through IFSCA authorised exchange, for

which advance remittance has been made, does not materialise, or the
advance remittance made for the purpose is more than the amount
required, the unutilized advance remittance shall be remitted back to
the same AD bank within the specified time limit of eleven days.

d. For gold imported through IIBX, QJ shall submit the Bill of Entry (or any
other such applicable document issued/approved by Customs
Department for evidence of import), issued by Customs Authorities to
the AD bank from where advance payment has been remitted.

e. All payments by Qualified Jewellers for imports of gold through IIBX,

shall be made through exchange mechanism as approved by IFSCA in
terms of IFSC Act and regulations. Any deviation from the extant
guidelines for import of Gold through IIBX need to be approved in
advance by IFSCA and other applicable and appropriate authority/ies.

ii. IFSC Authority (IFSCA) will conduct all required due diligence on the exchange
– IIBX including all other entities involved in enabling import of Gold by QJs in
terms of the IFSCA regulations. IFSCA shall also put in place necessary system to
ensure that the advance remittance received from QJs are solely for the purpose
for import of gold through IIBX.
29
 iii. AD bank shall ensure that:

a. all required documentation, custom duty related procedures and filing Bill
of Entry (BoE) as evidence of import, etc. is complete for the import of
gold by QJ within the specified applicable period.
b. single/multiple ORMs created and matched with corresponding BoEs and
closed appropriately in IDMPS.

c. the importer – that is QJs comply with the related extant instructions
relating to imports under FEMA, 1999, FTDR Act 1992, Foreign Trade
Policy and regulations of IFSCA.
AD banks may frame their own internal guidelines to deal with such cases, with
the approval of their Board of Directors.

iv. Reporting requirement by AD banks

a. AD bank shall create Outward Remittance Message (ORM) for all such
outward remittances in IDPMS in terms of extant guidelines.
b. All these transactions need to be reported in FETERS in terms of extant
guidelines.
c. AD bank shall report the import of gold through QJ in CIMS as
prescribed at para C.11.1 above.

v. The above mentioned arrangement is for the sole purpose of facilitating physical
import of gold through IIBX or any similar exchange authorised by IFSCA, by
Qualified Jewellers in India.

C.11.4 Import of gold by valid India-UAE CEPA Tariff Rate Quota Holders as
notified by –The International Financial Services Centres Authority (IFSCA)

AD Category-I banks may allow valid India-UAE CEPA Tariff Rate Quota (TRQ)
Holders to remit advance payment for eleven days for import of gold through IIBX
subject to the directions as mentioned in A.P. (DIR Series) Circular No.04 dated
May 25, 2022 41.

41
Inserted vide A.P.(DIR Series) Circular No. 14 dated January 31, 2024
30
 C.12. Import of Other Precious Metals

C.12.1. Import of Platinum/ Palladium/ Rhodium/ Silver/ Rough, Cut & Polished
Diamonds/ Precious and Semi-precious Stones.
(a) Suppliers’ and Buyers’ Credit, including the usance period of Letters of Credit
opened for import of Platinum, Palladium, Rhodium and Silver and rough, cut and
polished Diamonds, Precious and semi-precious stones; should not exceed 90 days
from the date of shipment. However, for Clean Credit i.e. credit given by a foreign
supplier to its Indian customer/ buyer, without any Letter of Credit (Suppliers’
Credit)/ Letter of Undertaking (Buyers’ Credit)/ Fixed Deposits from any Indian
financial institution for import of rough, cut and polished diamonds, precious and
semi-precious stones, may be permitted for a period not exceeding 180 days from
42
the date of shipment. Further, AD banks may allow extension of time in respect of
such clean credit for import of rough, cut and polished diamonds, for a period
exceeding 180 days from the date of shipment to a maximum period of 180 days
beyond the prescribed period/ due date beyond which they may refer the cases to
the respective Regional Office of the Reserve Bank. Such extension by AD banks
may be subject to the conditions such as: (i) AD banks being satisfied of the
genuineness of the reason and bonafides of the transaction and also that no interest
payment is involved for the additional period; (ii) reasons for such extension are due
to financial difficulties and/ or quality disputes; (iii) importer is not under investigation
and is not a frequent offender. AD banks may submit a half yearly report (half year
shall be April- September and October-March) of such extensions allowed
customer-wise, to the respective Regional Office of the Reserve Bank within 15
days of the end of the respective half year 43.
(b) AD Category – I banks should ensure that due diligence is undertaken and
Know Your Customer (KYC) norms and Anti-Money Laundering (AML) guidelines,
issued by the Reserve Bank are adhered to while undertaking import of the
precious metals and rough, cut and polished diamonds. Further, any large or
abnormal increase in the volume of business should be closely examined to
ensure that the transactions are bonafide and are not intended for interest /

42
Inserted vide A.P.(DIR Series) Circular No. 57 dated March 31, 2016
43
Updated. Prior to updation it read as “AD banks may submit a half yearly report of such extensions allowed
customer-wise, to the respective Regional Office of the Reserve Bank.”
31
 currency arbitrage.

C.12.2. Import of Platinum / Silver on Unfixed Price Basis

The nominated agency/bank may allow import of platinum and silver, on outright
purchase basis subject to the condition that although ownership of the same shall
be passed on to the importers at the time of import itself, the price shall be fixed
later as and when the importer sells to the user.

C.12.3 Import of Silver by Qualified Jewellers as notified by –The International

Financial Services Centres Authority (IFSCA) 44

AD Category-I banks may allow Qualified Jewellers to remit advance payment for
eleven days for import of silver through IIBX subject to the conditions as mentioned in
A.P. (DIR Series) Circular No.04 dated May 25, 2022.

C.13. Import Factoring

(i) AD Category – I bank may enter into arrangements with international factoring
companies of repute, preferably members of Factors Chain International, without
the approval of Reserve Bank.
(ii) They will have to ensure compliance with the extant foreign exchange directions
relating to imports, Foreign Trade Policy in force and any other guidelines/directives
issued by Reserve Bank in this regard.

C.14. Merchanting Trade45

C.14.1. AD banks may handle the Merchanting Trade Transactions (MTT) subject
to the following guidelines:
i. For a trade to be classified as merchanting trade, goods acquired shall not
enter the Domestic Tariff Area.
ii. Considering that in some cases, the goods acquired may require certain
specific processing/ value-addition, the state of goods so acquired may be
allowed transformation subject to the AD bank being satisfied with the
documentary evidence and bonafides of the transaction.

44
Inserted vide A.P.(DIR Series) Circular No. 07 dated November 10, 2023
45 Revised guidelines on merchanting trade transactions issued vide A.P. (DIR Series) Circular No.20 dated
January 23, 2020 in supersession of guidelines contained in A.P. (DIR Series) Circular No.115 dated March 28,
2014.

32
 iii. The MTT shall be undertaken for the goods that are permitted for exports /
imports under the prevailing Foreign Trade Policy (FTP) of India as on the
date of shipment. All rules, regulations and directions applicable to exports
(except Export Declaration Form) and imports (except Bill of Entry) shall be
complied with for the export leg and import leg respectively.
iv. AD bank shall satisfy itself with the bonafides of the transactions. Further,
KYC and AML guidelines shall be scrupulously adhered to by the AD bank
while handling such transactions.
v. The entire merchanting trade is to be routed through the same AD bank. The
AD bank shall verify the documents like invoice, packing list, transport
documents and insurance documents (if originals are not available, Non-
negotiable copies duly authenticated by the bank handling documents may
be taken) and satisfy itself about the genuineness of the trade. The AD bank
may, if satisfied, rely on online verification of Bill of Lading/ Airway Bill on the
website of International Maritime Bureau or Airline web check facilities.
However, the AD bank shall ensure that the requisite details are made
available /retrievable at the time of Inspection/Audit/investigation of the
transactions.
vi. The entire MTT shall be completed within an overall period of nine months
and there shall not be any outlay of foreign exchange beyond four months.
The commencement date of merchanting trade shall be the date of shipment
/ export leg receipt or import leg payment, whichever is first. The completion
date shall be the date of shipment / export leg receipt or import leg payment,
whichever is the last.
vii. Short-term credit either by way of suppliers' credit or buyers' credit may be
extended for MTT to the extent not backed by advance remittance for the
export leg, including the discounting of export leg LC by the AD bank, as in
the case of import transactions. However, Letter of Undertaking (LoU)/ Letter
of Comfort (LoC) shall not be issued for supplier’s/ buyer’s credit.
viii. Any receipts for the export leg, prior to the payment for import leg, may be
parked either in Exchange Earners Foreign Currency (EEFC) account or in
an interest-bearing INR account till the import leg liability arises. It shall be
strictly earmarked/ lien-marked for the payment of import leg and the liability
of the import leg, as soon as it arises, shall be extinguished out of these
funds without any delay. If such receipts are kept in interest-bearing INR
account, hedging thereof may be allowed by the AD bank at the request of its
customer, as per extant regulations. No fund/non-fund-based facilities shall
be extended against these balances.
ix. In case of discounting of export leg LC where payment for import leg is still to
be made (even if partially), the proceeds shall be utilized in the manner
prescribed at point no. 2 (viii) above.
x. Payment for import leg may also be allowed to be made out of the balances
in EEFC account of the merchant trader.

33
 xi. Merchanting traders may be allowed to make advance payment for the
import leg on demand made by the overseas supplier. In case where inward
remittance from the overseas buyer is not received before the outward
remittance to the overseas supplier, AD bank may handle such transactions
based on its commercial judgement. It may, however, be ensured that any
such advance payment for an import leg beyond USD 500,000/- per
transaction, shall be made against Bank Guarantee / an unconditional,
irrevocable standby Letter of Credit from an international bank of repute.
Overall prudential limits on allowing such advance payments by a customer
may be fixed by the AD bank.
xii. Letter of Credit to the supplier for the import leg is permitted against
confirmed export order, keeping in view the foreign exchange outlay of four
months and completion of the MTT within nine months and subject to
compliance with the instructions issued by Department of Banking Regulation
on “Guarantees and Co-acceptances”, as amended from time to time.
xiii. AD bank shall ensure one-to-one matching in case of each MTT and report
defaults in any leg by the traders to the concerned Regional Office of the
Reserve Bank, on half yearly basis in the format as annexed, within 15 days
from the close of each half year, i.e. June and December;
xiv. Merchant traders with outstanding of 5% or more of their annual export
earnings shall be liable for caution listing.

C.14.2 The merchanting traders shall be genuine traders of goods and not mere
financial intermediaries. Confirmed orders must be received by them from the
overseas buyers. AD banks shall satisfy themselves about the capabilities of the
merchanting trader to perform the obligations under the order. The merchanting
trade shall result in profit which shall be determined by subtracting import
payments and related expenses from export proceeds for the specific MTT.C.14.3
Write-off of unrealized amount of export leg:

i. AD bank may write-off the unrealized amount of export leg, without any
ceiling, on the request made by the Merchanting trader, in the following
circumstances:
a. The MTT buyer has been declared insolvent and a certificate from the
official liquidator specifying that there is no possibility of recovery of export
proceeds has been produced.
b. The goods exported have been auctioned or destroyed by the Port /
Customs / Health authorities in the importing country and a certificate to that
effect has been produced.
c. The unrealized amount of the export leg represents the balance due in a
case settled through the intervention of the Indian Embassy, Foreign
Chamber of Commerce or similar Organization;
34
 provided, the MTT is in adherence to all other provisions except the
delays in timelines (either for outlay or completion period of MTT or both)
attributed to reasons mentioned at a, b and c above.

ii. In addition to above, write-off as at (i) shall be subject to following

conditions:
a. AD bank shall satisfy itself with the bonafides of the transactions and ensure
that there are no KYC/AML concerns.

b. The transaction shall not be under investigation under FEMA by any of the
investigating agency/ies.
c. The counterparty to the merchant trader is not from a country or jurisdiction
in the updated FATF Public Statement on High Risk & Non-Co-operative
Jurisdictions on which FATF has called for counter measures.

C.14. 4 Third Party payments

Third party payments for export and import legs of the MTT are not allowed.

C.14.5 Payment of Agency Commission

Agency commission is not allowed in MTTs. However, AD banks may allow

payment of agency commission up to a reasonable extent by way of outward
remittance under exceptional circumstances, subject to the following conditions:

a. MTT has been completed in all respects.

b. The payment of agency commission shall not result in the MTT ending into
a loss.
c. The Merchanting trader shall make a specific request to the AD bank in
this regard.

C.14.6 AD bank may approach Regional Office (RO) concerned of the Reserve
Bank for regularization of the MTT for deviation, if any, from the prescribed
guidelines and the MTT shall be closed only after receiving approval from the RO
concerned of the Reserve Bank.

35
C.14.7 Reporting for merchanting trade transactions under FETERS shall be done
on gross basis, against the undermentioned codes:

Trade Purpose Code Description

under FETERS

Export P0108 Goods sold under merchanting /receipt

against export leg of merchanting trade

Import S0108 Goods acquired under merchanting /payment

against import leg of merchanting trade

C.14.8. Merchanting trade to Nepal and Bhutan

As Nepal and Bhutan are landlocked countries, there is a facility of transit

trade whereby goods are imported from third countries by Nepal and Bhutan
through India under the cover of Customs Transit Declarations in terms of the
Government of India Treaty of Transit with these two countries. In consultation with
Government of India, it is clarified herein that goods consigned to the importers of
Nepal and Bhutan from third countries under merchanting trade from India would
qualify as traffic-in-transit, if the goods are otherwise compliant with the
provisions of the India-Nepal Treaty of Transit and Indo-Bhutan Treaty of Transit
respectively.

C.15. Processing of import related payments through Online Payment Gateway

Service Providers (OPGSPs)

AD Category-l banks have been permitted to offer facility of payment for imports of
goods and software of value not exceeding USD 2,000 by entering into standing
arrangements with the OPGSPs subject to the following:-

(a) The balances held in the Import Collection account shall be remitted to the
respective overseas exporter's account immediately on receipt of funds from the
importer and, in no case, later than two days from the date of credit to the collection
account.

(b) The AD Category –I bank will obtain a copy of invoice and airway bill from the
OPGSP containing the name and address of the beneficiary as evidence of import
and report the transaction in R-Return under the foreign currency payment head.

36
 (c) The permitted credits in the OPGSP Import Collection account will be:

(i) collection from Indian importers for online purchases from overseas
exporters electronically through credit card, debit card and net banking and
(ii) charge back from the overseas exporters.

(d) The permitted debits in the OPGSP Import Collection account will be:

(i) payment to overseas exporters in permitted foreign currency;

(ii) payment to Indian importers for returns and refunds;
(iii) payment of commission at rates/frequencies as defined under the contract to
the current account of the OPGSP; and
(iv) bank charges
46
C.16. Settlement of Import transactions in currencies not having a direct exchange
rate

To further liberalize the procedure and facilitate settlement of import transactions

where the invoicing is in a freely convertible currency and the settlement takes
place in the currency of the beneficiary, which though convertible, does not have a
direct exchange rate, it has been decided that AD Category-I banks may permit
settlement of such import transactions (excluding those put through the ACU
mechanism), subject to conditions as under:

(a) Importer shall be a customer of the AD Bank,

(b) Signed contract / invoice is in a freely convertible currency,
(c) The beneficiary is willing to receive the payment in the currency of
beneficiary instead of the original (freely convertible) currency of the invoice/
contract, Letter of Credit as full and final settlement,
(d) AD bank is satisfied with the bonafides of the transactions, and
(e) The counterparty to the importer of the AD bank is not from a country or
jurisdiction in the updated FATF Public Statement on High Risk & Non Co-
operative Jurisdictions on which FATF has called for counter measures.

46 Inserted vide AP (DIR) Series Circular 42 dated February 4, 2016

37
 Appendix

Consolidated List of Circulars on Import of Goods and Services

Sr. AP (DIR Subject Date of

No Series) Circular
Circular No
1 106 Import of goods and services into India. June 19,
2003
2 4 Merchanting Trade Transactions – Clarifications July 19,
- Short term credit 2003
3 9 Evidence of Import – Liberalisation August 18,
2003
4 15 Advance Remittance for Imports September
17, 2003
5 49 Advance Remittance for Imports December
15, 2003
6 66 Imports into India – Direct Receipt of Import February
Bills/Documents 6, 2004
7 72 Foreign Exchange Management Act, 1999 - February
Import of Goods into India – Evidence of Import 20, 2004
8 2 Import of Gold by (i) Export Oriented Units July 9,
(EOUs), (ii) Units in SEZ/EPZ, and (iii) 2004
Nominated Agencies
9 34 Import of Gold on Loan Basis – Tenor of Loan February
and Opening of Stand-By Letter of Credit 18, 2005
10 1 Import of Goods of Value USD 100,000 and July 12,
Less -Clarification on Follow up for Evidence of 2005
Import
11 33 Liberalisation of Export and Import procedures February
28, 2007
12 34 Import of Goods of Value USD 100,000 and March 2,
Less -Clarification on Follow up for Evidence of 2007
Import
13 63 Import of Equipments by BPO Companies in May 25,
India for International Call Centre 2007
14 77 Advance Remittance for Import of aircrafts / June 29,
helicopters / other aviation related purchases 2007
15 18 Direct Receipt of Import Bills / Documents - November
Liberalisation 7, 2007
16 37 Direct Receipt of Import Bills / Documents for April 16,
Import of Rough Precious & Semi-Precious 2008
Stones
17 03 Advance Remittance for Import of Rough August 4,
Diamonds 2008

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18 08 Advance Remittance for Import of Rough August 21,
Diamonds 2008
19 09 Foreign Exchange Management Act, 1999- August 21,
Advance Remittance for Import of Goods - 2008
Liberalisation
20 12 Foreign Exchange Management Act, 1999 – August 28,
Import of Platinum / Palladium / Rhodium / 2008
Silver
21 13 Direct Receipt of Import Bills / Documents - September
Liberalisation 1, 2008
22 15 Foreign Exchange Management Act, 1999 – September
Advance Remittances for Import of Services 8, 2008
23 21 Advance Remittance for Import of Rough December
Diamonds 29, 2009
24 56 Advance Remittance for Import of Goods – April 29,
Liberalisation 2011
25 59 Import of rough, cut and polished diamonds May 06,
2011
26 82 Release of Foreign Exchange for Imports – February
Further Liberalisation 21, 2012
27 83 Import of Gold on Loan Basis - Tenor of Loan February
and Opening of Stand - By Letter of Credit 27, 2012
28 103 Data on import of Gold – Statements – April 03,
Modification 2012
29 83 Import of precious and semi precious stones- February
Clarification 20, 2013
30 103 Import of Gold by Nominated Banks/Agencies May 13,
2013
31 107 Import of Gold by Nominated Banks/Agencies June 4,
2013
32 122 Import of Gold by Nominated Banks/Agencies June 27,
2013
33 15 Import of Gold by Nominated Banks July 22,
/Agencies/Entities 2013
34 39 Export import of Currency September
6, 2013
35 70 Third party payments for export / import November
transactions 8 , 2013
36 71 Advance Remittance for Import of Rough November
Diamonds 8, 2013
37 73 Import of Gold by Nominated Banks November
/Agencies/Entities 11, 2013
38 75 Trade Credit for imports into India- Online November
submission of data on issuance of 19, 2013
Guarantee/Letter of Undertaking (LoU)/Letter of
Comfort (LoC) by ADs

39
39 82 Import of Gold by Nominated December
Banks/Agencies/Entities 31, 2013
40 95 Merchanting Trade Transactions January
17, 2014
41 100 Third party payments for export / import February
transactions 04, 2014
42 103 Import of Gold / Gold Dore by Nominated Banks February
/Agencies /Entities - Clarifications 14, 2014
43 115 Merchanting Trade Transactions - Revised March 28,
guidelines 2014
44 116 Advance Remittance for Import of Rough April 01,
Diamonds 2014
45 122 Trade Credits for Imports into India – Review of April 10,
all-in-cost ceiling 2014
46 133 Import of Gold by Nominated Banks / Agencies / May 21,
Entities 2014
47 146 Export & Import of Currency- Enhanced June 19,
Facilities 2014
48 2 Import of Rough, Cut and Polished Diamonds - July 07,
credit relaxation 2014
49 42 Import of Gold by Nominated Banks/Agencies November
28, 2014
50 76 Form A1- Payments for Imports - February
Discontinuance thereof 12, 2015
51 79 Guidelines on Import of Gold by Nominated February
Banks / Agencies 18, 2015
52 96 Merchanting Trade to Nepal and Bhutan April 30,
2015
53 16 Processing and settlement of import and export September
related payments facilitated by Online Payment 24 , 2015
Gateway Service Providers
54 29 Import of Goods into India – Evidence of Import November
26, 2015
55 30 Advance Remittance for Import of aircrafts / November
helicopters /other aviation related purchases 26, 2015
56 42 Settlement of Export/ Import transactions in February
currencies not having a direct exchange rate 4, 2016
57 57 Import of Rough, Cut and Polished Diamonds March 31,
2016
58 65 Import of goods- Import Data Processing and April 28,
Monitoring System (IDPMS) 2016
59 05 Import Data Processing and Monitoring System October
(IDPMS) 06, 2016
60 11[(1)/14(R)] Foreign Exchange Management (Manner of October
Receipt and Payment) Regulations 2016 20, 2016

40
61 27 Evidence of Import under Import Data Processing January
and Monitoring System (IDPMS) 12, 2017
62 33 Import of goods and services- Extension of time May 22,
limits for Settlement of import payment 2020
63 04 Guidelines on import of gold by Qualified Jewellers May 25,
as notified by – The International Financial Services 2022
Centers Authority (IFSCA)
64 13 Use of any Alternative reference rate in place of September
LIBOR for interest payable in respect of export / 28, 2021
import transactions
65 07 Guidelines on import of silver by Qualified November
Jewellers as notified by – The International 10, 2023
Financial Services Centres Authority (IFSCA)
66 12 CIMS Project implementation - Discontinuation December
of submission in legacy XBRL 22, 2023

67 14 Guidelines on import of gold by Tariff Rate Quota January 31,

(TRQ) holders under the India-UAE CEPA as 2024
notified by–The International Financial Services
Centres Authority (IFSCA)

41