RBI relaxes some import/forex rules

The Reserve Bank of India has liberalised the procedure for facilitating the import of rough diamonds (termed roughs in the trade).

Till now, advance payment without any limit and without a bank guarantee or standby letter of credit could be made only to notified mining companies by an importer, other than a public sector company or a department or undertaking of the Union or state governments.

Henceforth, RBI will not notify the names of foreign mining companies from which such an importer may import roughs by way of advance payments and without any limit or bank guarantee or standby letter of credit.

However, banks remitting the advance payments must adhere to certain conditions.

RBI says banks should undertake the transactions on their commercial judgment and after being satisfied about the genuineness of the transaction.

The foreign mining company should have the recommendation of the Gems and Jewellery Export Promotion Council.

The importer should be a recognised processor of roughs, with a good record.

Advance payments should be strictly as in the sale contract and made directly to the account of the company concerned -- that is, to the ultimate beneficiary, not through numbered accounts or otherwise.

Also, due caution is to be exercised to ensure the remittance is not permitted for import of what are termed 'conflict diamonds' -- they must have the Kimberly Certification, a scheme established by the United Nations to prevent diamond sales from financing war and/or human rights abuses.

The Know Your Customer and due- diligence

exercise should be done by the banks as the rules prescribe.

Banks should follow-up on the filing of the bill of entry and other documents evidencing the import of roughs.

In the case of an importer entity in the public sector or a department or undertaking of the central or state governments, banks may permit an advance remittance of at least $100,000, subject to the above conditions and a specific waiver of bank guarantee from the Union ministry of finance.

Other easing

Giving partial effect to its first bi-monthly monetary policy statement for 2014-15, RBI has now allowed all resident individuals and companies with actual or anticipated foreign exchange exposure to book forward contracts up to $250,000 on the basis of a simple declaration, without further documentation.

The existing facilities for small and medium enterprises having direct and/or indirect exposure to forex risk, permitting these to book or cancel or roll over forward contracts without having to produce the related documents, to manage their exposures effectively subject to specified conditions, remain unchanged.

RBI has also delegated the powers of compounding i.e. settling a dispute by agreeing on an amount less than the claim, to its regional offices in cases of delay in reporting inward remittance for issue of shares, in filing form FC after issue of shares, refund of share application money beyond 180 days, mode of receipt of funds, violation of pricing guidelines for issue, issue of ineligible instruments such as non-convertible debentures, partly paid shares, shares with optionality clause, issue of shares without approval of RBI or the Foreign Exchange Promotion Board, respectively, wherever required.