Mumbai: The RBI has allowed banks to permit exporters to receive advance payment for shipment of goods which would take more than one year to manufacture, a step which will reduce transaction time.
"With a view to liberalising the procedure, it has been decided to permit AD Category-I banks to allow exporters to receive advance payment for export of goods which would take more than one year to manufacture and ship...," the Reserve Bank said in a notification.
As per the old rule under the Foreign Exchange Management (Export of Goods and Services) Regulations, prior approval of the apex bank was required to be obtained by an exporter for receipt of advance in case the agreement provided for shipment of goods extending beyond the period of one year from the date of receipt of advance payment.
In its notification, the RBI said that relaxation could be availed of subject to certain conditions like compliance with Know Your Customer (KYC) norms and other guidelines, besides due diligence by the concerned bank.
"RBI's latest decision is part of its effort to decentralise operations and this will help in reducing the transaction time for exporters," Federation of Indian Exports Organisations (FIEO) Director General Ajay Sahai said.
The RBI had in 2011 increased the period for repatriation of profits by exporters from six months to one year.
"This is a further step in liberalising the existing rules. I consider it as a trade facilitating measure, which will be especially helpful at a time when the global economy is witnessing a slowdown," Sahai said.
As per data from the Ministry of Commerce, exports grew by merely 6.7 per cent to $ 25 billion in December, 2011, compared to the same month last year due to demand slowdown in the US and Europe.
In January, however, exports went up by 10.1 per cent year-on-year to $ 25.4 billion.
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