Master Circular No. 7/2011-12
July 01, 2011
All Category – I Authorised Dealer Banks
Madam / Sir,
Master Circular on 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) Rules, 2000 as amended from time to time.
- This Master Circular consolidates the existing instructions on the subject of
';Import of Goods and Services'; at one place. The list of underlying circulars
consolidated in this Master Circular is also furnished.
- This Master Circular is being issued with a sunset clause of one year. This
circular will stand withdrawn on July 1, 2012 and be replaced by an updated
Master Circular on the subject.
Chief General Manager
Section A - Introduction
- 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.
- 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
- Compliance with the provisions of Research & Development Cess Act, 1986
may be ensured for import of drawings and designs.
- AD Category – I banks may also advise importers to ensure compliance with
the provisions of Income Tax Act, wherever applicable.
Section B- 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 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
Operations & Development) in all their dealings.
B.2. Form A-1
Applications by persons, firms and companies for making payments, exceeding USD
500 or its equivalent, towards imports into India must be made in Form A-1
B.3. Import Licenses
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
special conditions, if any, attached to such licences should be adhered to.
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
- 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 to use it for any other
purpose for which acquisition of foreign exchange is permissible under the said
Act or Rules or Regulations framed there under.
- 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., Exchange Control copy of the Bill of Entry, Postal
Appraisal Form or Customs Assessment Certificate, etc., and satisfy himself that
goods equivalent to the value of remittance have been imported.
- 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)
B.5. Time Limit for Settlement of Import Payments
B.5.1. Time limit for normal imports
- 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.
- AD Category – I banks may permit settlement of import dues delayed due to
disputes, financial difficulties, etc. Interest in respect of delayed payments, usance bills or overdue interest for a period of less than three years from the
date of shipment may be permitted in terms of the directions in para C.2 of Part
B.5.2. Time limit for deferred payment arrangements
Deferred payment arrangements, including suppliers and buyers credit, providing
for payments beyond a period of six months from date of shipment up to a period
of less than three years, are treated as trade credits for which the procedural
guidelines laid down in the Master Circular for External Commercial Borrowings
and Trade Credits may be followed.
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 Part III of this Circular.
B.6. Import of Foreign exchange / Indian Rupees
- 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 clause (g) of sub-section (3) of Section 6 of the Foreign Exchange
Management Act, 1999, and the Foreign Exchange Management (Export and Import of
Currency) Regulations 2000, made by Reserve Bank vide
Notification No. FEMA
6/2000-RB dated May 3, 2000, as amended from time to time.
- 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 –
- send into India without limit foreign exchange in any form other than
currency notes, bank notes and travellers cheques;
- bring into India from any place outside India, without limit foreign
exchange (other than unissued notes), which shall be 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 USD10,000 (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
- 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 notes up to an amount not exceeding Rs.7,500/- per person.
- A person may bring into India from Nepal or Bhutan, currency notes of
Government of India and Reserve Bank notes other than notes of denominations of
above Rs.100 in either case.
Section C - Operational Guidelines for Imports
C.1. Advance Remittance
C.1.1. Advance Remittance for import of goods
- AD Category – I bank may allow advance remittance for import of goods
without any ceiling subject to the following conditions:
- 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
- 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.
- 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.
- All payments towards advance remittance for imports shall be subject to the
C.1.2. Advance Remittance for Import of Rough Diamonds
- AD Category – I bank are permitted to allow advance remittance without any
limit and without bank guarantee or standby Letter of Credit, by an importer
(other than a Public Sector Company or a Department / Undertaking of the
Government of India / State Government/s), for import of rough diamonds into
India from the under noted mining companies, viz.
- De Beers UK Ltd,
- RIO TINTO, UK,
- BHP Billiton, Australia,
- ENDIAMA, E. P. Angola,
- ALROSA, Russia,
- GOKHARAN, Russia,
- Rio Tinto, Belgium,
- BHP Billiton, Belgium and
- Namibia Diamond Trading Company (PTY) Ltd. (NDTC).
- While allowing the advance remittance, AD bank may ensure the following:
- The importer should be a recognized processor of rough diamonds as per the
list to be approved by Gems and Jewellery Export Promotion Council (GJEPC) in
this regard and should have a good track record of export realisation;
- AD Category – I bank should undertake the transaction based on their
commercial judgment and after being satisfied about the bonafides of the
- 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. Further, due caution may be exercised to ensure that remittance is
not permitted for import of conflict diamonds;
- KYC and due diligence exercise should be done by the AD Category – I bank
for the Indian importer entity and the overseas company; and
- AD Category – I bank should follow up submission of the Bill of Entry /
documents evidencing import of rough diamonds into the country by the importer,
in terms of FEMA / Rules / Regulations / Directions issued in this regard.
- 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
bank may permit 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.
- AD Category – I banks are required to submit a report in the format annexed
(Annex-2) of all such advance remittances made without a bank guarantee or
Standby Letter of Credit, where the amount of advance payment is equivalent to
or exceeds USD 5,000,000, to the Chief General Manager, Reserve Bank of India,
Foreign Exchange Department, Trade Division, Central Office, Amar Building, Sir.
P. M. Road, Fort, Mumbai – 400 001, on a half yearly basis as at the end of
September and March every year. The report should be submitted within 15 days
from the close of the respective half year.
C.1.3. Advance Remittance for Import of Aircrafts/Helicopters and other Aviation
As a sector specific measure, airline companies which have been permitted by the
Directorate General of Civil Aviation to operate as a schedule air transport
service, can make advance remittance without bank guarantee, 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. The remittances for the above
transactions shall be subject to the following conditions:
- 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
- Advance payments should be made strictly as per the terms of the sale
contract and are made directly to the account of the manufacturer (supplier)
- AD Category - I bank may frame their own internal guidelines to deal with
such cases, with the approval of their Board of Directors.
- 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.
- 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
- Prior to making the remittance, the AD Category – I bank may ensure that the
requisite approval of the Ministry of Civil Aviation / DGCA / other agencies in
terms of the extant Foreign Trade Policy has been obtained by the company, for
- 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.
Prior approval of the Regional Office concerned of the Reserve Bank will be
required in case of any deviation from the above stipulations.
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:
- 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.
- 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.
- 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
C.2. Interest on Import Bills
- AD – Category – I bank may allow payment of interest on usance bills or
overdue interest for a period of less than three years from the date of shipment
at the rate prescribed for trade credit from time to time.
- 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 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 the
prevailing LIBOR of the currency of invoice.
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.
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.
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:
- 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.
- 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 remittance is made directly to the account of the overseas supplier.
- 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.
C.6. Receipt of Import Bills/Documents
C.6.1. Receipt of import documents by the importer directly from overseas
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,
make remittances where import bills have been received directly by the importers
from the overseas supplier, except in the following cases:
- Where the value of import bill does not exceed USD 300,000.
- Import bills received by wholly-owned Indian subsidiaries of foreign
companies from their principals.
- 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.
- 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 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. AD Category - I
banks may undertake such transactions subject to the following conditions:
- The import would be subject to the prevailing Foreign Trade Policy.
- The transactions are based on their commercial judgment and they are
satisfied about the bonafides of the transactions.
- 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.
C.6.3. Receipt of import documents by the AD Category – I bank directly from
- 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
- 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
- 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 whom the relative remittance was made,
to ensure that the importer submits :-
- The Exchange Control copy of the Bill of Entry for home consumption,
- The Exchange Control copy of the Bill of Entry for warehousing, in case of
100% Export Oriented Units,
- Customs Assessment Certificate or Postal Appraisal Form, as declared by the
importer to the Customs Authorities, where import has been made by post, as
evidence that the goods for which the payment was made have actually been
imported into India.
- In respect of imports on D/A 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.
C.7.2. Evidence of import in lieu of Bill of Entry
- 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 auditor of the company that the goods for which remittance was made have
actually been imported into India provided :-
- the amount of foreign exchange remitted is less than USD 1,000,000 or its
- 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.
- 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.
C.7.3. Non Physical Imports
- 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.
- AD Category – I bank should advise importers to keep Customs Authorities
informed of the imports made by them under this clause.
C.8. 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.
C.9. Verification and Preservation
- 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.
- Documents evidencing import into India should be preserved by AD Category –
I bank for a period of one year from the date of its 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
C.10. Follow up for Import Evidence
- In case an importer does not furnish any documentary evidence of import, as
required under paragraph C.7. of Part III, within 3 months from the date of
remittance involving foreign exchange exceeding USD 100,000, the AD Category – I
bank should rigorously follow-up for the next 3 months, including issuing
registered letters to the importer.
- AD Category – I bank should forward a statement on half-yearly basis as at
the end of June & December of every year, in form BEF (Annex 1) 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, to the Regional Office of Reserve
Bank under whose jurisdiction the AD Category – I bank is functioning, within 15
days from the close of the half-year to which the statement relates.
- AD Category – I bank need not follow up submission of evidence of import
involving amount of USD 100,000 or less provided they are satisfied about the
genuineness of the transaction and the bonafides of the remitter. A suitable
policy may be framed by the bank's Board of Directors and AD Category – I bank
may set their own internal guidelines to deal with such cases.
C.11. Issue of Bank Guarantee
AD Category – I banks are permitted to issue guarantee on behalf of their
importer customers in terms of Notification No. FEMA 8/2000-RB dated May 3,
2000, as amended from time to time.
C.12. Import of Gold / Platinum / Silver by Nominated Banks / Agencies
C.12.1. Import on consignment basis
Gold may be imported by the nominated agencies/banks on consignment basis where
the ownership will remain with the supplier and the importer (consignee) will be
acting as an agent of the supplier (consignor). Remittances towards the cost of
import shall be made as and when sales take place and in terms of the provisions
of agreement entered into between the overseas supplier and nominated
agency/bank. These instructions would also apply to import of platinum and
C.12.2. Import on unfixed price basis
The nominated agency/bank may import gold on outright purchase basis subject to
the condition that although ownership of the gold shall be passed on to the
importer at the time of import itself, the price of gold shall be fixed later,
as and when the importer sells the gold to the users. These instructions would
also apply to import of platinum and silver.
C.13. Direct Import of Gold
AD Category – I bank can open Letters of Credit and allow remittances on behalf
of EOUs, units in SEZs in the Gem & Jewellery sector and the nominated agencies
/ banks, for direct import of gold, subject to the following
- The import of gold should be strictly in accordance with the Foreign Trade
- Suppliers’ and Buyers’ Credit, including the usance period of LCs opened
for direct import of gold, should not exceed 90 days.
- Banker's prudence should be strictly exercised for all transactions
pertaining to import of gold. AD Category – I bank should ensure that due
diligence is undertaken and all Know Your Customer (KYC) norms and the
Anti-Money-Laundering guidelines, issued by Reserve Bank from time to time are
adhered to while undertaking such transactions. AD Category – I bank should
closely monitor such transactions. Any large or abnormal increase in the volume
of business of the importer should be closely examined to ensure that the
transactions are bonafide trade transactions.
- In addition to carrying out the normal due diligence exercise, the
credentials of the supplier should also be ascertained before opening the LCs.
The financial standing, line of business and the net worth of the importer
customer should be commensurate with the volume of business turnover. Apart from
the above, in case of such transactions banks should also make discreet
enquiries from other banks to assess the actual position. Further, in order to
establish audit trail of import/export transactions, all documents pertaining to
such transactions must be preserved for at least five years.
- AD Category – I bank should follow up submission of the Bill of Entry by the
importers as stipulated.
- Head Offices/International Banking Divisions of AD Category – I banks
undertaking gold import transactions are required to submit as per the format
Annex-3, a monthly statement thereof, to the Chief General Manager,
Trade Division, Foreign Exchange Department, Amar Building, Central Office,
Reserve Bank of India, Sir P.M. Road, Fort, Mumbai 400001.
C.14. Gold Loans
- Nominated agencies / authorised banks can import gold on loan basis for on
lending to exporters of jewellery under this scheme.
- EOUs and units in SEZ who are in the Gem and Jewellery sector can import
gold on loan basis for manufacturing and export of jewellery on their own
- The maximum tenor of gold loan would be as per the Foreign Trade Policy
2009-2014, or as notified by the Government of India from time to time in this
- AD bank may open Standby Letters of Credit (SBLC), for import of gold on
loan basis, where ever required, as per FEDAI guidelines dated April 1, 2003.
The tenor of the SBLC should be in line with the tenor of the gold loan.
- SBLC can be opened only on behalf of entities permitted to import gold on
loan basis, viz. nominated agencies and 100% EOUs/units in SEZ, which are in the
Gem and Jewellery sector.
- SBLC should be in favour of internationally renowned bullion banks only. AD
Category – I bank can obtain a detailed list of internationally renowned bullion
banks from the Gem & Jewellery Export Promotion Council.
- All other existing instructions on import of gold and opening of Letters
of Credit, with usance period not exceeding 90 days, will continue to be
- AD Category – I banks must maintain adequate documentation with them to
uniquely link all imports with the SBLC issued for the import of gold on loan
C.15. Import of Platinum, Palladium, Rhodium, Silver and rough, cut &
- 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 should not exceed 90 days from the date of shipment.
- 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 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 / currency
arbitrage. All other instructions relating to import of these metals and rough,
cut and polished diamonds shall continue.
C.16. Import factoring
- 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.
- 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.17. Merchanting Trade
AD Category – I bank may take necessary precautions in handling bonafides
merchanting trade transactions or intermediary trade transactions to ensure
- Goods involved in the transactions are permitted to be imported into India
and all the rules, regulations and directions applicable to export (except
Export Declaration Form) and import (except Bill of Entry) are complied with for
the export leg and import leg, respectively.
- The entire merchant trade transaction is completed within a period of 6
- The transactions do not involve foreign exchange outlay for a period
exceeding three months.
- Payment is received in time for the export leg.
- Where the payment for export leg of the transaction precedes the payment for
import leg, AD Category – I banks should ensure that the terms of payment are
such that the liability for the import leg of the transaction is extinguished by
the payment received for the export leg of the transaction, without any delay.
AD Category – I banks may note that short-term credit either by way of
suppliers' credit or buyers' credit is not available for merchanting trade or
intermediary trade transactions.
List of Circulars consolidated in the Master Circular
Import of Goods and Services
AP (DIR Series) Circular No. 106
||June 19, 2003
AP (DIR Series) Circular No. 4
||July 19, 2003
AP (DIR Series) Circular No. 9
||August 18, 2003
AP (DIR Series) Circular No. 15
||September 17, 2003
AP (DIR Series) Circular No. 49
||December 15, 2003
AP (DIR Series) Circular No. 66
||February 6, 2004
AP (DIR Series) Circular No. 72
||February 20, 2004
AP (DIR Series) Circular No. 2
||July 9, 2004
AP (DIR Series) Circular No. 34
||February 18, 2005
AP (DIR Series) Circular No. 1
||July 12, 2005
||AP (DIR Series) Circular No. 33
||February 28, 2007
AP (DIR Series) Circular No. 34
||March 2, 2007
AP (DIR Series) Circular No. 63
||May 25, 2007
AP (DIR Series) Circular No. 77
||June 29, 2007
AP (DIR Series) Circular No. 18
||November 7, 2007
AP (DIR Series) Circular No. 37
||April 16, 2008
AP (DIR Series) Circular No. 03
||August 4, 2008
AP (DIR Series) Circular No. 08
||August 21, 2008
AP (DIR Series) Circular No. 09
||August 21, 2008
AP (DIR Series) Circular No. 12
||August 28, 2008
AP (DIR Series) Circular No. 13
||September 1, 2008
AP (DIR Series) Circular No. 15
||September 8, 2008
AP (DIR Series) Circular No.21
||December 29, 2009
AP (DIR Series) Circular No.56
||April 29, 2011
AP (DIR Series) Circular No. 59
||May 06, 2011