Reserve Bank Of India
A.P. (DIR Series) Circular No. 88
March 12, 2013
To
All Category - I Authorized Dealer Banks
Madam / Sir,
“Write-off” of unrealized export bills –
Export of Goods and Services – Simplification of procedure
Attention of Authorized Dealer Category – I (AD Category –I) banks is invited to
A.P. (DIR. Series) Circular No. 12, 30, 61, 40, 33 and 03 dated September 09,
2000, April 04, 2001, December 14, 2002, December 05, 2003, February 28, 2007
and July 22, 2010 respectively in terms of which the exporters were given
limited powers of write-off and also AD Category – I banks have been permitted
to accede to the requests for "write-off" made by the exporters, subject to the
conditions, inter alia, that the exporter had to surrender proportionate export
incentives, if availed of, in respect of the relative shipments.
- With a view to further simplifying and liberalizing the procedure and for
providing greater flexibility to all exporters as well as the Authorized Dealer
banks, the earlier instructions have been reviewed. It has now been decided to
effect, subject to the stipulations regarding surrender of incentives prior to”write-off” adduced in the A.P. (DIR Series) Circular No. 03 dated 22 July
2010, the following liberalization in the limits of “write-offs” of unrealized
export bills:
- Self “write-off” by an exporter
(Other than Status Holder Exporter)
----------------------------------------------------- 5%*
- Self “write-off” by Status Holder Exporters
------------------------------------------ 10%*
- ‘Write-off” by Authorized Dealer bank
------------------------------------------------ 10%*
*of the total export proceeds realized during the previous calendar year.
- The above limits will be related to total export proceeds realized during the
previous calendar year and will be cumulatively available in a year.
- The above “write-off” will be subject to the following conditions:
- The relevant amount has remained outstanding for more than one year;
- Satisfactory documentary evidence is furnished in support of the exporter
having made all efforts to realize the dues;
- The case falls under any of the undernoted categories :
- The overseas buyer has been declared insolvent and a certificate from the
official liquidator indicating that there is no possibility of recovery of
export proceeds has been produced.
- The overseas buyer is not traceable over a reasonably long period of time.
- The goods exported have been auctioned or destroyed by the Port / Customs /
Health authorities in the importing country.
- The unrealized amount represents the balance due in a case settled through the
intervention of the Indian Embassy, Foreign Chamber of Commerce or similar
Organization;
- The unrealized amount represents the undrawn balance of an export bill (not
exceeding 10% of the invoice value) remaining outstanding and turned out to be
unrealizable despite all efforts made by the exporter;
- The cost of resorting to legal action would be disproportionate to the
unrealized amount of the export bill or where the exporter even after winning
the Court case against the overseas buyer could not execute the Court decree due
to reasons beyond his control;
- Bills were drawn for the difference between the letter of credit value and
actual export value or between the provisional and the actual freight charges
but the amount has remained unrealized consequent on dishonour of the bills by
the overseas buyer and there are no prospects of realization.
- The exporter has surrendered proportionate export incentives (for the cases not
covered under A. P. (DIR. Series) Circular No.03 dated July 22, 2010), if any,
availed of in respect of the relative shipments. The AD Category – I banks
should obtain documents evidencing surrender of export incentives availed of
before permitting the relevant bills to be written off.
- In case of self write-off, the exporter should submit to the concerned AD bank,
a Chartered Accountant’s certificate, indicating the export realization in the
preceding calendar year and also the amount of write-off already availed of
during the year, if any, the relevant GR / SDF Nos. to be written off, Bill No.,
invoice value, commodity exported, country of export. The CA certificate may
also indicate that the export benefits, if any, availed of by the exporter have
been surrendered.
- However, the following would not qualify for the “write off” facility :
Exports made to countries with externalization problem i.e. where the overseas
buyer has deposited the value of export in local currency but the amount has not
been allowed to be repatriated by the central banking authorities of the
country.
GR / SDF forms which are under investigation by agencies like, Enforcement
Directorate, Directorate of Revenue Intelligence, Central Bureau of
Investigation, etc. as also the outstanding bills which are subject matter of
civil / criminal suit.
- The respective AD banks may forward a statement in form EBW, in the senclosed
format, to the Regional Office of Reserve Bank under whose jurisdiction they are
functioning, indicating details of write-offs allowed under this circular.
- AD banks are advised to put in place a system under which their internal
inspectors or auditors (including external auditors appointed by authorised
dealers) should carry out random sample check / percentage check of “write-off”
outstanding export bills.
- Cases not covered by the above instructions / beyond the above limits, may be
referred to the concerned Regional Office of Reserve Bank of India.
- Authorized Dealers may bring the contents of the Circular to the notice of
their constituents concerned.
- The directions contained in this Circular have been issued under sections
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals, if any, required under any
other law.
Yours faithfully,
(Rashmi Fauzdar)
Chief General Manager
RBI/2012-13/435