'Deemed exports eligible for bank credit'

Can we get loans from banks for deemed exports at concessional interest rates, and if so, can you give the details?

Banks are permitted to extend rupee pre-shipment and post-supply rupee export credit at a concessional rate of interest to parties against orders for supplies in respect of projects aided/financed by bilateral or multilateral agencies/funds (including World Bank, IBRD, IDA), as notified from time to time by the Department of Economic Affairs, Ministry of Finance, under the Chapter ‘Deemed Exports’ in the Foreign Trade Policy (FTP), which are eligible for grant of normal export benefits by the Government of India.

Banks may also extend rupee (i) pre-shipment credit, and (ii) post-supply credit (for a maximum period of 30 days or up to the actual date of payment by the receiver of goods, whichever is earlier), for supply of goods specified as ‘Deemed Exports’ under the same Chapter of the FTP from time to time. For further details, you may refer to RBI Master Circular DBOD No.DIR. (Exp).BC.07/04.02.02/2009-10 dated 1st July, 2009.

Against our export bills, our bankers are issuing bank certificates of exports (Appendix-22A) for the actual amount received from overseas banks, which debit their charges and send only the balance money. This results in loss for us in terms of incentives as well as export performance. Is there any way to convince banks to issue bank certificates for the full value of export proceeds realised, without deducting bank charges?

As per RBI AD (GP) Series Circular no. 4, dated 18th March 1997, banks may merely indicate the ‘FOB value’ under the column 14 of the bank certificate, without certifying that the amount has been actually realised. This is an old circular and it helps only in a limited way. You may represent the matter to the RBI and ask them to clarify the matter. In my opinion, export proceeds actually realised would mean that the amount paid by the buyer and the charges recovered by banks should not be deducted from the amount realised for the purpose of issue of a bank certificate. This problem is experienced by many exporters and so, I think the RBI should quickly issue a circular to clear all doubts. Can we club the advance authorisations issued under the 2004-09 Policy with the advance authorisations issued in the 2009-14 Policy?

Conceptually, I see no problem. But, Para 4.20 of the Handbook of Procedures, Vol. 1 (HB-1) says that “authorisations are required to have been issued under similar Customs notification even pertaining to different financial years. However in case of Authorisations issued in 2004-09 period or thereafter, Advance Authorisations with different customs notification can be clubbed.” This is interpreted as a restriction by some Regional (Licensing) Authorities.