RBI eases compliance burden; gives extra time for merchant payments

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The Reserve Bank of India has increased the period for foreign currency payment or expenditure for transactions such as imports from four months to six months to soften the blow from the adverse global trade environment on Indian merchants. This increase in time will be available only for Merchanting Trade Transactions (MTT).

 

In an MTT arrangement, an intermediary or merchant buys goods from a foreign supplier and sells those to a different foreign buyer without the goods ever physically entering the intermediary’s home country.

 

The RBI, in its statement on Developmental and Regulatory Policies, said this relaxation is expected to help Indian merchants overcome the challenges they face in completing their business transactions efficiently while maintaining profitability. Global uncertainties in trade are resulting in supply chain disruptions, making it challenging for Indian merchants to meet their contractual obligations in time, the RBI added. 

 

In another decision, the RBI eased the compliance requirements for small value exporters and importers. It has simplified the process of reconciliation in the Export and Import Data Processing and Monitoring System (DPMS).

 

Under the revised rules, bills can be reconciled and closed by a bank in DPMS for a shipping bill, or paid against a Bill of Entry, for entries of value less than or equivalent to ₹0.1 crore per bill. This would be based on a declaration from the concerned exporter or importer.

 

The revised procedure will also enable reduction in the realisable value of bills by authorised dealer (AD) banks based on such declarations. This measure is expected to reduce the compliance burden on small value exporters and importers and enhance ease of doing business, the RBI said.