To build a developed India, RBI must move beyond micromanagement

RBI eases forex compliance: exporters and importers can reconcile smaller bills, merchant traders get longer timelines, and rupee vostro accounts gain investment flexibility

On the first day of this month, the Governor of the Reserve Bank of India (RBI) announced a series of measures aimed at promoting ease of doing business, simplifying foreign exchange management, and facilitating greater use of the Indian Rupee (INR) in international trade. To give effect to these announcements, the RBI issued several AP (DIR) circulars. Of particular interest to exporters and importers is the one dealing with reconciliation and closure of entries in the Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS). 

RBI’s AP (DIR Series) Circular No. 12 dated October 1, 2025, allows Authorised Dealer (AD) banks to reconcile and close entries, including outstanding ones, in EDPMS and IDPMS of value equivalent to ₹10 lakh per bill or less, based on a declaration from the exporter that the amount has been realised, or from the importer that payment has been made. Any reduction in the declared or invoiced value of shipping bills or bills of entry may also be accepted based on such declarations. The circular further permits exporters and importers to submit these declarations on a quarterly basis in a consolidated form, covering several bills together, for bulk reconciliation and closure. 

This facility will particularly help exporters and importers who have mentioned one AD code in the shipping bill or bill of entry but received or made payment through another AD bank and also cover cases where payment has been made or received through a third party. The option to accept a reduction in declared or invoice value appears to be a practical alternative to the current system of seeking formal write-offs for shortfalls in the realisation of export proceeds or in making remittances for imports. However, more clarity is needed and hopefully, the RBI will clarify the circumstances where this facility can be used. 

Regarding merchanting trade transactions (MTT), earlier RBI instructions required the entire transaction to be completed within nine months and restricted any outlay of foreign exchange to four months. The commencement date was defined as the date of shipment, export-leg receipt, or import-leg payment, whichever occurred first, and the completion date as the date of shipment or settlement, whichever was later. The RBI has now extended the period for the foreign exchange outlay from four months to six months, giving merchant traders additional operational flexibility. 

Another step concerns the Special Rupee Vostro Accounts (SRVA). Previously, surplus INR balances in these accounts could be invested in government treasury bills and securities under prescribed limits. The RBI has now permitted investment of such balances in non-convertible debentures, bonds, and commercial papers issued by Indian companies, again within existing guidelines and limits. This broadens investment opportunities for partner countries that settle trade in rupees but may not be enough to encourage trade in non-convertible INR. 

These little changes will somewhat simplify compliance for exporters and importers. Yet, a more fundamental question remains whether it is necessary for the central bank to continue policing each export and import transaction for realisation and payment. For a country aspiring to become developed by 2047, such micromanagement sits uneasily with its ambitions. 

If India truly aims to be developed by 2047, it must learn to trust its traders. The road map to full convertibility of INR should also be very clearly defined. 

Email : tncrajagopalan@gmail.com