In a further liberalising of the norms for rough diamond imports, the Reserve Bank of India (RBI) has lifted restrictions on a number of mines abroad, to which advance remittances can be extended for such import of roughs.
Banks may use their own discretion to extend advance remittance to Indian importers in favour of global miners. Based on recommendations from the Gems & Jewellery Export Promotion Council (GJEPC), RBI had in 2007 notified five global miners of roughs — including Diamond Trading Company, UK; Rio Tinto, UK and BHP Billiton, Australia — to which an importer was allowed to make advance remittance without any limit and without a bank guarantee or standby letter of credit for import of roughs. The number was later extended to nine, including Al Rosa and Gokharan from Russia and Endiama EP from Angola.
“Henceforth, we will not notify the names of overseas mining companies from whom an importer may import rough diamonds into India, by way of advance payments, without any limit or bank guarantee or standby letter of credit,” RBI stated on Monday. At present, banks extend remittances to foreign miners on behalf of importers before the dispatch of consignments.
“RBI’s move will help the industry, as we will be able to procure rough diamonds from anywhere. Our hands will be free now,” said Shreyas Doshi, chairman, Shrenuj & Co.
Banks are now permitted to decide on the foreign mining companies to which an importer can make advance payments, without any limit or bank guarantee or standby letter of credit, the circular clarified. RBI cautioned that mining company in question should have recommendations from GJEPC and importers, be a recognised processor of roughs and have a good record.
The advance payment should be transferred directly to the account of the company concerned, not through numbered accounts or otherwise. The regulator has ,however, restricted remittances to any mining company without certification from the Kimberly Process Certification Scheme, established in 2003 by the United Nations to prevent diamond sales from financing war or human rights abuses.
For public sector undertakings, banks may permit the advance remittance with a specific waiver of bank guarantee from the ministry of finance, where the advance payment is equivalent to or exceeds $100,000. Banks are to report all such advances or remittances of over $5 million within 15 days of every six months.