Reality test needed for RBI credit rules

The RBI says banks may consider the applications from exporters and grant permission for opening or hiring of warehouses abroad

The Reserve Bank of India (RBI) gives exporters nine months from the date of export for realisation of the proceeds. The exception is 15 months for goods exported to a warehouse outside India.

The RBI needs to understand better the implications of these stipulations. Export proceeds of most shipments made without buyers being extended any credit come after about a month. For, it takes time for collection bills to reach the foreign buyer through banks and for payments to get routed through the proper channels. Quite often, foreign buyers wait for the shipments to arrive before retiring the bills.

Many exporters also