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Banks can consider extending time limit for settling import dues: Expert

Weekly advice on managing small businesses. This time SME chatroom talks about a RBI directive on import of goods and services.

sme CHATROOM | India imports

TNC Rajagopalan 

imports, exports, retailers

Q. We have ordered some goods from a foreign seller on free on board (FOB) basis. We have to pay in advance. When we approached our bank they told us that the remittance can be made but we have to take a marine insurance policy for the shipment. Is the bank’s demand correct?

RBI Master Direction no.17/2016-17 dated January 1, 2016 (as amended) on Import of Goods and Services does not prescribe any such condition. It is possible that the banks want to secure your interests and in case they are extending credit to you, want to guard their interests also against a risk where the money is paid to the foreign party but the goods shipped are lost in transit.

Q. We received the import documents directly from the seller abroad. The goods are cleared and found defective. We have not made payment as the dispute is not yet resolved. What action we are required to take under FEMA Regulations pending resolution of the commercial dispute?

As per Para B.5.4 of the above referred Master Direction, banks can consider granting extension of time for settlement of import dues up to a period of six months at a time (maximum up to a period of three years) irrespective of the invoice value for delays on account of disputes about quantity or quality or non-fulfillment of terms of contract, financial difficulties and cases where the importer has filed suit against the seller. Any sector-specific guidelines (i.e. rough, cut and polished diamonds) will be applicable.

Q. We have exported certain goods and sent the shipping documents through our bank on collection basis. Now the buyer has requested delivery of documents without payment and has assured full payment within the nine-month period stipulated by RBI. We understand the liquidity problems of our buyer and want to accede to his request. We are not sure if our bankers will agree. Please guide us.

As per Para C.10 of RBI Master Direction no.16/2015-16 dated January 1, 2016 (as amended), banks can allow status holders (as per FTP), SEZ units and regular customers with good standing and track record to directly dispatch export documents to the buyer. Banks can even regularise cases where the documents (up to $1 million per shipment) have already been dispatched by the exporter directly to the buyer abroad, subject to fulfillment of certain conditions. Based on these instructions, I think your bank can accede to your request provided you are a regular customer of the bank with good standing and track record, compliant with the “Know Your Customer” guidelines and you satisfy the bank about making suitable arrangements for realisation of export proceeds.

Q. As per Para 5.04 of HBP, installation certificate for capital goods imported under EPCG scheme can be certified by the jurisdictional Customs authority. Does it mean the Customs authority at the port?

No. It means the Customs authority having jurisdiction over the premises where the capital goods are installed.

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First Published: Mon, November 16 2020. 14:42 IST