RBI extends MTT payment timeline to six months, eases compliance rules

RBI extended the merchanting trade payment timeline to six months from four and simplified reconciliation rules for small exporters and importers to ease compliance burden

The Reserve Bank of India (RBI) has extended the period for foreign currency payment or expenditure for transactions such as imports from four months to six months. The relaxation is aimed at softening the impact of adverse global trade conditions on Indian merchants. The extension applies only to Merchanting Trade Transactions (MTTs).

 

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

 

In its statement on Developmental and Regulatory Policies, RBI said the relaxation is expected to help Indian merchants manage challenges in completing business transactions efficiently while maintaining profitability. Global trade uncertainties and supply chain disruptions have made it difficult for merchants to meet contractual obligations on time, the central bank added.

 

 

In another decision, RBI eased compliance requirements for small value exporters and importers by simplifying 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 transactions of value less than or equal to Rs 0.1 crore per bill, based on a declaration from the concerned exporter or importer.

 

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