Advance payments for exports - Doubtful Inflow - RBI cautions banks
AS per the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, an exporter receiving an advance payment for exports (with or without interest) from a buyer outside India shall be under an obligation to ensure that the shipment of goods is made within the stipulated period from the date of receipt of advance payment.
RBI has observed that there is substantial increase in the number and amount of advances received for exports remaining outstanding beyond the stipulated period on account of non-performance of such exports (shipments in case of export of goods).
RBI wants banks to efficiently follow up with the concerned exporters in order to ensure that export performance (shipments in case of export of goods) are completed within the stipulated time period.
RBI further wants banks to exercise proper due diligence and ensure compliance with KYC (Know Your Customer) and AML (Anti Money Laundering) guidelines so that only bonafide export advances flow into India. Doubtful cases as also instances of chronic defaulters may be referred to Directorate of Enforcement (DoE) for further investigation.
Recently Enforcement Directorate is reported to have initiated investigation into such export advances running into over 800 crores in UCO Bank - with no export taking place -maybe another scam in the making; other banks could also be involved.
RBI Circular 74/RBI., Dated: February 09, 2015