Settlement of Export/ Import transactions in currencies not having a direct exchange rate.

Settlement of Export/ Import transactions in currencies not having a direct exchange rate.

To further liberalize the procedure and facilitate settlement of export and import transactions where the invoicing is in a freely convertible currency and the settlement takes place in the currency of the beneficiary, which though convertible, does not have a direct exchange rate, it has been decided that AD Category-I banks may permit settlement of such export and import transactions (excluding those put through the ACU mechanism), subject to conditions as under:

1. Exporter/ Importer shall be a customer of the AD Bank,

2. Signed contract / invoice is in a freely convertible currency,

3. The beneficiary is willing to receive the payment in the currency of beneficiary instead of the original (freely convertible) currency of the invoice/ contract/ Letter of Credit as full and final settlement,

4. AD bank is satisfied with the bonafides of the transactions, and;

The counterparty to the exporter / importer of the AD bank is not from a country or jurisdiction in the updated FATF Public Statement on High Risk & Non Co-operative Jurisdictions on which FATF has called for counter measures.

The Master Direction No. 16 of 2015-16 (on Export of Goods and Services) and Master Direction No. 17 of 2015-16 (on Import of Goods and Services) have been updated accordingly to incorporate the above changes.