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

 To facilitate settlement of export and import transactions where the invoicing is in a freely convertible currency and the settlement takes place in a currency, 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:

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

b)    Signed contract / invoice is in a freely convertible currency,

c) The beneficiary is willing to receive the payment in the currency of beneficiary instead of the original currency of the contract as full and final settlement,

d)    AD bank is satisfied with the bonafides of the transactions, and;

e)  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.

Based on RBI Circular dt 04/02/16. Please visit www.rbi.org.in for any further clarification if required…..       Poppy