There is lots of confusion in the mind of various exporters regarding period for export realisation and procedure if exports are not realised within prescribed time and overall what is the current prescribed time for export realisation. I will try to provide a simple to understand but comprehensive analysis of RBI policy on this matter. However, please take expert opinion and look at upto date guidelines of the RBI before taking any decisions. We provide this information on “No Obligation” basis.
In India any export undertaken is required to be realised within prescribed time or there is requirement of applying for extending the time prescribed for export. The details of the RBI guidelines on export realisation is given below.
Prescribed Time for Export Realisation
As per current RBI guidelines Exports are required to be realised within 12 months of date of export.
What to do if amount not realised within prescribed time
RBI has libralised its policy of extension of time period for export realisation and now the time period can be increased (subject to conditions) by the exporter itself, Designated Bank or lastly by RBI.
Conditions for Self Increase of Prescribed Time by Exporter
RBI has now allowed exporters to unilaterally increase prescribed time for export realisation without seeking any permission subject to some conditions. These conditions are:
- Total Value of Export Bills written off and extended should not exceed 10% of total export proceeds due during the financial year i.e. Exporter can itself increase the time prescribed for export realisation if the total amount of export bills extended or written off does not exceed 10% of Total Export proceeds due in that financial year.
- The Export Bills are not subject to investigation by any investigative agencies including CBI or Enforcement Directorate
- The limit of 10% is on per Designated Bank basis i.e. if a exporter is dealing with multiple banks then limit of 10% is required to be calculated for each bank separately
- Within one month from the close of financial year the exporter is required to submit a statement of export proceeds due, realised and not realised to its Designated Bank
- The designated bank will then verify all the details submitted by the exporter and if everything is in order no further action is required.
Extension of Prescribed Time by Designated Banks
RBI has also allowed Banks to increase prescribed time for upto a period of 6 months after 12 months have elapsed subject to the following conditions.
- Export Transactions as not subject to investigation by any investigative agencies
- The bank is satisfied that exporter has not been able to realise export proceeds due to reasons beyond its control
- The exporter submits a declaration that export proceeds would be realised within the extended period.
- The total outstanding of the exporter does not exceed USD 1,000,000 or 10% of Average Export Realisations within the last 3 years, whichever is higher
- In case exporter has filed suits abroad against the buyer, the extension may be granted irrespective of the limit.
Extension of Time Limit by RBI
In case not covered in the two options above, the exporter can make an application in Form ETX (in duplicate) to the Regional Office of RBI through his Bank.
For more details look at RBI Master Circular on Export of Goods and Services here http://www.rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=6502