Currencies not having a direct exchange rate, settlement of Export transactions
RBI Guidelines to Exporter's Bank on settlement of export transactions in currencies not having a direct exchange rate.
The extract of RBI regulations on settlement of export transaction in currencies not having a direct exchange rate is stated below:
(vi) Settlement of Export transactions in currencies not having a direct exchange rate.
To further liberalize the procedure and facilitate settlement of export 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 transactions (excluding those put through the ACU mechanism), subject to conditions as under:
- Exporter shall be a customer of the AD Bank,
- Signed contract / invoice is in a freely convertible currency,
- 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,
- 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 above information describes about settlement of export transaction in currencies not having a direct exchange rate
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