Write off of unrealised Export Bills

6C.14

(i)

In cases where the exporter has not been able to realise the outstanding

export dues despite his best efforts, he may approach the authorised dealer, who had

handled the relevant shipping documents, with appropriate supporting documentary evidence with a request for write off of the unrealised portion. Authorised dealers may accede to such requests (the branch concerned should obtain the approval of its controlling office) subject to the undernoted conditions:

(a)

The relevant amount has remained outstanding for 360 days or more.

(b)

The aggregate amount of write off allowed by the authorised dealer (at all branches put together) during a calendar year should not exceed 10% of the total export proceeds realised by the exporter through the concerned authorised dealer during the previous calendar year.

(c)

Satisfactory documentary evidence has been furnished in support of the exporter having made all efforts to realise the dues but has been unsuccessful due to reasons beyond his control.

(d)

The case falls under any of the undernoted categories:

(i)

The overseas buyer has been declared insolvent and a certificate from the official liquidator indicating that there is no possibility of recovery of export proceeds has been produced. (Names, addresses and other relevant particulars of the overseas buyers who have been declared insolvent may be intimated to ECGC for updating their files on buyers).

(ii)

The overseas buyer has not been traceable over a reasonably long period of time and suitable supporting documentary evidence to that effect has been produced. (His name, original address and other relevant particulars may be reported to ECGC, for updating their files).

(iii)

The goods exported have been auctioned or destroyed by the Port/Customs/Health authorities in the importing country and a certificate issued by the said authorities or the Indian Mission or Chamber of Commerce in the country of destination indicating that the goods have been auctioned or destroyed has been produced.

(iv)

The unrealised amount represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organisation.

(v)

The unrealised amount represents the undrawn balance of an export bill (not exceeding 10 per cent of the invoice value) and has remained outstanding and turned out to be unrealisable despite all efforts made by the exporter. The authorised dealer should take into consideration the track record of the exporter, documentary evidence/correspondence showing that there is no possibility of recovery of the undrawn balance, frequency of similar cases considered in the past and the antecedents of the overseas buyer, if available, before allowing the closure.

(vi)

The cost of resorting to legal action would be disproportionate to the unrealised amount of the export bill or where the exporter even after winning the Court case against the overseas buyer could not execute the Court decree due to reasons beyond his control and sufficient documentary evidence is produced to fully satisfy the authorised dealer.

(vii)

Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges but the amount has remained unrealised consequent on dishonour of the bills by the overseas buyer and documentary evidence is produced to show that there are no prospects of realisation.

(e)

The case is not the subject matter of any civil or criminal suit which is pending.

(f)

The exporter has not come to the adverse notice of the Enforcement Directorate or the Central Bureau of Investigation or such other law enforcement agency.

(g)

The exporter has surrendered proportionate export incentives, if any, availed in respect of the relative shipments.

(ii)

The documentary evidence received by the authorised dealer should be kept

for a period of two years or till their verification by the Reserve Bank's Inspectors, whichever is earlier. A half yearly statement, as on June 30 and December 31, showing particulars of export bills allowed to be written off should be furnished to Reserve Bank in form EBW. The statement should be submitted within fifteen days from the close of the relative half year. Where there is no further amount to be realised against the GR / PP form covered by the write off, authorised dealer should submit the duplicate thereof to Reserve Bank along with 'R' return, duly certified, as under:

Write off of ...................................................

(Amount in words and figures)

permitted in terms of paragraph 6C.14 of Exchange Control Manual.

Date

Stamp & Signature of

Authorised Dealer

Change of Buyer/Consignee

6C.15

Prior approval of Reserve Bank is not required if, after goods have been shipped, they

are to be transferred to a buyer other than the original buyer in the event of default

by the latter, provided the reduction in value, if any, involved does not exceed 10% and the realisation of export proceeds is not delayed beyond the period of six months from the date of shipment. Where the reduction in value exceeds 10%, the conditions stipulated in paragraph 6C.13 should also be satisfied.

Extension of Time Limit

6C.16

In cases where an exporter has not been able to realise proceeds of a shipment made

by him within the period prescribed (i.e the due date for payment which has to

fall within six months from the date of shipment, vide Rule 8 of Foreign Exchange Regulation Rules, 1974) for reasons beyond his control, but expects to be able to realise proceeds if extension of the period is allowed to him, necessary application (in duplicate) for the purpose should be made to Reserve Bank in form ETX together with appropriate documentary evidence. Extension will not ordinarily be granted unless Reserve Bank is satisfied that the exporter is in no way directly or indirectly responsible for the delay in realisation of proceeds and that by grant of a short extension the exporter will be able to realise proceeds.

Shipments Lost in Transit

6C.17

When shipments from India for which payment has not already been received either by

negotiation of bills under letters of credit or otherwise are lost in transit, authorised dealer

must see that insurance claim is made as soon as loss is known. The duplicate copy of GR / PP form should be forwarded to Reserve Bank with following particulars regarding insurance:

(a)

Amount for which shipment was insured.

(b)

Name and address of insurance company

(c)

Place where claim is payable.

In cases where claim is payable abroad, authorised dealer must arrange to collect

the full amount of claim due on the lost shipment, through the medium of his overseas branch/correspondent and forward the duplicate copy of GR/PP form to Reserve Bank only after the amount has been collected. A certificate for the amount of claim received should be furnished on the reverse of the duplicate copy.