RBI's reported move over remittances causes panic among exporters
IANS 17 December 2018
The Engineering Export Promotion Council of India (EEPC) on Monday said reports that the RBI was contemplating to forward cases of non-realisation of export proceeds to the ED, have created panic among exporters who submitted their records about remittance receipts to their banks.
 
"We have received several complaints from our members about the banks not issuing documents about the remittance receipts even after submission of all the required papers. Thus, exporters are facing a double whammy -- losing refunds like drawbacks and the possibility of Enforcement Directorate action," EEPC Chairman Ravi Sehgal said in a statement.
 
He said while the EEPC has been regularly advising its members to reconcile their remittances records, several banks are not issuing clearances, especially with regard to shipments to countries like Syria, Iran and Sudan.
 
At a time when exports are facing global headwinds like slowdown in the American economy, uncertainty over Brexit and the trade war between the US and China, the Reserve Bank of India and the government should be dealing with issues like remittances in a "friendly manner", Sehgal said. 
 
"In any case, it is in the interest of exporters to get their remittances in as quickly as possible. It is in rare cases that there may be temptation of foreign exchange arbitrage which could even result into losses. So, the problem seems to be more of procedures and should be treated like that," he said.
 
According to the apex body of engineering exports, India's overall merchandise exports remained static, logging in less than 1 per cent growth this November.
 
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Comments
Dayananda Kamath
6 years ago
It is High time RBI exercise the powers vested with it and stop allowing authorised dealers to misuse the satisfaction clause in allowing transactions under FEMA. Issuing of FIRC for trade transactions was prohibited in FERA as well as FEMA. But allowed to be abused first in consortium finance then universally to everyone as RBI did not initiate action for violations and closed it eyes. Change from Regulation to Management in Forex Act was misinterpreted and it appears they consider mismanagement also management.
Similarly Remitting of commission without declaring to customs is being misused to the hilt and allowed to be abused. It also leads to fraud on Govt by availing export incentives for which they are not eligible as there is no check to return the proportionate incentive on such remittances.
RBI has not initiated action on 88000 defaulters list thrown out by EDPMS for last 2 years. And to come out from this list Exporters as well as authorised dealers are again violating FEMA. It is high time RBI initiate special audit of the elimination of defaulters from the list from FEMA angle in last two years. Will the authorities wake up now. This route is allowed to be abused since 2004 for money laundering and round tripping. And only RBI woke up when its failure was brought to its notice in 2013, after modus operandi of remitting commission was published in news papers and EDPMS was introduced in 2014.
Gaurav Madan
Replied to Dayananda Kamath comment 6 years ago
Dear Mr. Kamath
It would be unfair to say that RBI has not actioned on EDPMS defaulters. RBI had in fact got IEC blocked which was later opened up. This definitely sent strong message to exporters. Further there are many times the reconciliation is not being done due to genuine reasons like remitter name is different from the buyer name or exports sent to Iran, Sudan etc. I believe we also need to streamline the whole process to make it easier. I don't think there is any website from where exporter can download complete list of pending cases against IEC. The process of reconciling the payment with the export is a manual process with physical movement of papers.
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