SBI Import Checklist Guide 2011

SBI IMPORT CHECKLIST
Job Card
No
Contents Page No
1 Issue of Letters of Credit 2-8
2
Amendments/ Cancellation/ Exir! of LCs
Issued
"-11
# Imort $ills for Collection 12-1%
&
'crutin!/ (etirement of $ills dra)n under
Imort LCs
1*-2%
+ 'uliers Credit , $u!ers Credit 2*-#2
% Ad-ance (emittances - Imorts ##-#&
* Loans from .CN$ .unding - #+-&%
8 Issuance of .oreign $an/ 0uarantees &*-+*
Job Card 1Imorts2 No3 1
IMPORT LETTERS OF CREDIT
BASIC INFORMATION:
Letter of Credit can be c4aracterised as an arrangement of ma/ing a!ment against
documents3 It contains a )ritten underta/ing gi-en b! t4e imorter5s ban/6 to a! a
certain sum of mone! to t4e exorter6 on resentation of stiulated documents and
fulfillment of all t4e terms and conditions incororated t4erein3 All letters of credit are
sub7ect to3
1a2 8niform Customs and Practice for 9ocumentar! Credits 18CP9C2 %::3
1b2 .E;A (egulations
1c2 <rade Control (e=uirements3
1d2 Public Notices issued b! t4e 9irector 0eneral of .oreign <rade from time to
time3
1e2 8niform rules for ban/ to ban/ reimbursements under documentar! credits
ICC Publication no3+2+3
1f2 Credit norms of ($I3
1g2 >no) ?our Customer 1>?C2 guidelines
142 $an/5s internal rocedures3
'ince t4e ban/ establis4ing t4e credit underta/es t4e resonsibilit! of 4onouring t4e
drafts dra)n t4ere under6 e-er! care s4ould be ta/en b! it6 to ensure t4e abilit! of t4e
imorter to meet its obligation6 t4e integrit! of t4e exorter6 t4e nature of goods under
exort etc36 besides obser-ance of .E;A (egulations3
<4e different t!es of letters of credit are as under@-
1a2 (e-ocable letter of credit 1bu!er can call bac/ t4e credit23
1b2 Irre-ocable letter of credit 1t4e credit cannot be called bac/ )it4out t4e
agreement of all t4e concerned arties2
1c2 Irre-ocable and confirmed letter of credit 1)4ere in addition to t4e oening
ban/6 anot4er ban/ underta/es to 4onour t4e credit2
1d2 <ransferable Credit
1e2 Clean Credit 1a credit a!able on resentation of one or more drafts or
demand for a!ment )it4 no ot4er documents2
1f2 (e-ol-ing letter of credit 1amount is rene)ed or reinstated6 )it4out secific
amendment to t4e credit2
1g2 $ac/ to $ac/ letter of credit 1)4en a credit is oened )it4 t4e securit! of
anot4er credit6 t4e credit t4us oened is termed as bac/-to-bac/-credit23
142 9omestic credit 1 also /no)n as inland letter of credit A )4ere all t4e arties to
t4e LC are situated in t4e same countr! 2
Imports Page 2 of 57
1i2 (ed clause credit A red clause is a secial clause aut4orising t4e ad-ising or
confirming ban/ to ma/e ad-ances to beneficiar! before t4e s4iment3
1J2 'tand b! credit A issuing ban/ underta/ing an obligation to ma/e a!ment to
t4e beneficiar! on account of an! indebtedness of t4e alicant/ mone!
borro)ed/ or an! default 1 generall! used as a substitute for financial
guarantees and are oular in countries li/e 8'A6 ban/s6 b! la)6 are
recluded from issuing guarantees3
OPENING OF LETTER OF CREDIT:

<4e oening of a letter of credit in-ol-es t)o stages
A3 (eceit and scrutin! of t4e alication from t4e imorter-customer
&
$3 Bening of t4e letter of credit t4roug4 our foreign office/corresondent3
JOB SET-UP
A. Scrutin !" #$$%ic#ti!n:
Bn receit of t4e alication for oening a letter of credit6 ensure t4at -
13 1i2 All t4e documents mentioned in t4e co-ering letter are enclosed3 <4e
documents )ill generall! consist of@
1a2 'tamed Alication cum 0uarantee form3
1b2 Exc4ange Control co! of t4e Imort Licence or declaration form in
case t4e items of imort are freel! imortable under t4e .oreign
<rade olic! in force3
1c2 Letter of aut4orit! )4ere aroriate6 signed b! t4e licensee in fa-our
of t4e alicant6 in case t4e alicant is not t4e 4older of t4e licence3
1d2 Proforma in-oice/indent/sale contract6 etc6 co-ering t4e goods to be
imorted3
1e2 ;andate signed b! t4e alicant for transferring t4e foreign currenc!
liabilit! to ruee liabilit! in case6 t4e documents recei-ed under t4e
letter of credit remain unaid be!ond 1: da!s of t4e receit3
1f2 $oard (esolution in t4e case of limited comanies conferring t4e
o)ers to t4e coman! to establis4 t4e letter of credit etc3 <4is need
not be obtained in case of sanctioned limit3
1g2 E-idence for t4e Imorter Exorter Code Number allotted b! 90.<
to t4e imorter3
1ii2 9eclaration-cum-underta/ing to be obtained b! A9s under section
1:1+2 c4ater III of .E;A3
1iii2 Alication cum guarantee is dul! dated and stamed6 as an
agreement3
1i-2 It is signed b! erson/s aut4orised to do so3
1-2 Cis/t4eir signature/s is/are -erified b! t4e aut4orised official3
1-i2 All t4e columns in t4e form 4a-e been dul! filled and all t4e
corrections/alterations are aut4enticated3
1-ii2 Essential articulars furnis4ed in t4e alication -iD3 descrition of
goods6 =uantit!6 -alue 1including unit rice6 terms of sale6 etc26 conform
to t4e roforma in-oice/contract/indent bac/ing t4e letter of credit
1-iii2 All t4e terms and conditions are comatible )it4 eac4 ot4er3
1ix2 Ensure t4at t4ere is no clause in t4e LC )4ic4 ma! lead to a
contradiction or a re=uirement )4ic4 can not be -erified b! documents
because non-documentar! conditions 4a-e no -alidit!3
1x2 Ensure t4at s4iing terms are clear -iD3.B$6 CI.6 C.( etc3
1xi2 Ensure t4at )4ere-er necessar! t4e t!e of insurance and ris/s to be
co-ered are clear3
1xii2 Alication must contain a list of documents and number of coies of
eac4 re=uired3 9ocumentar! conditions must be clear and recise3
1xiii2 Ensure t4at exir! date and lace are )ritten clearl!3 9ates must be
mentioned )it4 mont4 )ritten in )ords3
1xi-2 Indent/contract continues to be -alid3
1x-2 Imort licence 1)4ere-er necessar! bears t4e number )it4 its refixes
and suffixes and is dul! signed and sealed b! t4e imort Licensing
Aut4orit!3 All t4e correction/alterations 4a-e been aut4enticated3
1x-i2 Endorsements or secial remar/s on t4e imort licence are strictl!
comlied )it4 1e3g3 0eneral Currenc! Area -0CA23
1x-ii2 <4e goods to be imorted are secificall! ermitted under t4e licence
and are co-ered b! t4e a-ailable balance in t4e licence3
1x-iii2 <4e amount a-ailable in t4e licence is sufficient to co-er t4e CI. -alue
of t4e goods under imort3 If t4e LC is establis4ed on .B$ basis t4e
amount s4ould be reduced b! 1:E or more for freig4t and 1E for
insurance3 F4ene-er alicable ro-ision for a!ment of agenc!
commission 1uto a maximum of 23+E of .B$ -alue of
imorts2/interest a!able locall! or abroad s4ould be made3 If 4o)e-er
imort is made t4roug4 our national carrier freig4t amount can also be
utilised for imort3
1xix2 <4e eriod of lacing t4e order is in conformit! )it4 t4at mentioned in
t4e imort licence6 if t4e licence indicates so3
1xx2 <4e countr! from )4ic4 t4e goods are to be consigned aearing in
t4e alication is in conformit! )it4 t4at of imort licence6 if t4e licence
secificall! stiulates t4e countr! of origin/exort3
1xxi2 <4e s4iment date gi-en in t4e alication is )it4in t4e -alidit! eriod
of licence3
1xxii2 If it is an AI9 licence all t4e conditions selt out in t4e relati-e ublic
notice of Imort <rade Control are comlied )it43
1xxiii2 <4e imorts conform to t4e descrition gi-en in t4e Current EGI;
Polic! $oo/3
1xxi-2 Letter of credit -alidit! is )it4in t4e -alidit! eriod of imort licence/ if
freel! imortable uto t4e licensing !ear as er t4e current Exim
Polic!3
1xx-2 <4e tenor of t4e bill of exc4ange called for does not exceed t4e eriod
ermitted under .E;A (egulations in force -iD3 18: da!s from t4e date
of bill of lading3 In case t4e tenor exceeds 18: da!s t4e credit can be
establis4ed onl! after obtaining ($I aro-al3
1xx-i2 Currenc! in )4ic4 a!ment for imort is to be made is in accordance
)it4 .E;A (egulations
1xx-ii2 If t4e alicant desires an! addition/secific conditions to be
incororated in t4e letter of credit6 it is not -iolati-e of t4e
Exc4ange/Imort Control (egulations and ro-isions of 8niform
Customs , Practice for 9ocumentar! Credits3
1xx-iii2 0oods are not to be consigned directl! to t4e bu!er under Air Fa!
$ill/$ill of Lading/Post Parcel and documents of title to goods are not
re=uired to be sent directl! to t4e imorter 1Co)e-er6 under secific
sanctions consignment direct to imorter ma! be allo)ed under roer
aut4orit!23
1xxix2 No onerous clause is incororated in t4e letter of credit )4ic4 )ill
4amer t4e securit! -is-H--is t4e $an/3
1xxx2 Ensure t4at t4e follo)ing clause is incororated in t4e LC Is4iment b!
sea-)ort4! -essels )4ic4 are not more t4an 2+ !ears old6 classed 1::
A1 b! Llo!ds or e=ui-alent classification 'ociet! and aro-ed b!
0eneral Insurance Cororation of IndiaJ
1xxxi2 Endorsements to be made at t4e redetermined rate )4ere suc4 a rate
is indicated in t4e Licence3
23 If t4ere are an! s4ort comings/discreancies6 get t4em rectified b! t4e
alicant3
#3 Kerif! t4e credit reort on t4e beneficiar! if a-ailable and see )4et4er it can
be considered as satisfactor!3
&3 F4ere t4e art! is en7o!ing a regular sanctioned limit for oening letters of
credit ut u t4e aers for aro-al b! t4e aut4orised official3
+3 If no regular limit 4as been sanctioned to t4e art!6 obtain t4e sanction of t4e
;anager/$ranc4 ;anager/Controlling Aut4orit!3
B. O$&nin' !" t(& Cr&)it
Bn obtaining t4e aro-al/sanction to oen t4e letter of credit -
i2 If t4e imort is against a line of credit extended to India b! a foreign countr!6
-erif! )4et4er t4e formalities rescribed for t4e urose 4a-e been comlied
)it43
ii2 In t4e case of deferred a!ments6 see )4et4er ermission of .oreign
Exc4ange 9eartment6 (eser-e $an/ 4as been obtained6 )4ere-er
necessar!3 3
i-2 Ensure t4at t4e date of oening t4e letter of credit is )it4in t4e -alidit!
eriod of t4e Imort Licence@
N!t&:
<4e last da! of t4e mont4 relating to t4e eriod of -alidit! of t4e licence is
rec/oned as t4e date of exir! of t4e licence3
-2 Endorse t4e CI. -alue of t4e imort6 on t4e Licence6 b! al!ing t4e $ill
'elling rate/con-ersion rate gi-en in t4e licence/.or)ard Contract (ate6
)4ic4e-er is alicable3
-i2 If t4e letter of credit is oened on .B$ or C.( basis6 earmar/ sufficient
amount to)ards freig4t and insurance from t4e licence3
-ii2If t4e letter of credit calls for usance draft6 ensure t4at usance eriod does not
exceed % mont4s from t4e date of s4iment3
-iii2 Ensure t4at in case of letter of credit on C.( and .B$ terms6 t4e alicant
4olds insurance co-er note in t4e $an/5s name and oener and co-ers at
least 11:E of in-oice -alue6 is -alid for s4iment eriod and in-ariabl! co-ers
Far , '(CC ris/s
ix2 Ensure t4at t4ere are no conditional clauses in t4e insurance co-er
note/olic!6 incororated in t4e letter of credit3
x2 Ensure t4at all imort LC oened b! t4e branc4 are ad-ised t4roug4 our
foreign office and I' RESTRICTED FOR NEGOTIATION TO THEM AS PER
THE BANKS* DIRECTION OF BUSINESS GUIDELINES3
xi2 (eco-er t4e necessar! margin )4ere-er alicable and /ee it in Current
Account or <393 ;ar/ lien on <9/CA3 (eco-er $an/5s c4arges
xii2 EGI;$ILL $(ANCCE'@ LC articulars 4a-e to be entered in Imort Letter of
Credit issuance / Amendment ;enu and -erified b! t4e aut4oriDed official3
8load t4e same to '.;' 1IN ;< *::2 and transmit it after due -erification
and aut4oriDation3
xiii2 .ile t4e ac/no)ledged co! ;< *::
xi-2 Arrange to send reimbursement instructions to t4e reimbursing ban/ 1')ift
;<-*&:26 )4ere-er alicable3
x-2 Ad-ise t4e imorter about t4e a-ailabilit! of for)ard co-er3
Note@ $ranc4es6 )4ile oening 8'9 denominated Letters of Credit on '$I6 Cong
>ong s4ould gi-e t4e reimbursement aut4oriDation to '$I6 Cong >ong
instead of '$I6 Ne) ?or/3 <4e relati-e 'ale entr! s4ould also be reorted
to 0;8> against '$I6 Cong >ong 1C(C9@ '$C>82 and not against '$I6
Ne) ?or/3 <4is re=uirement also alies to LCs oened on '$I6 Los
Angeles1'$LA23
ACCB8N<IN0 P(BCE98(E , EN<(IE'
.or ;argin - 9ebit @ Customer5s account
Credit @ <9/CA
.or C4arges - 9ebit @ Customer5s account
Credit @ Commission account6 Postages and
<elegram c4arges reco-ered Account
Proforma 0L entries to be assed31In t4e currenc! of LC issue2
9ebit @ Constituents liabilit! on $an/ LCs oened a/c
Credit @ $an/ LCs issued / confirmed a/c3
COMMISSION AND CHARGES:
Collect commission as er alicable rates
DOCUMENTS & FORMS
Letter of Credit alication cum guarantee stamed as an agreement form6
Customer5s underta/ing to a! t4e bills dra)n under Letter of Credit and t4e
$an/5s c4arges3 9eclaration-cum-underta/ing to be obtained b! APs under
section 1:1+2 c4ater III of .E;A3 ;andate for de-lin/ing foreign currenc! liabilit!
in case of non-a!ment of bills )it4in 1: da!s of receit 1sig4t bills2 / due date
1usance23
Ann&+ur&
Alicable C4arges to be reco-ered for oening of Imort Letters of Credit Bening
of Imort Letters of Credit@
MISCELLANEOUS:
Cr&)it !$ti!n, #-#i%#.%&:
Credit ma! be a-ailable b! negotiation/ accetance/ deferred a!ment/ a!ment3
Negotiation@ gi-ing of -alue under t4e LCL it can be eit4er sig4t or usanceL bills of
exc4ange A drafts- are dra)n as er t4e terms of t4e LC3
Accetance@ usance drafts to be dra)n on t4e nominated ban/ and uon
accetance6 t4e mone! becomes a!able on t4e acceted due date3
9eferred a!ment@ liabilit! under t4e LC arises on t4e due date3 NB drafts are dra)n
in t4is case3
1use of deferred credits 4as de-eloed rimaril! to a-oid 4ig4 stam dut! t4at certain
countries 4a-e alied to drafts2
Pa!ment@ a!ment made uon resentation of credit comliant documents 1at sig4t2
A no drafts dra)n3
Inc!t&r/, 0121@ 1FE. :13:132:112
EGF - Ex For/s
.CA - .ree Carrier
.A' - .ree Alongside '4i3
.B$ - .ree Bn $oard
C.( - Cost and .reig4t
CI. - Cost Insurance .reig4t
CP< - Carriage Paid <o
CIP - Carriage and Insurance Paid to
99P - 9eli-ered 9ut! Paid3
9A< - 9eli-ered at <erminal
9AP - 9eli-ered at Place
Acc!untin' in E3IMBILLS
Imort LC Issuance / Amendment M A3 <ransaction ;enu M Issuance M 13 (egister
LC Alication3 Bn confirming t4is ste6 LC number is generated3
ISSUE LC
Imort LC Issuance/Amendment M A3<ransaction ;enu M Issuance M13 Issue LC
1After (egister2
AMENDMENTS TO4 CANCELLATION OF4 E3PIR5 OF
LETTERS OF CREDIT
BASIC INFORMATION:
An irre-ocable letter of credit6 in rincile6 cannot be amended as an!
amendment )ill mean certain c4anges in t4e terms and conditions of t4e original
Letter of Credit3 Co)e-er6 if t4e arties to t4e Letter of Credit6 namel!6 t4e
beneficiar!6 oener6 oening ban/ and t4e ad-ising ban/ agree to t4e c4anges in
t4e terms and conditions of t4e original Letter of Credit6 t4e amendments can be
effected3
A. A/&n)/&nt, T! I/$!rt L&tt&r, !" Cr&)it
<4e 8CP9C %:: Article 1: 1a2 and 1: 1e2 reads as@
IExcet as ot4er)ise ro-ided b! Article #86 an irre-ocable Credit can neit4er be
amended nor cancelled )it4out t4e agreement of t4e issuing ban/6 t4e
confirming ban/ 1if an!2 and t4e beneficiar!3
IPartial accetance of amendments is not allo)ed and )ill be deemed to be
notification of re7ection of t4e amendment3J
As suc46 t4e beneficiar! cannot exercise t4e otion of acceting onl! certain
amendments of a single amendment letter3
Nature of Amendments@
1i2 Extension of last date for s4iments and negotiation3
1ii2 En4ancement or reduction in t4e -alue of credit3
1iii2 C4ange in t4e secification or descrition of t4e commodit!3
1i-2 C4anges in t4e mode of s4iment3
1-2 C4ange in t4e insurance olic! or an! ot4er documents3
1-i2 Extension of -alidit! eriod of Letter of Credit3
1-ii2 C4ange of an! clause in t4e letter of credit concerning documents to be
tendered under t4e credit3
JOB SET-UP
1i2 Bbtain alicant5s re=uest in )riting3 Kerif! from t4e communications
exc4anged bet)een t4e seller and t4e bu!er t4at t4e beneficiar! is agreeable
to en4ancement/reduction in t4e -alue of L/C3
1ii2 Ensure t4at t4e amendments soug4t are in conformit! )it4 Imort Licence
Conditions 1if an!26 .E;A (egulations6 Public Notices6 Indent/Purc4ases
order3
1iii2 4en s4iment dates are extended6 ensure t4at extended date falls )it4in t4e
-alidit! eriod for s4iment as er t4e Imort License 1if an!23
1i-2F4en t4e -alue of Letter of Credit is en4anced ensure t4at t4e en4ancement
is still )it4in t4e -alue of Imort license 1if an!2 and t4e sanctioned limit3
1-2 Put u for orders of t4e aut4orised official6 if t4e abo-e conditions are
fulfilled3
1-i2 Collect additional margin in case of en4ancements3
1-ii2 Collect additional commission and commitment c4arges as alicable and
also out of oc/et exenses3
1-iii2 (ecord details of amendment in Eximbills3
1ix2 8load t4e ')ift ;< *:* and transmit t4e same t4roug4 '.;' after due
-erification and aut4oriDation3
1x2 If t4e -alue is en4anced or -alidit! extended - intimate t4e same to t4e
reimbursing ban/3
1xi2 Endorse Imort Licence 1if an!2 )it4 C3I3.3 -alue of t4e en4ancement3
1xii2 In case of en4ancement6 roforma entries for t4e difference to be assed3
B. C#nc&%%#ti!n !" D!cu/&nt#r Cr&)it
1a2 An irre-ocable documentar! credit cannot be cancelled )it4out t4e consent
of t4e issuing ban/6 t4e confirming ban/ if an! and t4e beneficiar! 1Article 1:
1A2 of 8CP9C2
1b2 Kerif! )4et4er t4e re=uest is for cancellation of documentar! credit or
cancellation of unutilised ortion3
1c2 Bbtain a letter from t4e oener containing 4is instructions on t4e abo-e3
1d2 'end a ')ift ;< *:* to ad-ising ban/ re=uesting t4em to obtain beneficiar!5s
letter of consent for cancellation3
1e2 If beneficiar! 4as ad-ised 4is consent6 ad-ise 4im to return t4e documentar!
credit to t4e ban/6 t4roug4 t4e ad-ising ban/3
1f2 Instead of returning t4e documentar! credit if beneficiar! issues a letter
agreeing for cancellation6 re=uest t4e ad-ising ban/ to send ')ift ;< *#:6 to
t4is effect3
1g2 Also re=uest t4e ad-ising ban/ to cancel t4e documentar! credit6 to re-ent
furt4er use3
142 (educe t4e customer5s liabilit! )it4 t4e -alue of letter of credit3
1i2 (einstate t4e cancelled amount to rele-ant Imort Licence 1if an!23
172 (e-erse t4e roforma entries3
C. E+$ir !" D!cu/&nt#r Cr&)it
1a2 9ocumentar! credits are deemed to 4a-e exired one mont4 after -alidit!
date if documents are not recei-ed3 Co)e-er6 actual osition is to be
ascertained from t4e ad-ising ban/3
1b2 (estore t4e exired/unutilised amount to customer5s liabilit!3
1c2 (einstate t4e exired/unutilised amount to rele-ant Imort Licence3
1d2 (efund margin6 if an!6 collected earlier3
1e2 C4arges collected )4ile oening credit and amendment are NB< to be
refunded3
1f2 (e-erse t4e roforma entries3
C(#r'&, t! .& r&c!-&r&) !n A/&n)/&nt !" L&tt&r, !" Cr&)it
As alicable to t4e 'er-ice C4arges being udated from time to time3
.or re-i-al of exired L/Cs )it4in # mont4s from date of exir!6 collect Commitment
and usance c4arge from t4e date of exir! to t4e -alidit! date of t4e re-i-ed L/C3
Control entries as in t4e case of Issue of Lcs are to be assed onl! in case of
amendment of -alue of t4e LC3 Bt4er)ise6 entries relating to reco-er! of c4arges
onl! are to be assed3
Pr!c&,, in E+i/.i%%,:
Imort LC Issuance/Amendment M A3 <ransaction ;enu M Issuance M Amendment
of LC3
Job Card 1Imorts2 No3 #
IMPORT BILLS FOR COLLECTION
BASIC INFORMATION
<4ese include imort bills )4ic4 4a-e been recei-ed on collection basis eit4er being
urc4ased or )it4out being urc4ased b! a foreign branc4 or corresondent
1remitting ban/23 'ome of t4e bills mig4t 4a-e been urc4ased b! t4e
branc4/corresondent6 1remitting ban/23 Nonet4eless6 all t4e bills at t4is end )ill fall
under t4e categor! of N$ills for Collection5 onl!3
Imort bills and documents s4ould be recei-ed from t4e ban/er of t4e seller b! t4e
ban/er of t4e bu!er in India3 $ranc4es s4ould not6 t4erefore6 ma/e remittances
)4ere imort bills 4a-e been recei-ed directl! b! t4e imorters from t4e o-erseas
seller6 excet in t4e follo)ing cases
9ocuments ma! be recei-ed directl! b! imorters from t4e o-erseas sellers6
ro-ided6
a3 <4e imort is sub7ect to t4e re-ailing .oreign <rade Polic!3
b3 <4e transactions are based on t4eir commercial 7udgment
and t4e! are satisfied about t4e bonafides of t4e
transactions3
c3 <4e imorter is a customer of t4e branc4 and t4e
customer5s account is full! comliant )it4 extant >?C /
A;L guidelines issued b! t4e ($I3
d3 9ue diligence exercise is done b! t4e branc4 and is full!
satisfied about t4e financial standing / status and trac/
record of t4e imorter customer3
e3 It is customar! in t4at trade to recei-ed imort documents
directl! from t4e o-erseas exorter3
f3 'usicion about t4e genuineness of t4e transaction is
reorted t4roug4 t4e 'usicious <ransaction (eort 1'<(2
to .I8OIN9;1.inancial Intelligence 8nit in India2
$ranc4es 1but not t4e imorters2 ma! recei-e imort bills -alued uto 8'P1::6:::/-
or its e=ui-alent direct from t4e o-erseas sellers if t4e imorter re=uests so6 at t4e
re=uest of t4eir imorter clients6 ro-ided t4e branc4 is satisfied about t4e financial
standing/status and trac/ record of t4e imorter3 $ranc4 s4ould also obtain
satisfactor! reorts on t4e seller from o-erseas ban/er or reuted credit agencies3
a2 As er Article32 of 8(C +22L ICollectionJ means 4andling of documents b!
ban/s in accordance )it4 t4e instructions recei-ed in order to@
12 obtain a!ment and /or accetance or
22 deli-er documents against a!ment and/or accetance or
#2 deli-er documents on ot4er terms and conditions3
b2 Art 1:a of 8(C +22 states t4at goods s4ould not be desatc4ed directl! to t4e
address of a ban/ or consigned to or to t4e order of a ban/ )it4out rior
agreement on t4e art of t4at ban/3
c2 As er Article3121a2 ban/s must determine )4et4er t4e documents recei-ed
aear to be as listed in t4e collection instruction and must ad-ice b!
telecommunication or b! an! ot4er exeditious means6 )it4out dela!6 t4e art!
from )4om t4e collection instruction )as recei-ed of an! documents missing or
found to be ot4er t4an listed3
d2 Article32& states t4at t4e collection instruction s4ould gi-e secific instructions
regarding IrotestingJ in t4e e-ent of non-a!ment or non-accetance3 In t4e
absence of suc4 secific instructions6 t4e ban/s concerned )it4 t4e collection
4a-e no obligation to 4a-e t4e documents rotested3
Collection of bills is subject to@
1a2 8niform (ules for collections incororated International C4amber of
Commerce
Publication - +22
1b2 .E;A (egulations
1c2 .oreign <rade olic!
1d2 Public Notices Issued b! t4e 9irector 0eneral of .oreign <rade from time to
time3
JOB SET-UP
1i2 Bn receit6 -erif! )4et4er all t4e documents mentioned in t4e co-ering
sc4edule6 4a-e been recei-ed3
1ii2 C4ec/ )4et4er t4e documents/instructions are in conformit! )it4 t4e .oreign
<rade olic!/ .E;A (egulations and secific re=uirements in t4e case of
imorts under AI9 license as alicable3
1iii2 In case t4ere are an! deficiencies/s4ort comings ad-ise t4e remitting
branc4/corresondent ban/3
1i-2 <4e Presentation ;emo s4ould be scrutiniDed b! an Bfficial before being
for)arded to t4e dra)ee3 3
1-2 F4ere t4e bills 4a-e been dra)n on usance basis6 ad-ise t4e alicable
stam dut!6 t4roug4 t4e resentation memo3

A3 In t4e case of sig4t bills @
1a2 enter t4e transaction t4roug4 Eximbill ;enu and ad-ise customerL
1b2 call for t4e Exc4ange Control co! of t4e imort license if t4e
relati-e imort is under License3
1c2 If not so6 -erif! and ensure t4at t4e goods do not fall under negati-e
list3
1d2 get .orm A-I dul! signed b! t4e imorter3
1e2 ma/e t4e necessar! endorsement on t4e Imort license under
roer aut4entication3
1f2 a!ment of t4e bill to be recorded in Eximbill3
1f2 deli-er t4e documents dul! disc4arged b! t4e aut4orised official3
$3 In t4e case of usance bills ensure t4at @
1a2 t4e bill articulars are recorded in Eximbills3
1b2 t4e bill is resented for accetance3
1c2 t4e accetance is recei-ed )it4in &8 4ours of resentation3
1d2 t4e remitting branc4/corresondent is notified6 if it is not acceted
and furt4er instruction is soug4t3
1e2 )4en t4e accetance is recei-ed6 c4ec/ t4at t4e erson )4o 4as
signed6 4as t4e necessar! aut4orit! t4erefor3
1f2 4is signature is -erified/aut4enticated b! t4e aut4orised official3
1g2 t4e remitting branc4/corresondent is ad-ised of t4e due date3
142 t4e acceted draft is /et under roer custod!3
1i2 t4e documents are deli-ered against accetance/a!ment6 as
aroriate on submission of .orm A 1, relati-e Exc4ange Control
co! of t4e license6 if alicable after obtaining t4e aro-al of t4e
aut4orised official3
172 at t4e time a!ment6 enter articulars in t4e Eximbills3
1/2 t4e acceted draft is deli-ered to t4e art! dul! disc4arged b! t4e
aut4orised official on receit of a!ment in t4e case of 93A3 bills3
1-i2 (emit t4e roceeds less c4arges 1if t4e! are to be deducted from t4e
roceeds2 to t4e remitting branc4/Corresondent3 <4e roceeds )ill 4a-e to
be remitted b! draft/s)ift as er instructions contained in t4e bill co-ering
sc4edule of t4e foreign branc4/Corresondent3
1-ii2 (eort t4e sale to ($I in t4e (-(eturn aroriate for t4e rele-ant eriod3
1-iii2 As/ for t4e submission of documentar! e-idence of imort after clearance
of goods3
1ix2 9iarise t4e due dates for follo) u3
1x2 (eort to (eser-e $an/ if t4e art! fails to submit documentar! e-idence of
imort e-en after reminding6 t4roug4 t4e $E. statement3
1xi2 .ollo) t4e instructions co-ered in ($I5s AP 9I( Circular No3" of 2::: for
recautions in 4andling imort documents3

COMMISSION
As alicable
ACCOUNTING PROCEDURE & ENTRIES
1i2 a2 Bn receit of bill6 t4e follo)ing entries are to be assed3 In case of
Eximbills branc4es )4en t4e $ill articulars are entered under In)ard
Collections for transaction t!es 0' and N'6 t4e s!stem asses t4ese
entries3
9ebit @ $ills for Collection Account
Credit @ $ills lodged account
b2 If it is a .oreign Currenc! Non-credit usance bill discounted b! our foreign
offices6 t4e follo)ing entries are to be assed3 In case of Eximbills branc4es
)4en t4e $ill articulars are entered as In)ard Collections for transaction
t!es P' and ('6 t4e s!stem asses t4ese entries3
9ebit @ $an/s $ills (ecei-able a/c 1$$(2
Credit @ '$I $ills a/c

1ii2 a2 Bn a!ment t4e follo)ing entries are to be assed3 In case of Eximbills
branc4es )4ere t4e bill )as lodged in s!stem6 t4e a!ment 4as to be made
as In)ard Collections and t4e entries are assed b! t4e s!stem3
9ebit @ ImorterQs a/c or cas4
Credit @ Currenc! Control Account 1'end a!ment b! ')ift
;<&:: to t4e collecting ban/ and ;<
2:2 our nostro corresondent2
Bn (ealisation @ (e-erse t4e abo-e control 1contra2 entries3

DOCUMENTS & FORMS

1i2 9ocumentar! e-idence of imort to be retained at t4e branc43

STATEMENTS & RETURNS

1i2 A 4alf !earl! return as at t4e end of June and 9ecember on outstanding
cases of non submission of documentar! e-idence of imort 1$E.2 s4ould
be submitted to ($I3
1ii2 $ranc4es s4ould submit to t4eir controlling aut4orit! a return of o-erdue bills
as on t4e 1+t4 and last )or/ing da! of eac4 mont43
Pr!c&,, in E+i/.i%%,:
Imort Collection Lodgment of $ills M A3 <ransaction ;enu M :13Lodgment of
$ills under Collection3
(egister Non Accetance / Non Pa!ment@
Imort Collection Lodgment of $ills M A3 <ransaction ;enu M :%3 (egister Non
Accetance / Non Pa!ment
(eturn 8naid 8nacceted 9ocuments
Imort Collection Lodgment of $ills M A3 <ransaction ;enu M :*3 (eturn 8naid
8nacceted 9ocuments3
Pa!ment of Collection $ills
Imort collection a!ment of $ill M 13 Pa!ment M :#3(egister a!ment at
maturit! M :&3 Pa!ment at ;aturit!
Note@ All t4e abo-e stes re=uire suer-isor! release and at t4e aroriate
lace6 rates to be ta/en t4roug4 ;ercur! .G3
Job Card 1Imorts2 No3 &
SCRUTIN5 & RETIREMENT OF BILLS DRA6N UNDER
IMPORT LETTERS OF CREDIT
BASIC INFORMATION
Imorts into India are regulated b! t4e .oreign <rade Polic! announced b!
0o-ernment of India and t4e subse=uent Public Notices issued from time to time3
F4ere t4e ban/ 4as oened a letter of credit for imort of goods6 it 4as gi-en an
underta/ing t4at it )ill 4onour t4e draft/s dra)n b! t4e exorter6 ro-ided t4at t4e
documents called for6 are recei-ed and terms and conditions stiulated in t4e credit
are strictl! comlied )it43 'ince reliance 4as to be laced entirel! on t4e
documents6 as in documentar! credit oerations all arties concerned deal )it4
documents and not )it4 goods 1-ide article + of 8CP9C26 t4e scrutin! of documents
assumes aramount imortance3 E-er! care and caution s4ould6 t4erefore be
exercised in carr!ing out t4e scrutin!6 as t4e documents ma! be ultimatel! re7ected
b! t4e imorter6 if an! discreancies are found t4erein6 4o)e-er minor t4e! ma! be3
JOB SET-UP
i2 Ensure t4at all t4e documents listed in t4e co-ering sc4edule of t4e negotiating
ban/ 4a-e been recei-ed3
ii2 In case t4e dulicate set of documents 4as been recei-ed earlier t4an t4e
original set6 treat t4e same as first set and carr! out t4e scrutin!3 Also inform t4e
negotiating ban/3
iii2 Counter-c4ec/6 b! a reference to t4e letter of credit6 )4et4er all t4e documents
called for t4erein 4a-e been submitted and arrange t4em in t4e order in )4ic4
t4e! 4a-e been stiulated3
i-2 In t4e case of documents dra)n under AI9 credits6 ensure t4at t4e! are in
conformit! )it4 t4e AI9 conditions3
-2 In t4e lig4t of t4e ro-isions of 8CP9C and -arious terms and conditions selt
out in t4e letter of Credit and t4e subse=uent amendments6 if an!6 carr! out t4e
scrutin! and list out t4e discreancies3 <4e bills recei-ed under imort letters of
credit s4ould be carefull! scrutinised to ensure t4at t4ere are no discreancies3 <4is
exercise is necessar! e-en if t4e negotiating ban//branc4 4as indicated no
discreancies in t4eir co-ering sc4edule3
Enter t4e articulars in Eximbills under t4e ;enu A Imort LC $ills Lodgement
/ Pa!ment A Lodgement of LC $ills3
If 9ocuments are in order and as er t4e terms of Letter of Credit6 send an
ad-ice to t4e customer and ac/no)ledge t4e documents to remitting $an/3
In case of discreant documents6 c4oose t4e otion N!esJ and record t4e
details of discreant documents3 After suer-isor! aro-al6 uload t4e
;<*#& 1ad-ise of discreancies in documents2 to '.;'3 0enerate t4e
Kouc4ers and t4e ad-ice to customer to be disatc4ed romtl!3 If
beneficiar! accets t4e discreancies6 go to ;EN8- (egister Accetance6
8date 9iscreant 9ocuments field to NNo5 and gi-e suer-isor! aro-al3
8load t4e accetance message in form ;< *"" to '.;' for e-entual
transmission to collecting / negotiating ban/3
$ills of entr! A registration3 $ills of entr! 4a-e to be recorded after t4eir
receit from t4e customers in Eximbills3
C(&c7 Li,t "!r Scrutin
(E.E(ENCE ;A<E(IAL@
112 LC Co!
122 8CP9C6 I'$P
1a2 0ENE(AL 'C(8<IN?@
Ensure t4at -
1i2 All documents6 in full sets6 as er letter of credit terms 4a-e been
recei-ed3
1ii2 9ocuments 4a-e been resented/negotiated before t4e exir! date3
1iii2 Cancellations/o-er )ritings/alterations in all t4e documents are
aut4enticated3
1i-2 All t4e documents are in conformit! )it4 LC terms and consistent )it4
eac4 ot4er3

1b2 'C(8<IN? B. 9(A.</$ILL' B. EGCCAN0E@
Ensure t4at -
1i2 It is dra)n on t4e ban/ as indicated in t4e letter of credit3
1ii2 It is dra)n and dul! signed b! t4e beneficiar! of t4e credit3
1iii2 9ra)ing is )it4in letter of credit amount3
1i-2 9ra)n in t4e same currenc! as er t4e letter of credit
1-2 <enor is as er letter of credit3
1-i2 <4e amount in )ords and figures are t4e same and identical )it4 t4e
amount stated in t4e in-oice3
1-ii2 'uerscrition6 regarding dra)ing under letter of credit 4as been made3
1c2 'C(8<IN? B. INKBICE@
Ensure t4at -
1i2 It is made out in t4e name of t4e erson )4o 4as oened t4e letter of
credit3
1ii2 It is signed b! t4e beneficiar! of t4e letter of credit6 if stiulated in t4e LC3
1iii2 Ruantit!6 unit rice and -alue are =uoted as er letter of credit3
1i-2 F4et4er contract terms suc4 as .B$6 C.(6 and CI. etc3 is as er letter
of credit3
1-2 <4e descrition of t4e merc4andise corresond to t4e descrition in t4e
letter of credit
1-i2 <4e arit4metical calculations are correct3
1-ii2Imort Licence / Contract Number/Brder Number/Indent Number
mentioned as er letter of credit terms3
1-iii2 No c4arges ot4er t4an t4ose stiulated in letter of credit are included3
1ix2 <4e date and number of t4e Licence indicated6 if an!3
1d2 'C(8<IN? B. <(AN'PB(< 9BC8;EN<'@
Ensure t4at -
1i2 <4e date of s4iment is before t4e last date for s4iment as er LC3
1ii2 .ull =uantit! of goods is s4ied6 if art s4iment is not allo)ed3
1iii2 .ull set is submitted3
1i-2 .reig4t is s4o)n as reaid/a!able at destination6 as er letter of credit3
1-2 $ill of lading s4o)s Non board5 notation )it4 date3
1-i2 Parties are notified as er letter of credit terms3
1-ii2 Carr!ing -essel5s name 4as been mentioned in bill of lading3
1-iii2 <4e beneficiar!5s name is s4o)n as consignor6 unless letter of credit
ermits t4ird art! bill of lading3
1ix2 <4e consignee5s name is as er letter of credit3
1x2 <4e bill of lading is signed or ot4er)ise aut4enticated3
1xi2 <4e descrition of goods is consistent )it4 letter of credit3
1xii2 <4e orts of loading/destination are mentioned as er letter of credit
terms3
1xiii2 ;ar/s6 numbers6 =uantit! and )eig4t agree )it4 t4e in-oice3
1xi-2 <4e carr!ing -essel belongs to t4e articular line as er letter of credit3
1x-2 Ade=uatel! stamed3
1x-i2 Proerl! endorsed3
1x-ii2 If AF$6 )4et4er flig4t number and date of dearture is mentioned3
1x-iii2 If freig4t 4as been added searatel! in in-oice and no searate freig4t
certificate of s4iing coman! is submitted6 bill of lading s4o)s freig4t
amount3
1xix2 Ensure t4at t4e $ill of Lading contains name , address of Aut4orised
9ealer in India3
1e2 IN'8(ANCE @
Ensure t4at -
1i2 Certificate/olic! is according to letter of credit terms3 In case of olic!6 all
negotiable coies are a-ailable3
1ii2 (is/ commences )it4 effect from date of bill of lading3
1iii2 Amount of insurance is as er letter of credit terms3
1i-2 F4et4er dra)n in t4e same currenc! as t4e letter of credit3
1-2 9escrition of goods agrees )it4 bill of lading3
1-i2 (is/s as er letter of credit are co-ered3
1-ii2<4e lace )4ere claims are a!able is as er letter of credit terms3
1-iii2 Ade=uatel! stamed3
1ix2 9etails suc4 as name of carr!ing -essel6 ort of loading/destination mar/s
agree )it4 t4e bill of lading3
1f2 CE(<I.ICA<E B. ANAL?'I'6 FEI0C;EN< E<C3
Ensure t4at -
1i2 <4e certificates are issued b! t4e aut4orit! stiulated in letter of credit3
1ii2 Name of t4e s4ier is roerl! s4o)n3
1iii2 9escrition of goods is roerl! s4o)n3
1i-2 <4e samles dra)n relate to t4e goods actuall! s4ied3
1-2 9ate of samle -erification is )it4in t4e date of s4iment3
1g2 CE(<I.ICA<E B. B(I0IN @
Ensure t4at -
1i2 It is issued b! t4e aut4orit! stiulated in t4e letter of credit3
1ii2 <4e descrition of goods agrees )it4 t4at gi-en in t4e in-oice3
142 B<CE( 9BC8;EN<' @
Ensure t4at -
1i2 All ot4er documents stiulated in t4e letter of credit are -erified3
1ii2 <4e! are issued b! t4e aut4orities secified in t4e letter of credit3
1iii2 <4e! contain t4e details as re=uired b! t4e letter of credit3
N!t& :
1i2 In case an! discreanc! is obser-ed6 t4e negotiating ban//branc4 s4ould
be ad-ised b! ')ift ;< *#& )it4out dela!6 not later t4an t4e close of t4e
+t4 ban/ing da! follo)ing t4e da! of receit of t4e documents6 of t4e
nature of discreanc! indicating t4at t4e documents are being 4eld at t4eir
disosal or are being returned3 <4e ')ift message s4ould also contain a
re=uest to refund t4e amount of t4e bill )it4 interest for t4e eriod in-ol-ed
at t4e rate6 ruling in t4e countr! from )4ic4 reimbursement )as ro-ided3
1ii2 <4e discreanc! s4ould t4en be ad-ised to t4e alicants immediatel! and
t4eir confirmation t4at t4e documents are accetable to t4em desite t4e
discreanc! must be obtained6 in )riting6 before t4e release of t4e relati-e
documents3 If t4e documents are accetable to t4e dra)ee6 a ')ift ;< *#2 is
to be sent to t4e negotiating ban/3
1iii2 F4ile ad-ising t4e discreancies t4e imorter s4ould be as/ed to con-e!
t4eir accetance/re7ection of t4e discreant documents )it4in a definite time
limit so as to a-oid cr!stallisation of t4e imort bill on t4e 1:t4 da! from t4e
date of receit of t4e relati-e bill3
i-2 All bills s4ould be branded )it4 t4e $an/5s Crossing stam3 Also affix rubber
stam on all t4e documents recei-ed and indicate t4e number as er t4e
imort $ills (egister3
-2 Preare t4e rescribed resentation memo listing out t4e discreancies in t4e
documents6 if an!3
-i2 in resect of all foreign currenc! imort bills negotiated b! debit to an! of t4e
$an/5s foreign currenc! accounts 1nostro accounts2 abroad t4e follo)ing
roforma entries are assed@
9r3 N.oreign currenc! Imort $ills Account
Cr3 N.oreign Currenc! Imort $ills contra Account53
In case t4e branc4 is 4a-ing Eximbills s!stem6 t4e details of t4e $ill to be entered
in to t4e s!stem against t4e resecti-e imort letter of credit <4e abo-e entries
are assed b! t4e s!stem and -ouc4ers are generated3
-ii2 After getting t4e aro-al of t4e aut4orised official and under 4is signature -
a2 'end a ')ift ;< *#& to t4e negotiating ban/ stating t4e reasons
1discreancies2 for )4ic4 t4e documents are being 4eld at its disosal6 in
resect of discreant documents and ad-ising t4em to refund roceeds if
reimbursement for negotiations 4as alread! been obtained b! t4em3
b2 'end bill intimation to t4e imorter6 soliciting 4is resonse on discreancies3
-iii2 Kerif! from t4e Post Parcel/Air Cargo Arri-al Notice (egister6 )4et4er
necessar! notice 4as been sent to t4e imorter and )4et4er deli-er! order 4as
alread! been issued to t4e imorter against margin3
ix2 If t4e imorter is )illing to retire t4e documents in site of t4e discreancies
listed6 4e s4ould declare in )riting t4at t4e dra)ers are released from t4eir
liabilit!3 'end ')ift ;< *#2 to t4e negotiating ban/ communicating accetance of
discreancies3
x2 In t4e case of C . ( and .B$ contracts inform t4e articulars of s4iment to
t4e Insurance Coman! )4ic4 4as ro-ided t4e Insurance co-er at t4e time of
oening t4e letter of credit and get t4e Insurance Polic!6 )4ere necessar!3
xi2 Pending retirement of t4e bill6 /ee t4e documents under roer custod!3
<4ese are to be c4ec/ed b! an aut4orised official once a )ee/3
xii2 9ulicate set of documents as and )4en recei-ed s4ould NB< be 4anded
o-er to t4e imorter before retirement/accetance of t4e bill3
xiiii2 In t4e case of sig4t bills6 t4e! ma! be retired b! t4e imorter eit4er-
a2 against a!ment b! c4e=ue or debit to account3 1No cas4 to be acceted2
OR
1b2 b! a-ailing of an imort loan6 if a line of credit 4as been extended - reco-er
t4e ruee e=ui-alent at $ill selling rate / contracted for)ard rate along )it4
ot4er c4arges6 and also get .orm A-1 signed b! t4e Imorter and endorse
t4e licence6 )4ere alicable under roer aut4entication3
xi-2 9eli-er t4e documents dul! disc4arged 1retaining one co! of t4e in-oice2
after obtaining t4e aro-al 1and signature of t4e aut4orised official2
x-2 Bbtain an ac/no)ledgement from t4e customer for t4e receit t4ereof3
x-i2 In t4e case of usance bills6 ensure t4at-
1a2 t4e negotiating ban/ is ad-ised of t4e due date3
1b2 <4e due date is diarised3
1c2 t4e acceted draft is /et in roer custod!3
1d2 t4e documents are deli-ered against accetance6 on submission of .orm A-1
dul! signed b! t4e imorter and t4e Exc4ange Control co! of t4e licence6 if
alicable3
1e2 t4e acceted draft on a!ment is deli-ered to t4e art! on receit of
a!ment6 dul! disc4arged b! t4e aut4orised official3
x-ii2 If a!ment is not fort4coming )it4in 1: da!s for sig4t bills or on due date for
usance bills6 lease follo) t4e rocedures for cr!stallisation of imort bills3
x-iii2 Call for t4e $ill of Entr!6 in resect of aid bills for submission after
clearance of goods3 9iarise for follo) u 1if t4e -alue of t4e imort exceeds 8'9
1::6::: or its e=ui-alent23
xix2 Pa!ment is to be done t4roug4 Eximbills
In case t4e $ills 4a-e been recei-ed on collection basis due to discreancies
)4ic4 are later acceted b! t4e imorters6 remit roceeds as er foreign ban/5s
instructions3
xx2 (eort t4e sale to .oreign 9eartment t4roug4 Eximbills /;ercur! .G as t4e
case ma! be using transaction sub-t!es as under3
a2 .oreign 9emand $ills under LC 1.9LC2 - ''
b2 .oreign 8sance $ills under LC 1.$LC2 - 8'
xxi2 (eort t4e sale in t4e aroriate (-(eturn for t4e rele-ant eriod3
xxii2 Bbtaining of documentar! e-idence of imort@ In case of all imorts made
into India t4roug4 Post or ot4er)ise6 )4ere -alue of foreign exc4ange
remitted/aid for imort into India exceeds 8'9 1::6::: or its e=ui-alent6 it is
obligator! on t4e art of t4e branc4es t4roug4 )4om t4e relati-e remittance )as
made to ensure t4at t4e imorter submits t4e documentar! e-idence rescribed3
a2 <4e Exc4ange Control co! of t4e $ill of Entr! for 4ome consumtion /
4otoco! of Iex-$ond $ill of Entr!J for 4ome consumtion 1in case )4ere
E9I s!stem 4as been imlemented b! Customs26 or
b2 In case of 1::E Exort Briented 8nits t4e exc4ange control co! of t4e
$ill of Entr! for )are4ousing6 or
c2 Customs Assessment Certificate or Postal Araisal .orm as declared b!
t4e imorter to t4e customs aut4orities6 )4ere imort 4as been made b!
ost6 as e-idence t4at t4e goods for )4ic4 t4e a!ment )as made 4a-e
actuall! been imorted into India3
1xxiii2 )4ere t4e amount of foreign exc4ange remitted for imort is less t4an 8'9
1 million or its e=ui-alent6 branc4es ma! accet6 eit4er Exc4ange Control co!
of $ill of Entr! for 4ome consumtion / 4otoco! of Iex-$ond $ill of Entr!J for
4ome consumtion 1in case )4ere E9I s!stem 4as been imlemented b!
Customs2or a certificate from t4e C4ief Executi-e Bfficer 1CEB2 or Auditor of t4e
Coman! t4at t4e goods for )4ic4 remittance )as made 4a-e actuall! been
imorted into India6 ro-ided@
a2 t4e imorter is a coman! listed on a stoc/ exc4ange in India and )4ose
net )ort4 is not less t4an (s31:: crores as on t4e date of last audited balance
s4eet6 orL
b2 t4e imorter is a Public 'ector Coman! or an 8nderta/ing of t4e
0o-ernment of India or its 9eartments3 <4is facilit! is also extended to
autonomous bodies including scientific bodies/academic institutions6 suc4 as
Indian Institute of 'cience / Indian Institute of <ec4nolog! etc3 )4ose
accounts are audited b! Comtroller , Auditor 0eneral of India3 In suc4
cases a declaration from t4e auditor/CEB of suc4 institutions t4at t4eir
accounts are audited b! CA0 ma! be insisted uon3
1xxi-2 Ac/no)ledge receit of e-idence of imort from imorters b! issuing
ac/no)ledgement slis containing t4e follo)ing articulars3
a2 Imorter5s full name and address )it4 code numbersL
b2 Imort licence number and date 1)4ere-er alicable2L
c2 $an/5s reference of letter of credit number6 etc36 if an!L
d2 Number and date of Exc4ange Control co! of t4e $ill of Entr! /
4otoco! of Iex-$ond $ill of Entr!J for 4ome consumtion 1in case )4ere
E9I s!stem 4as been imlemented b! Customs2 / Postal araisal form /
certificate from t4e C4ief Executi-e Bfficer 1CEB2 or Auditor of t4e coman!
or Customs Assessment Certificate and t4e amount of imortL and
e2 Particulars of goods imorted3
1xx-2 Internal insectors or auditors s4ould carr! out 1:: ercent -erification of
t4e documents e-idencing imort3
1xx-i29ocuments e-idencing imort into India s4ould be reser-ed for a eriod of
one !ear from t4e date of its -erification3 Co)e-er6 in resect of cases )4ic4
are under in-estigation b! in-estigating agencies6 t4e documents s4ould be
destro!ed onl! after obtaining clearance from t4e in-estigating agenc!
concerned3
1xx-ii2In case an imorter does not furnis4 t4e document of e-idence of imort6
as re=uired )it4in # mont4s from t4e date of remittance in-ol-ing foreign
exc4ange exceeding 8'9 1::6::: or its e=ui-alent6 t4e branc4 s4ould rigorousl!
follo)-u for t4e next # mont4s6 including issue of registered letters to t4e
imorter concerned3 $ranc4es ma! accet eit4er Exc4ange Control co! of $ill
of Entr! for 4ome consumtion or a certificate from t4e C4ief Executi-e Bfficer
1CEB2 or Auditor of t4e coman! t4at t4e goods for )4ic4 remittance )as made
4a-e actuall! been imorted into India ro-ided t4e amount of foreign exc4ange
remitted is less t4an 8'9 1 million or its e=ui-alent and sub7ect to conditions
gi-en at 1xx-i2 abo-e3

1xx-iii2 (eort t4e cases of imorters )4o 4a-e failed to submit document of
e-idence of imort6 to (eser-e ban/6 on 4alf !earl! basis as at t4e end of June
and 9ecember e-er! !ear6 in form $E.3 In a fe) cases articularl! in case of
ne) accounts t4roug4 )4ic4 imort bills are routed6 branc4es s4ould send
coies of fe) bills of entr! on random basis for -erification b! t4e concerned
office of customs and follo)-u for confirmation or reort from t4em3 3'uc4
corresondence s4ould be /et on record for -erification b! internal auditors and
insecting officials of ($I3
xxix2 (emittance of interest to be endorsed on t4e imort licence3

ACCOUNTING PROCEDURE & ENTRIES:

A3 Bn receit of t4e bill 1F4ere $an/Qs nostro a/c 4as been debited2 t4e follo)ing
entries are to be assed3 1F4en t4e details are entered in Eximbills s!stem 1if
t4e branc4 is 4a-ing Eximbills23 t4e entries are assed b! t4e s!stem2@
i2 9r3 .oreign Currenc! Imort $ills A/c
Cr3 Liabilit! on .oreign Currenc! Imort $ills A/c
ii2 (e-erse t4ese roforma entries for L/C to t4e extent of bill amount b!
al!ing t4e same rate )it4 )4ic4 t4e foreign currenc! amount of t4e L/C
)as con-erted into ruees3
$3 Bn retirement of t4e bill 1)it4in 1: da!s2 t4e follo)ing entries are to be assed3
<4e details 4a-e to be entered in Eximbills s!stem 1if t4e branc4 is 4a-ing
Eximbills2 or t4e $an/ ;aster A .orex ;odule as sale transaction 6 t4e entries
are assed b! t4e s!stem and a data string gets generated for transmission of
transaction details to .oreign 9eartment3
i2 9r3 Imorter5s A/c 1at bill selling rate on date or t4e contracted rate2
Cr3 Currenc! control account
ii2 (e-erse Proforma entries stated as A1i23 <4e re-ersal )ill be done also if
t4e bill is returned unaid to t4e foreign ban/3
iii2 9r3 Imorter5s A/c Cr3 $ranc4 Interest A/c 1at domestic commercial rate of
interest i3e36 cas4 credit interest rate as er borro)er5s credit rating3 .or non-
borro)ers-maximum rate of interest on cas4 credit ad-ance2 1 for t4e eriod
from t4e date of negotiation/from t4e date of debit to our nostro a/c till t4e
date of retirement2
i-2 9r3 Imorter5s A/c
Cr3 Commission A/c 1as alicable2
-2 9r3 Imorter5s A/c
Cr3 .orex Clearing general A/c 1 )it4 t4e amount of foreign ban/5s c4arges6 if
an!6 to be con-erted at sot bill selling rate2
-i2 (efund aroriate margin6 if an!6 alread! reco-ered at t4e time of oening
t4e L/C3
COMMISSION TO BE RECO8ERED ON IMPORT BILLS UNDER
L4CS:
Alicable c4arges to be reco-ered3

DOCUMENTS & FORMS
1i2 .orm A 1
1ii2 $ill of Entr!/ost arcel / Courier )raer3
1iii2 P4otocoies of t4ose imort licences against )4ic4 exc4ange 4as been
released3

RETURNS & STATEMENTS
112 Calf !earl! return to (eser-e $an/ at t4e end of June and 9ecember e-er!
!ear6 of outstanding cases )it4 regard to submission of E-idence of imort in
resect of imort transactions e=ui-alent to or exceeding 8'9 1::6:::1$E.
'tatement23
122 A reort eac4 of $ills of entr! for Ad-ance imort a!ment and for imort
collection bills is a-ailable under <rade .inance reorts )it4 file names
S$r3CodeMI$A3rt and S$r3CodeMI$C3rt resecti-el!3

CR5STALLISATION OF IMPORT BILLS
In case of non-a!ment of sig4t bills )it4in 1: da!s/usance bills on t4e due date6
t4e bill amount )ill be cr!stallised b! con-erting foreign currenc! into ruees3 If
t4e material da! falls on a 4olida! or 'aturda! t4e imorter5s liabilit! s4all be
cr!stallised on t4e next )or/ing da!3 In t4e case of bills containing discreancies6
t4e imorter5s liabilit! s4ould not be cr!stallised till t4ese 4a-e been rectified /
acceted b! t4e customer3
Entries to be assed@
I3 A3 9r3 Ad-ances made to customers against imort bills 1 0eneral Ledger A/c in
case of sig4t bills2
!r
9r3 Imorter5s A/c 1in case of usance bills2
Cr3 C8((ENC? CBN<(BL A/c 1at t4e bill selling rate on t4e date or t4e
contracted rate2
$3 (e-erse roforma entries assed earlier in t4e .oreign Currenc! Imort $ills
Account and .oreign Currenc! Imort $ills Contra Account
C3 9r3 Imorter5s A/c
Cr3 Interest A/c
1at domestic commercial rate of interest i3e3 cas4 credit interest rate as er
borro)er5s credit rating3 .or non-borro)ers-maximum rate of interest on cas4
credit ad-ance2 eriod from the date of negotiation at t4e foreign centre to
t4e date of cr!stallisation3
93 9r3 Imorter5s A/c
Cr3 Commission A/c
II3 After cr!tallisation6 rigorous follo)-u )it4 t4e imorters is to be made so t4at t4e
bill is retired as earl! as ossible3 .ollo)ing entries are to be assed on
retirement@

A3 9r3 Imorter5s A/c
Cr3 Ad-ances made to customers against Imort $ills A/c
$3 9r3 Imorter5s A/c
Cr3 Interest A/c
12E abo-e t4e rate of interest c4arged under 13c abo-e3 <4e ceiling if an!6 of
($I as regards reco-er! of interest is to be abided at t4is stage2 Period from
t4e date of cr!stallisation to t4e date of retirement of t4e bill3
III3 Necessar! s)a cost to be reco-ered b! debit to imorter5s account as er
.E9AI rule " in case of earl! deli-er! )4ere for)ard contract is boo/ed3
IK3In case of non-retirement of t4e bill b! t4e customers )it4in a reasonable time
A3 9r3 Imorter5s A/c
Cr3 Ad-ances made to customers against Imort $ills A/c
$3 9r3 Imorter5s A/c
Cr3 Interest A/c
Period @ from t4e date of cr!stallisation till date
(ate @ As mentioned earlier at entr! No3 II3$3
CARE: Bbtain aut4orit! from t4e imorter at t4e time of oening letter of credit6 to
cr!stallise t4e bill in case of non- retirement )it4in 1: da!s from t4e date of receit3
Pr!c&,, in E+i/.i%%,:
Imort LC $ill Lodgment@
Imort LC lodgment and a!ment of bills M A3 <ransaction ;enu M 13$ill Lodge and
Pa!ment M :13Lodgment of LC $ills3
Imort LC $ill Pa!ment
<4is is done t)o stes3 13 (egister a!ment of $ills and 23 Pa!ment of $ills3
(egister Pa!ment of $ills@
Imort LC Lodgment and a!ment of $ills M A3 <ransaction ;enu M 13 $ill Lodge
and Pa!ment M (egister a!ment of $ills
Pa!ment of bills 1After registration2
Imort LC Lodgment and Pa!ment of $ills M A3 <ransaction ;enu M 13 $ill Lodge and
Pa!ment M:%3Pa!ment of $ills 1After (egistr!2
All t4e abo-e stes re=uire suer-isor! aut4oriDation and forex rates to be ta/en at
t4e aroriate stage t4roug4 ;ercur! .G3
Job Card 1Imorts2 No3 +
Tr#)& Cr&)it, 9Su$$%i&r, Cr&)it & Bu&r*, Cr&)it:
BASIC INFORMATION

Tr#)& Cr&)it, "!r I/$!rt, int! In)i#:

<rade Credits refer to credits extended for imorts directl! b! t4e o-erseas sulier6
ban/ and financial institution )it4 original maturit! of less t4an t4ree !ears3
9eending on t4e source of finance6 suc4 trade credits include 'uliers5 Credit or
$u!er5s Credit3
'uliers5 Credit relates to credit for imorts into India extended b! t4e o-erseas
sulier6 )4ile $u!ers5 Credit refers to loans for a!ment of imorts in to India
arranged b! t4e imorter from a ban/ or financial institution )it4 a maturit! of less
t4an t4ree !ears3
<4e $u!ers5 credit and 'uliers5 credit for t4ree !ears and abo-e come under t4e
categor! of External Commercial $orro)ings 1EC$2 )4ic4 are go-erned b! EC$
guidelines issued to ($I from time to time3
Fe can aro-e trade credits for imorts in to India u to 8'9 2: million er imort
transaction for imort of all items 1ermissible under foreign trade olic!2 )it4 a
maturit! eriod 1from t4e date of s4iment2 u to one !ear3 .or imort of caital
goods6 )e ma! aro-e trade credits u to 8'9 2: million er imort transaction
)it4 a maturit! eriod of more t4an one !ear and less t4an t4ree !ears3 No roll-
o-er / extension )ill be ermitted be!ond t4e ermissible eriod3

SBI*, SUPPLIER*S CREDIT@

<4ere is a roduct called 'ulier5s Credit a-ailable at our foreign offices3 )4ere t4e
settlement is done )it4in 18: da!s of s4iment3 <4e salient features of t4is roduct
are as follo)s@
a2 F4en t4e sulier is not in a osition to ro-ide t4e trade credit6 t4roug4 t4is
arrangement t4e bu!er )ill ma/e 4im agree for 4is usance bill to be
discounted at our foreign office6 so t4at t4e bu!er )ill e-entuall! get t4e credit
for t4e usance eriod3 <4e sulier )ill also get t4e rincial amount at t4e
beginning of t4e usance eriod3
b2 <4e arrangement leads to L/C bac/ed 18: da!s usance bills discounting
c2 A non- L/C usance bill discounting can be done )it4 recourse to t4e sulier
d2 An! ot4er credit facilit! arranged )it4 recourse to sulier for financing u to
18: da!s imort into India )4ic4 is not bac/ed u in t4e form of an! ot4er
document/guarantee agreement

S#%i&nt F&#tur&,

1i2 9omestic office to ascertain from .B in t4e sulier5s countr! t4e rate at
)4ic4 t4e usance bills for t4e secific eriod )ould be discounted b!
t4em3
1ii2 <4e underl!ing contract bet)een t4e exorter and t4e imorter s4ould
ro-ide for usance drafts3
1iii2 <4e L/Cs s4ould be oened strictl! in accordance )it4 t4e a!ment
terms of t4e underl!ing contracts and s4ould be restricted for negotiation
at our .B concerned3
1i-2 <4e L/Cs s4ould ro-ide for our .B concerned to claim reimbursement
onl! on t4e due dates of t4e bills dra)n under t4e L/Cs3
1-2 <4ere s4ould not be an! clause in t4e L/Cs or in t4e co-ering letters
for)arding t4e credits indicating t4at t4e bills dra)n under t4e credits
s4ould be discounted b! our .B3 No mandate/LBC/guarantee s4ould be
sent to our .B for discounting bills dra)n under t4e L/Cs3

Ot(&r C!n)iti!n,:
a2 <4e tenor of t4e bills s4ould not exceed 18: da!s from t4e date of s4iment3
b2 All in cost ceilings 1including interest a!able2 s4ould not exceed % mont4s
LI$B( lus 2:: basis oints for t4e resecti-e currenc! of credit3
c2 No )it44olding tax is a!able
d2 <4e rate of interest s4ould be negotiated )it4 t4e .B /eeing in -ie) t4e
cometition3
BU5ER*S CREDITS 9UP TO ; 5EARS::
$u!er5s credits can be arranged b! our branc4es for t4e imorter clients b! issuing
0uarantee6 Letter of 8nderta/ing 1LB826 Letter of Comfort 1LoC2 fa-ouring our .Bs
or .oreign ban/s u to 8'9 2: million er transaction for a eriod uto one !ear for
imort of all non-caital goods ermissible under .oreign <rade Polic! 1excet 0old2
and u to t4ree !ears for imort of caital goods6 sub7ect to rudential guidelines
issued b! (eser-e $an/ from time to time3 <4e eriod of suc4 guarantees/Lo8s/
LoCs 4as to be co-terminus )it4 t4e eriod of credit6 rec/oned from t4e date of
s4iment3

Accordingl! roosals recei-ed for s4ort term credits6 in EC$-& for financing b! )a!
of $u!er5s Credit for imort of goods into India ma! be aro-ed6 ro-ided
a2 <4e credit is being extended for a eriod of less t4an # !ears3
.: <4e amount of credit does not exceed 8'9 2: mio< $&r i/$!rt tr#n,#cti!n.
1<4is indicates t4at s4ort term $u!er5s Credit is onl! for imort uroses2
c2 <4e N all-in-cost5 er annum6 a!able for credit does not exceed LI$B( T 2:: basis
oints3

<4e roosals of $u!er5s Credit )4en recei-ed from t4e clients )ill be rocessed b! t4e
domestic branc4 including obtention of t4e necessar! aro-al from t4e concerned
aut4orities etc3 <4e interest rates )ould be finaliDed in consultation )it4 t4e foreign office
from )4ere t4e $u!er5s Credit )ill be released3 In case of interest rates finer t4an t4ose
indicated abo-e t4e domestic branc4 ma! consult Credit Fing of International 9i-ision at
Cororate Centre in t4e matter3
<4e domestic branc4es )ill furnis4 details of aro-als of $u!er5s Credits granted b!
t4em during t4e mont46 in .orm <C to t4eir LCB for on)ard submission to ($I so as to
reac4 not later t4an 1:
t4
of t4e follo)ing mont43 Eac4 credit )ill be gi-en a uni=ue
identification number b! t4e $ranc46 )4ic4 )ill be =uoted in all t4e future references3
All alications6 in form EC$6 for a-ailing of s4ort term credit for amount exceeding 8'9
2: mio for an! imort transactions ma! be for)arded to t4e C0;6 .oreign Exc4ange
9ett6 EC$ 9i-ision6 ($I3

D!cu/&nt#ti!n:

.oreign offices )ould be extending t4e $u!er5s Credits based on t4e
aut4enticated 'FI.< messages recei-ed from t4e Indian branc4es3 A co! of
t4e 'FI.< message format is enclosed3
Along )it4 t4e 'FI.< message an ac/no)ledgement of 9ebt / Letter of
8nderta/ing
1co! enclosed2 is to be furnis4ed b! t4e Indian branc4/ ot4er ban/s3
A co! of t4e internal aro-al )ould also be sent to t4e concerned foreign
office3
F!r/#%iti&, #t t(& In)i#n Br#nc(&,
<4e $u!er5s Credits )ould be in t4e boo/s of foreign offices3 $ut t4e exosure in t4e
ruee leg )ill be ta/en b! t4e domestic branc43 <4e follo)ing recautions 4a-e
t4erefore to be ta/en )4ile 4andling suc4 credits3
a2 <4e domestic branc4 4as to ensure t4at sufficient fund based and non-fund
based limits are in lace to co-er t4e exosure of $u!er5s Credit3
b2 '4ort term $u!er5s Credit u to % mont4s can be arranged on t4e basis of t4e
LC limits also6 but aroriate mar/ing 4as to be made in t4e LC limit so t4at
t4e borro)er is not issued additional LC increasing t4e exosure3
c2 $u!er5s Credits for more t4an % mont4s ma! be arranged eit4er from t4e
fund based limits or segregating t4e term loan limits anal!sing t4e cas4 flo)3
d2 Care 4as to be ta/en to see t4at sufficient securities 4a-e been ta/en
against t4e abo-e-said fund based/ non-fund based limits from )4ic4 $u!er5s
Credit 4as been aortioned3
e2 Commission for arranging $u!er5s Credit ma! be collected u front on
annualiDed basis6 li/e LB8 in case of foreign currenc! loan6 deending uon
t4e relations4i )it4 t4e customer3
N!t&: '4ort term credit b! )a! of 'uliers5 Credit or $u!ers5 Credit6 as en-isaged
abo-e is not a-ailable for merc4ant trade or intermediar! trade transactions3

ANNE3URE -I
F!r/#t !" Aut(&ntic#t&) S=i"t M&,,#'& >Un)&rt#7in'
Please refer !our =uote dated OOOOOOOOOOOOOOOOOOOOOOO for t4e follo)ing
transaction@
Name of t4e Imorter/End user@
Amount of Loan@
<enor@
Interest (ate@
($I Aro-al Number and 9ate6 if an!@
23 Please extend t4e loan for OOOOOOOOOOOOOOOOOOOOOOOOOOOO to us for t4e abo-e
imort transaction and remit t4e amount to OOOOOOOOOOOOOOOOOOOO =uoting our
reference3
#3 Fe6 OOOOOOOOOOOOOOO 1$an/2 4ereb! unconditionall! agree to a! t4e rincial
and interest at alicable LI$B( T OOOOOOOOOObs for t4is loan3 Fe underta/e to
credit !our designated account on t4e due date as er !our instructions3 Fe 4ereb!
underta/e to a! !ou on demand t4e loan amount and interest t4ereon and/or t4e
amount of an! losses6 costs , damages !ou ma! suffer in our failure to credit !our
designated account on due date3
Ann&+ur& II

ACKNO6LEDGEMENT OF DEBT OF STATE BANK OF INDIA
? BRANCH IN FA8OUR OF STATE BANK OF INDIA

9ate@

Princial@ OOOOOOOOOOOOOOOOOOOOOOOO
1Currenc! , amount2
Interest@ LI$B( lus er cent 3a3
'ub7ect@ C(E9I< .B( EN9 8'E $? IN9IAN I;PB(<E('

FCE(EA'6 ursuant to our ')ift ;essage 8nderta/ing dated
OOOOOOOOOOOOO in fa-our of 'tate $an/ of India6 OOOOOOOOOOOOOOOO $ranc4 1I'$IJ26
)4ic4 is full! incororated 4erein and made a art 4ereof6 '$I 4as extended t4e
re=uested credit to us accordingl!6 in consideration for t4e execution6
ac/no)ledgement6 and deli-er! to '$I of t4e said 8nderta/ing and ot4er good and
-aluable consideration6 and '$I 4as remitted on t4e OOOO da! of OOOOOO2: as er
our instructions t4e sum of P OOOOOOOOOOOOOOOOO
1Currenc! , amount2
Fe 4ereb! exressl! ac/no)ledge our liabilit! for t4e urose of 'ection 18 of t4e
Indian Limitation Act6 1"%#6 in terms of t4e aforesaid 8nderta/ing and an! securit!
created t4erefor3
IN FI<NE'' FCE(EB.6 t4e art! 4ereunder 4as dul! executed t4is
Ac/no)ledgement of 9ebt on t4e date first )ritten abo-e3 <4e indi-idual signing
belo) certifies t4at 4e is dul! aut4orised to execute t4is instrument on be4alf of 'tate
$an/ of India OOOOOOOOOOOOOOOOOO $ranc46 and t4at 4e signed 4is name t4ereto6
for and on be4alf of t4e said $an/ b! order of its $oard of 9irectors3

'<A<E $AN> B. IN9IA
OOOOOOOOOOOOOOOO $(ANCC6
$!@ OOOOOOOOOOOOOOOOOOOOOO6
Name@ OOOOOOOOOOOOOOOOOOOOO6
<itle@ OOOOOOOOOOOOOOOOOOOOOOO3

Job Card 1Imorts2 No3 %
A9KANCE (E;I<<ANCE' .B( I;PB(<'
Ad-ance remittances made for imorts must be recorded in a register st!led
IAd-ance remittances for imorts registerJ and s4ould be diarised for ensuring t4at
bills of entr! are submitted in time3
$ranc4es ma! allo) ad-ance remittance for imort of goods into India as under @
1i2 Ad-ance remittance must be made direct to t4e suliers3 If t4e amount
soug4t to be remitted as ad-ance remittance exceeds 8'P 1::6:::/- or its
e=ui-alent6 an unconditional6 irre-ocable standb! Letter of Credit or
guarantee from an international ban/ of reute situated outside India or a
guarantee of an aut4oriDed dealer in India6 if suc4 a guarantee is issued
against t4e counter guarantee of an international ban/ of reute situated
outside India6 s4ould be obtained3 Co)e-er6 $an/ can6 under its discretion6
allo) customers )it4 '$ + 1ne)2 rating and abo-e to remit uto 8'9
+6:::6::: 18'9 .i-e ;illion2 as ad-ance against imorts )it4out insistence
on a $an/ 0uarantee3 Care s4ould be ta/en to ensure t4at t4ere is not more
t4an one outstanding remittance under t4is categor! at an! oint of time and
t4e outstanding in no circumstances exceeds t4e net)ort4 of t4e coman!3
1ii2 In cases )4ere t4e imorter 1ot4er t4an a Public 'ector Coman! or a
9eartment/8nderta/ing of t4e 0o-ernment of India/'tate 0o-ernments2 is
unable to obtain ban/ guarantee from o-erseas suliers and t4e $an/ is
satisfied about t4e trac/ record and bonafides of t4e imorter6 t4e
re=uirement of t4e ban/ guarantee/ standb! Letter of Credit ma! not be
insisted uon for ad-ance remittances u to 8'9 16:::6::: 18' dollar one
million23 'uc4 )ai-er s4ould be ermitted on a case to case basis )it4 t4e
aro-al of aroriate aut4orit!3
1iii2 In t4e case of a Public 'ector Coman! or a 9eartment/8nderta/ing of
Central/'tate 0o-ernments t4e re=uirement of ban/ guarantee 4as to be
secificall! )ai-ed b! t4e ;inistr! of .inance6 0o-ernment of India for
ad-ance remittances exceeding 8'91::6::: 18'9 one 4undred t4ousand2 3
P4!sical imort into India s4ould ta/e lace )it4in six mont4s 1t4ree !ears in case of
caital goods2 from t4e date of suc4 remittance and t4e imorter s4ould gi-e an
underta/ing to furnis4 documentar! e-idence of imort )it4in fifteen da!s from t4e
close of t4e rele-ant eriod3
In t4e e-ent of non-imort of goods6 branc4es s4ould ensure t4at t4e amount of
ad-ance remittance is reatriated to India or is utiliDed for an! ot4er uroses for
)4ic4 release of exc4ange is ermissible under t4e Act6 (ules or (egulations made
t4ereunder3
In cases of non submission of $E.s6 t4e articulars to be reorted in 4alf
!earl! return $E. to ($I3
Job Card 1Imorts2 No3 *
LOANS FROM FCNR9B: FUNDS
BASIC INFORMATION
<4e sc4eme became oerational from 9ecember 1""% in t4e $an/3
2. S#%i&nt "&#tur&, !" t(& ,c(&/& #r& #, "!%%!=,:
a2 .CN( 1$2 Loans can be granted for manufacturing as )ell as trading
acti-ities of units3 Exorters and Industries/Cotels )it4 matc4ing forex
inflo)s )ill be referred3
b2 Loans can be granted for )or/ing caital as )ell as <erm Loan
re=uirements b! )a! of .CN( 1$2 9Ls for '$& 1Bld2 and '$-8L" 1NEF2
rated and .CN( 1$2 <Ls for '$ + 1Bld2 and '$ 1: 1NEF2 rated units33
.CN( 1$2 9emand loans can be sanctioned for a maximum eriod of 12
mont4s3 .CN( 1$2 <erm Loans can be sanctioned for duration of 1 to +
!ears3 F4ene-er <erm loans are considered for a eriod of abo-e # !ears
a secific rior clearance needs to be obtained from 0;8>3 In case of
loans sanctioned for a eriod of abo-e # !ears6 $an/ )ill retain t4e otion to
con-ert t4e loan in to (uee loan at an! time after # !ears from t4e date of
sanction3
c2 Loans )ill be granted in 8'9ollars 6 Pound 'terling6 Euro and ?en if funds
are a-ailable
;inimum@ 8' 9ollars +:::: or e=ui-alent in ot4er currencies and in
multiles of 8'9/0$P/E8( 1:6::: and JP? 16:::6::: t4ereafter3
;aximum@ 8' 9ollars + million er borro)er in general for )or/ing caital
and term loan ut toget4er3 After t4at aro-al of 9! ;9 1I$02 )ill be
re=uired3
d2 Prior funds clearance s4ould be obtained from 0;8> before commitment to
borro)ers3 In no case sanction of .CN( 1$2 loans s4ould be communicated
to t4e borro)er before funds allocation clearance is obtained from 0;8
>ol/ata3
e2 (ate of interest@ $ase rate is LI$B( for demand loans and for term loans3
<4e base rate and t4e sread o-er it range according to t4e credit rating of
t4e unit3
Pricing of .CN(1$2 A 9E;AN9 LBAN 1)3e3f3 :&3:132:1:2 1for dra)als u to 12
mont4s2
Credit (ating 1Ne) C(A )it4in brac/ets2 Pricing
'$-1 1'$-16 '$-22 LiborT&32+E
'$-2 1'$-# to '$-+2 LiborT+3::E
'$-# 1'$-%6 '$-*2 LiborT+3+:E
'$-& 1'$-86 '$-"2 LiborT%3+:E
'$-+ 1'$-1:2 LiborT*3::E
Pricing of .CN(1$2 A <L 1)3e3f3 :&3:132:1:2 1for dra)als u to 12 mont4s2
Credit (ating 1Ne) C(A )it4in brac/ets2 Pricin'
'$-1 1'$-16 '$-22 LiborT&3+:E
'$-2 1'$-# to '$-+2 LiborT+32+E
'$-# 1'$-%6 '$-*2 LiborT+3*+E
'$-& 1'$-86 '$-"2 LiborT%3+:E
'$-+ 1'$-1:2 LiborT*32+E
As er resent situation <L abo-e 12 mont4s6 fres4 .CN( 1$2 <erm Loans
abo-e 12 mont4s to be discouraged3 Existing <erm Loans )ill be considered
under t4e 12 mont4s buc/et3 T(& int&r&,t r#t&, in)ic#t&) in t(& #.!-& t#.%&,
#r& t(& /ini/u/@ .r#nc(&, ,(!u%) &n)&#-!r t! n&'!ti#t& #n) '&t (i'(&r
/#r7-u$ in -i&= !" %!= Li.!r r#t&,.
f2 Fit44olding <ax-nil
g2 Processing .ee- for .CN( 1$2 9Ls -t4ere is no searate rocessing fee if it
is alread! reco-ered at t4e time of fixing t4e o-erall limit3 .or .CN( 1$2 <Ls
rocessing fee alicable to t4e e=ui-alent to t4e (uee term loan s4ould
be reco-ered3
42 <ransaction Cost-8front
(s32+6:::/- for eac4 .CN(1$2 9L
(s3#+6:::/- for eac4 .CN(1$2 <L to be credited to $ranc4 Commission A/C3
i2 Commitment C4arge- 1for bot4 9Ls and <Ls2
.or disbursement6 time allo)ed )it4out commitment c4arge is 1+ da!s from
t4e date of allocation of funds3
If a-ailment of disbursement is after 1+ da!s but before t4ree mont4s6
commitment c4arge U 1E er annum is c4argeable )4ic4 s4ould be
credited to $ranc4 Interest account3
If not a-ailed )it4in t4ree mont4s aart from c4arging commitment c4arge
U 1E er annum6 t4e loan )ould be treated as cancelled3
72 $ranc4es to re-alue t4e balances 4alf-!earl! at rates ad-ised b! 0;8>3
/2 Penalt! for earl! a!ment 1;inimum loc/-in eriod of # mont4s2
.or earl! rea!ment of t4e loan6 a enalt! at 13+E er annum on t4e
amount of t4e loan reaid6 for t4e unexired eriod of t4e loan is c4arged3
l2 .or rea!ment of .CN( 1$2 loans6 Aut4orised 9ealers can sell foreign
currenc! to borro)ers )it4out ($I ermission3 <4ese loans can also be
reaid b! ad7ustment of ad-ances/in)ard remittances/exort
roceeds/balances in EE.C accounts/ot4er forex inflo)s3 In t(& &-&nt !"
n! "un), .&in' #-#i%#.%& in t(& .!rr!=&r*, #cc!unt< #n
!-&r)r#"t4irr&'u%#rit i, t! .& cr&#t&) "!r r&/ittin' t(& FCNRB 9DL: 4
in,t#%/&nt, !" FCNRB9TL: !n )u& )#t& t! GMU. K!%7#t#.
m2 <4e sc4eme en-isages oening t4ree 0eneral Ledger Accounts in
$ranc4es-
.CN(1$2 9emand Loans Account
.CN(1$2 <erm Loans Account3
.CN(1$2 .unds $orro)ed .rom .oreign 9eartment Account
1all entries ot4er t4an urc4ases/sales )ould be assed at fixed notional
rate 1.N(23
n2 <4e sc4eme is oerated at designated branc4es 19$s23 Bt4er branc4es can
oerate t4e sc4eme t4roug4 9$s3
o2 .or asset classification6 notional rates s4ould be used3
2 <4e urc4ase and sale entries at mar/et rates for disbursement and
rea!ment of .CN($ Loans )ill form art of urc4ase and 'ales for
reorting in P form and ( (eturns 3
=2 If customers )is4 to boo/ for)ard sale contracts for t4eir interest liabilit!
t4e! ma! be ermitted to do so b! gi-ing t4ese contracts searate treatment
0. FCNR9B: DEMAND LOANS
a2 Period@ 8 to a eriod a t)el-e mont4s3
b2 Fit4in t4e (uee ;P$. fixed for t4e borro)er and t4e .und $ased For/ing
Caital sanctioned b! t4e $an/3
c2 It can be art of eit4er )or/ing caital demand loan or cas4 credit
comonent3 If (uee FC9L 4as been con-erted to .CN( 1$2 9L t4en
maturit! of t4e .CN( 1$2 9L )ill be same as t4at of (uee FC9L3
A-ailment of .CN( 1$2 9L for bro/en eriod is also ermitted
d2 9isbursed in one lum sum6 so also t4e rea!ment3
e2 Loans can be granted on full! 4edged basis3 Fai-er for boo/ing of .or)ard
co-er can be aro-ed b! t4e Credit sanctioning aut4orit! not belo) t4e
ran/ of CCC-16 if t4e cororate 4as natural 4edge or )ell laid out cororate
4edging olic!3 Co)e-er6 )4ere-er )ai-er is ermitted6 $an/ reser-es t4e
rig4t to insist on 4edging an! time during t4e currenc! of t4e loan based on
eriod re-ie)s underta/en or )4ene-er ma7or ad-erse mo-ement in
exc4ange rates ta/e lace3
f2 .CN( 1$2 9L can be utilised to rea! t4e FC9L6 )it4 t4e aro-al of t4e
controlling aut4orit!3
g2 <4e number of FC9L and .CN( 1$2 9Ls ut toget4er s4ould not exceed
se-en er borro)er3
42 .or exorters6 .CN(1$2 9L in lieu of EPC 1car-ed out of EPC limits2
can be sanctioned3 'uc4 credits to exorters )ould amount to exort credit3 At
resent3 In -i&= !" #-#i%#.i%it !" PCFC 4 EBR %!#n, t! &+$!rt&r, #t
,u.,t#nti#%% %!=&r r#t& !" int&r&,t t(#n FCNR9B: %!#n,< it (#, .&&n
)&ci)&) t! =it()r#= t(& $r!-i,i!n !" !""&rin' FCNR9B: %!#n, t!
&+$!rt&r, #t /#r'in#%% .&tt&r int&r&,t r#t&, t(#n t(& r&'u%#r FCNR9B:
%!#n,.
Ad7ustment of ad-ance/in)ard remittances/exort roceeds6 balances in
EE.C/E.CA a/cs etc3 can be made in .CN( 1$2 9L3
i2 (e-aluation of out standings s4ould be made at t4e beginning of eac4
mont4 to assess )4et4er t4e (uee liabilit! is )it4in t4e caacit! of t4e
borro)er3 If not .CN( 1$2 9Ls s4ould be con-erted into FC9L under ad-ice
to controllers3
72 Interest s4ould be reco-ered for .CN( 1$2 9Ls at mont4l! inter-als at t4e
ruling << 'elling rate for t4e .oreign Currenc! amount3 If t4e interest
amount is (s31: la/4s and abo-e finer rates can be alied3
;. FCNR9B: TERM LOANS ACCOUNT
a2 'anctioned for duration of one !ear to t4ree !ears3 9uration can be
increased to + !ears )it4 t4e secific aro-al of 0;8>3
b2 ;inimum amount of disbursement is 8'9 +:6::: or e=ui-alent in ot4er
currencies
c2 9isbursed as and )4en t4e mac4iner!/e=uiment is urc4ased3
d2 <ime ga bet)een t4e first and last dra)do)n s4ould not exceed t4ree
mont4s3
e2 (ea!ments -=uarterl!/4alf !earl! in line )it4 cas4 flo)s3
f2 Can be utilised to li=uidate existing (uee term loan sub7ect to fres4
sanction/documentation3
g2 <4e .CN( 1$2 <erm loan can be sanctioned b! an aut4orit! not belo)
CCC-I3
42 Prea!ment of existing (uee term loans/ .oreign Currenc! Loans ta/en
from outside sources b! customers ma! be examined sub7ect to comliance of
ta/e-o-er norms of t4e $an/6 credit sanction and ermission of ($I/0BI
)4ere-er necessar!3
Acc!untin' Entri&, in CBS:
Disbursement of FCNB Loan in INR:
Pr& C!n)iti!n: .CN$ 9L/<L A/c 4as been oened and loan-trac/ing acti-it! 4as
been comleted3 8ser must 4a-e ne)l! oened .CN$ 9L/<L A/c number of
customer3 <4e customer5s .CN$ Loan A/c 4as been debited and .CN$ Loan to be
disbursed A/c 4as been credited b! t4e amount6 )4ic4 is to be disbursed3
Pr!c&,, in .ri&":
<)o different soft)ares are in-ol-ed in t4e transaction3 .irst art of transaction6
)4ic4 in-ol-es rate ta/ing and reorting to <reasur!6 is to be comleted on ;.x
'creen3 <4e second art6 )4ic4 )ill generate and ost t4e accounting entries6 is to
be comleted in $UNC'-2&3
I. N#-i'#ti!n in MF+:
Log in ;.x MM A Findo) I$ranc4 9as4 $oardJ )ill aear MM Clic/ on t4e lin/ IAdd
trade finance and C$' <ransactionJ Findo) IAdd <rade .inance and C$'
<ransactionJ )ill aear MM 'elect Core $an/ing3MMM
S&%&ct:
<ransaction <!e 'elect/ inut6 CN$.L A Con-ersion to IN( .CN$ <L / CN$.9 A
Con-ersion to IN( .CN$ 9emand Loan3 <o see t4e list of all
drodo)n -alues6 user s4ould inut A . A
$ranc4 (efr3 No3 Enter $ranc4 reference number/ '<(N Number/ .L Number6
user can inut maximum * numeric c4aracters3
A/c No3 Enter t4e ne)l! oened .CN$ loan account number and clic/
on I0et Account 9etailsJ3 <4e s!stem )ill fetc4 t4e necessar!
details from C$'3 In case of (BI on .CN$ 9L is lin/ed )it4
LI$B(6 t4e user )ill 4a-e to cature t4e re=uired details ertain
to LI$B( and margin in t4e resecti-e fields3
Currenc! 'elect t4e aroriate currenc!6 in )4ic4 draft is to be issued3
;aturit! 9ate Not alicable for t4is transaction
Customer Enter aroriate customer code for )4om t4e transaction is to
be done3 <o searc4 t4e code Clic/ on I V J 4el button3
Amount Enter foreign currenc! amount for )4ic4 t4e remittance to be
sent3
Btion 9ate Not alicable for t4is transaction
Corresondent 'elect/ inut t4e alicable Corresondence Code eg '$N? for
'$I Ne) ?or/3 <o searc4 t4e code Clic/ on IVJ 4el button6 t4e
list )ill aear6 user ma! select t4e aroriate code3
Kalue 9ate Not alicable for t4is transaction
Nostro 9ate Not alicable for t4is transaction
(-(eturn Code 'elect/ inut t4e alicable (-(eturn Code3 <o searc4 t4e code
Clic/ on IVJ6 t4e list )ill aearL user ma! select t4e aroriate
code3
.<C Card No3 Not alicable for t4is transaction
Corr3 (eference No3 Inut t4e alicable corresondent reference number6 if
a-ailable6 for nostro reconciliation urose3
IN( Cas4 <xn A In case IN( Cas4 is in-ol-ed in t4e transaction6 t4is flag s4ould
be I ?J6 ot4er)ise INJ3 .or t4is transaction t4is )ill be INJ3
Pr!)uct D&t#i%,:
8ser s4ould clic/ on WCBS U$)#t& . '!stem )ill generate reference number in t4e
format 1+ digit branc4 code T 1 al4a c4aracter T # digit numeric number23 <4is
number is called W;.x (eference number 6 )4ic4 )ill be used in C$'3
III. N#-i'#ti!n in BBNCS-0C:
.oreign Exc4ange $P( MMM .orex $P( Accounting 1'creen No 2#::& 0/L .orex
Accounting Promt2 )ill aear3 8ser s4ould inut ;.x reference numbers
generated b! ;.x6 t4en clic/ on transmit3 'creen no 2#::: 0/L .orex Accounting
)ill aear3 8ser s4ould -erif! t4e details and inut t4e desired narration in
statement narrati-e field3 <4e Customer5s .CN$ Loan A/c No3 s4ould be relaced
)it4 $0L A/c No36 naming .CN$ 9L/<L to be disbursed A/c3
.or reco-er! of c4arges@ Customer A/c for
C4arges Inut t4e customers IN( A/c6 )4ic4 is to be debited
to reco-er t4e c4arges3
Line & Inut t4e Commission/ Exc4ange/ P , < $0L A/c No
and amount in resecti-e fields3
Line + 1if re=uired2 Inut t4e Commission/ Exc4ange/ P , < $0L A/c No
and amount in resecti-e fields3
<4en <ransmit6 =ueue )ill be generated and sent to t4e C4ec/er for aut4oriDation3
C4ec/er s4ould aut4oriDe t4e transaction3 Na-igation to Print t4e -ouc4er and -erif!
accounting entries@
.oreign Exc4ange $P(MMM En=uiries MMM.orex3
Accounting 1'creen No 2#::+ 0/L .orex Accounting En=uir!2 )ill aear3 8ser
s4ould inut t4e ;.x reference number and clic/ on searc4@ '!stem )ill disla! t4e
osted accounting entriesL 8ser s4ould -erif! t4e disla!ed accounting entries and
clic/ on button APRINT 8OUCHERD to ta/e t4e rint of -ouc4er3
Disbursement of FCNB Loan in Foreign Currency:
Pr& C!n)iti!n:
.CN$ 9L/<L A/c 4as been oened and loan-trac/ing acti-it! 4as been comleted3
8ser must 4a-e ne)l! oened .CN$ 9L/ <L A/c number of customer3
Pr!c&,, in .ri&":
<)o different soft)are are in-ol-ed in t4e transaction3 .irst art of transaction6 )4ic4
in-ol-es rate ta/ing and reorting to <reasur!6 is to be comleted on ;.x 'creen3
<4e second art6 )4ic4 )ill generate and ost t4e accounting entries6 is to be
comleted in $UNC'-2&3
II. N#-i'#ti!n in MF+:
Log in ;.x MMM A Findo) I$ranc4 9as4 $oardJ )ill aear MMM Clic/ on t4e lin/
IAdd trade finance and C$' <ransactionJ Findo) IAdd <rade .inance and C$'
<ransactionJ )ill aear MMM 'elect Core $an/ing3MMM
S&%&ct:
<ransaction <!e 'elect/ inut6 9'-9raft issue/ <' A << Issue3 <o see t4e list of all
drodo)n -alues6 user s4ould inut A . A
$ranc4 (efr3 No3 Enter $ranc4 reference number/ '<(N Number / .L Number6
user can inut maximum * numeric c4aracters3
Currenc! 'elect t4e aroriate currenc!6 in )4ic4 draft / << is to be
issued3
;aturit! 9ate Not alicable for t4is transaction
Customer Enter aroriate customer code for )4om t4e transaction is to
be done3 <o searc4 t4e code Clic/ on I V J 4el button3
Amount Enter foreign currenc! amount for )4ic4 t4e remittance to be
sent3
Corresondent 'elect/ inut t4e alicable Corresondence Code eg '$N? for
'$I Ne) ?or/3 <o searc4 t4e code Clic/ on I V J 4el button6 t4e
list )ill aear 6 user ma! select t4e aroriate code3
Nostro 9ate Not alicable for t4is transaction
(-(eturn Code 'elect/ inut t4e alicable (-(eturn Code3 <o searc4 t4e code
Clic/ on I V J6 t4e list )ill aear 6 user ma! select t4e aroriate
code3
.<C Card Number Not alicable for t4is transaction
Corr3 (eference
No3
Inut t4e alicable corresondent reference number6 if a-ailable6
for nostro reconciliation urose3
IN( Cas4 <xn A In case IN( Cas4 is in-ol-ed in t4e transaction6 t4is flag s4ould
be I ?J6 ot4er)ise INJ3 .or t4is transaction t4is )ill be INJ3
Pr!)uct D&t#i%,:
Product <!e 'elect/ inut alicable roduct t!e -iD .L- .CN$ <erm Loan
and .9 A .CN$ 9emand Loan3 <o see t4e list of all drodo)n
-alues6 user s4ould inut I3I
Account Number Inut t4e ne)l! customer5s .CN$ Loan A/c No3
0et A/c 9etails Clic/ on t4is Icon3 '!stem )ill fetc4 t4e details from C$' and
disla!s t4e name of t4e customer and t4e a-ailable balance in
t4e account3 In case of .CN$ 9L is lin/ed )it4 LI$B(6 $ranc4 )ill
4a-e to cature t4e re=uisite details in resecti-e fields3
;aturit! 9ate This will be popped up by the system
Bt4er Currencies <4is is t4e currenc! of t4e .CN$ Loan account6 t4is )ill be
disla!ed b! t4e s!stem and s!stem )ill gi-e t4e con-ersion rate
bet)een t4is currenc! and currenc! field selected abo-e3 1eg3 if
user 4as selected 8'9 in abo-e field and customers 0$P .CN$
Loan A/c number )as gi-en in A/c No field3 <4e s!stem )ill
disla! 0$P in t4is field and rate )ill be gi-en 8'9/ 0$P23 In
case bot4 currencies are same (ate )ill not alicable3
Amount <4is is amount for )4ic4 transaction for t4is roduct is to be done3
In case transaction is not bifurcated6 user )ill inut t4e entire
amount3
Add Clic/ on t4is Icon and s!stem )ill disla! t4e details of transaction
in grid format3
C#r&: N! R#t& =i%% r&Euir& "!r t(i, tr#n,#cti!n< un%&,, it i, n!t cr!,, curr&nc
tr#n,#cti!n. 8ser s4ould clic/ on WCBS U$)#t& . '!stem )ill generate reference
number in t4e format 1+ digit branc4 code T 1 al4a c4aracter T # digit numeric
number23 <4is number is called W;.x (eference number 6 )4ic4 )ill be used in
C$'3
III. N#-i'#ti!n in BBNCS-0C:
Accounting Promt2 )ill aear3 8ser s4ould inut ;.x reference numbers
generated b! ;.x6 t4en clic/ on transmit3 'creen no 2#::: 0/L .orex Accounting
)ill aear3 8ser s4ould -erif! t4e details and inut t4e desired narration in
statement narrati-e field3 <4e Customer5s .CN$ Loan A/c No3 s4ould be relaced
)it4 .CN$ 9L/<L to be disbursed A/c3
C4arges Inut t4e customer5s IN( A/c6 )4ic4 is to
be debited to reco-er t4e c4arges3
Line & Inut t4e Commission/ Exc4ange/ P , <
$0L A/c No and amount in resecti-e
fields3
Line + 1if re=uired2 Inut t4e Commission/ Exc4ange/ P , <
$0L A/c No and amount in resecti-e
fields3
Repayment of FCNB Loan by debiting INR !ccount:
Pr& C!n)iti!n:
FCNB DL/TL A/c must be closed through loan module by debiting BGL A/c naming
FCNB Loan to be Reaid A/c! "ser must #erify that FCNB Loan to be Reaid A/c
should ha#e the DR balance in foreign currency and ensure that this is the amount
due from customer! There should not be any other balance in this account!
Pr!c&,, in .ri&":
<)o different soft)ares are in-ol-ed in t4e transaction3 .irst art of transaction6
)4ic4 in-ol-es rate ta/ing and reorting to <reasur!6 is to be comleted on ;.x
'creen3 <4e second art6 )4ic4 )ill generate and ost t4e accounting entries6 is to
be comleted in $UNC'-2&3
I8. N#-i'#ti!n in MF+:
Log in ;.x MMM A Findo) I$ranc4 9as4 $oardJ )ill aear MMM Clic/ on t4e lin/
IAdd trade finance and C$' <ransactionJ Findo) IAdd <rade .inance and C$'
<ransactionJ )ill aear MMM 'elect Core $an/ing3 MMM
S&%&ct:
<ransaction <!e 'elect/ inut6 CN'.9 A Con-ersion from IN( A .CN$
9emand Loan or CN'.L A Con-ersion from IN( .CN$
<erm Loan3 <o see t4e list of all drodo)n -alues6 user
s4ould inut A . A
$ranc4 (efr3 No3 Enter $ranc4 reference number/ '<(N Number6 user can
inut maximum * numeric c4aracters3
Account Number Inut t4e customer5s .CN$ Loan A/c No36 )4ic4 4as been
closed3
0et A/c 9etails Clic/ on t4is Icon3 '!stem )ill fetc4 t4e details from C$'
and disla!s t4e details customer6 (ate of Interest etc3 <4e
user 4as to inut LI$B( $asis /margin6 if alicable3
Interest (ate Interest (ate of closed .CN$ Loan A/c3 This will be
popped up by the system
Currenc! CARE: The system $ill dislay the currency of closed FCNB
loan and "ser should not ma%e any change3
;aturit! 9ate <4is )ill be disla! b! s!stem after getting t4e account
details from C$'
Customer Enter aroriate customer code for )4om t4e transaction is
to be done3 <o searc4 t4e code Clic/ on IVJ 4el button3
Amount Enter foreign currenc! amount6 )4ic4 is to be reco-er from
customer3
Corresondent 'elect/ inut t4e alicable Corresondence Code eg '$N?
for '$I Ne) ?or/3 <o searc4 t4e code Clic/ on IVJ 4el
button6 t4e list )ill aearL user ma! select t4e aroriate
code3
Nostro 9ate <4is is date of Nostro Credit6 In case6 it 4as been left blan/6
b! default s!stem )ill ta/e t4e transaction date3
(-(eturn Code 'elect/ inut t4e alicable (-(eturn Code3 <o searc4 t4e
code Clic/ on IVJ6 t4e list )ill aearL user ma! select t4e
aroriate code3
.<C Card No3 Not alicable for t4is transaction
Corr3 (eference No3 Inut t4e alicable reference number6 for nostro
reconciliation urose3
IN( Cas4 <xn A In case IN( Cas4 is in-ol-ed in t4e transaction6 t4is flag
s4ould be I ?J6 ot4er)ise INJ3 .or t4is transaction t4is )ill be
INJ3
Pr!)uct D&t#i%,:
Product <!e 'elect/ Inut6 (? - (ead!3 <o see t4e list of all drodo)n
-alues6 user s4ould inut I 3 I
Account Number Inut t4e CA/ CC/ B9 A/C Number6 )4ic4 is to be debited3
0et A/c 9etails Clic/ on t4is Icon3 '!stem )ill fetc4 t4e details from C$' and
disla!s t4e name of t4e customer and t4e a-ailable balance
in t4e account3
;aturit! 9ate This will be popped up by the system
Bt4er Currencies <4is is t4e currenc! of t4e inuted account6 t4is )ill be
disla!ed b! t4e s!stem and s!stem )ill gi-e t4e con-ersion
rate bet)een t4is currenc! and currenc! field selected abo-e3
1eg3 If user 4as selected 8'9 in abo-e field and customers
IN( A/c number )as gi-en in A/c No field3 <4e s!stem )ill
disla! IN( in t4is field and rate )ill be gi-en 8'9/ IN(23 In
case bot4 currencies are same (ate )ill not alicable3
Amount <4is is amount for )4ic4 transaction for t4is roduct is to be
done3 In case transaction is not bifurcated6 user )ill inut t4e
entire amount3
Add Clic/ on t4is Icon and s!stem )ill disla! t4e details of
transaction in grid format3
8ser s4ould clic/ on WCBS U$)#t& . '!stem )ill generate reference number in t4e
format 1+ digit branc4 code T 1 al4a c4aracter T # digit numeric number23 <4is
number is called W;.x (eference number 6 )4ic4 )ill be used in C$'3
I8. N#-i'#ti!n in BBNCS-0C:
Accounting Promt2 )ill aear3 8ser s4ould inut ;.x reference number generated
b! ;.x6 t4en clic/ on transmit3 'creen no 2#::: 0/L .orex Accounting )ill aear3
8ser s4ould -erif! t4e details and inut t4e desired narration in statement narrati-e
field3 <4e Customer5s .CN$ Loan A/c No3 s4ould be relaced )it4 $0L A/c No36
naming .CN$ 9L/<L to be aid A/c3
C4arges Inut t4e customer5s IN( A/c6 )4ic4 is
to be debited to reco-er t4e c4arges3
Line & Inut t4e Commission/ Exc4ange/ P ,
< $0L A/c No and amount in
resecti-e fields3
Line + 1if re=uired2 Inut t4e Commission/ Exc4ange/ P ,
< $0L A/c No and amount in
resecti-e fields3
<4en <ransmit6 =ueue )ill be generated and send to be C4ec/er6 for aut4oriDation3
C4ec/er s4ould aut4oriDe t4e transaction3 Na-igation to Print t4e -ouc4er and -erif!
accounting entries@
.oreign Exc4ange $P( MMM En=uiries MMM .orex Accounting 1'creen No 2#::+ 0/L
.orex Accounting En=uir!2 )ill aear3 8ser s4ould inut t4e ;.x reference number
and clic/ on searc4@ '!stem )ill disla! t4e osted accounting entries6 8ser s4ould
-erif! t4e disla!ed accounting entries and clic/ on button APRINT 8OUCHERD to
ta/e t4e rint of -ouc4er3
FUARTERL5 ALIGNMENT
$ranc4es s4ould submit a =uarterl! alignment statement e-er! June6 'etember6
9ecember6 ;arc4 to Products , 'er-ices 'ection at 0;8 >ol/ata3
ISSUANCE OF FOREIGN BANK GUARANTEES
B#,ic In"!r/#ti!n@
13 Issuance of .oreign $an/ 0uarantees are go-erned b! ICC 8niform (ules for
9emand 0uarantees18(9026 ICC Publication No3*+8 12:1: (e-ision2 )it4 effect
from 1
st
Jul! 2:1:3 8(90 is a set of rules formulated b! International C4amber of
Commerce 1ICC26 Paris and is intended to al! )orld)ide to t4e use of demand
guarantees3 <4e rules al! to an! demand guarantee or counter-guarantee )4ere
incororated b! reference in t4e text3 <4e liabilit! of t4e guarantor or issuer of t4e
demand guarantees arises on resentation of a )ritten demand and an! ot4er
document secified in t4e 0uarantee and is not conditional on actual default b! t4e
rincial in t4e underl!ing transaction3
<4e 8(90 contains #+ articles6 t4e gist of )4ic4 is gi-en in t4e table belo)3
Article
No3
Exlanation
1 Alication of 8(90 A Exressl! indicate it is sub7ect to t4e rules3
2 9efinitions of terms used in ot4er rules
# Interretation of terms
& Issue and Effecti-eness
+ Indeendence of guarantee and counter-guarantee
% 9ocuments Ks3 0oods6 ser-ices or erformances
* Non 9ocumentar! Conditions
8 Content of instructions and guarantees
" Alication not ta/en u
1: Ad-ising of guarantee or amendment
11 Amendments
12 Extent of 0uarantor5s liabilit! under guarantee
1# Kariation of amount of guarantee
1& Presentation
1+ (e=uirement for 9emand
1% Information about 9emand
1* Partial 9emand and ;ultile 9emandsL amount of demands
18 'earateness of eac4 demand
1" Examination
2: <ime for Examination of 9emandL a!ment
21 Currenc! of a!ment
22 <ransmission of coies of coml!ing demand
2# Extend or a!
2& Non-coml!ing demand6 )ai-er or notice
2+ (eduction or termination
2% .orce ;a7eure
2* 9isclaimer on effecti-eness of documents
28 9isclaimer on transmission or translation
2" 9isclaimer for acts of anot4er art!
#: Limits on exemtion from liabilit!
#1 Indemnit! for foreign la)s and usages
#2 Liabilit! for c4arges
## <ransfer of guarantee and assignment of roceeds
#& 0o-erning La)
#+ Jurisdiction
2. In terms of Notification No3.E;A38/2:::-($ dated ;a! #6 2:::6 Aut4orised
9ealer ban/s 4a-e t4e ermission to gi-e erformance bond or guarantee in fa-our
of o-erseas bu!ers on account of bona fide exorts from India3
#3 Prior aro-al of ($I s4ould be obtained b! t4e Aut4orised 9ealer ban/s for
issue of erformance bonds/ guarantees in resect of caution-listed exorters3
$efore issuing an! suc4 guarantees6 t4e! s4ould satisf! t4emsel-es )it4 t4e bona
fides of t4e alicant and 4is caacit! to erform t4e contract and also t4at t4e -alue
of t4e bid/ guarantee as a ercentage of t4e -alue of t4e contract/ tender is
reasonable and according to t4e normal ractice in international trade6 and t4at t4e
terms of t4e contract are in accordance )it4 t4e .oreign Exc4ange ;anagement
regulations3
&3 Aut4orised 9ealer ban/s6 s4ould also6 sub7ect to )4at 4as been stated abo-e6
issue counter-guarantees in fa-our of t4eir branc4es/ corresondents abroad in
co-er of guarantees re=uired to be issued b! t4e latter on be4alf of Indian exorters6
in cases )4ere guarantees of onl! resident ban/s are accetable to o-erseas bu!ers
in accordance )it4 local la)s/ regulations3
+3 0uarantees s4all be issued onl! on be4alf of o)n customers against suitable
guarantee limits or against suitable cas4 margin as ma! be stiulated b! t4e
aroriate sanctioning aut4orit!3
%3 Bffices s4ould6 carefull! scrutinise before-4and all t4e clauses in t4e
erformance bond/guarantee forms and refrain from executing erformance bond/
guarantee containing defecti-el! )orded clauses3 All cases of doubt s4ould be
referred to t4eir Controlling Aut4orit! X La) 9eartment3
*3 $ranc4es s4ould rocess re=uests from t4eir customers for issuance of
erformance guarantee6 bid-bonds )it4 t4e least ossible dela! and send t4eir
instructions to foreign offices/corresondents )ell before t4e last date for submission
of suc4 erformance guarantee/bid-bonds3 $ranc4es s4ould also imress uon t4eir
customers t4e necessit! of gi-ing ade=uate time to our foreign
branc4es/corresondents for roer examination of t4eir re=uest3 .urt4er6 clear
instructions regarding t4e forms in )4ic4 suc4 erformance guarantee/bid-bonds are
to be issued s4ould in-ariabl! be sent to t4e foreign branc4es/corresondents along
)it4 t4e re=uest3
83 F4ile issuing guarantees in fa-our of resident beneficiaries against t4e counter
guarantees of o-erseas office/corresondents6 t4e issuing branc4 4as to obtain rior
aro-al of t4e 0;8->ol/atta3
"3 Indian agents of foreign airline comanies )4o are members of International
Air <ransort Association 1IA<A26 are re=uired to furnis4 ban/ guarantees in fa-our
of foreign airline comanies/IA<A6 in connection )it4 t4eir tic/eting business3 As t4is
is a standard re=uirement in t4is business6 Aut4orised 9ealer ban/s in t4eir ordinar!
course of business can issue guarantees in fa-our of t4e foreign airline
comanies/IA<A on be4alf of Indian agents of foreign airline comanies6 )4o are
members of International Air <ransort Association 1IA<A26 in connection )it4 t4eir
tic/eting business3
0uarantees for Exort Ad-ance
1i2 It 4ad come to t4e notice of (eser-e $an/ t4at exorters )it4 lo) exort
turno-er are recei-ing large amounts as exort ad-ances6 in lo) interest
rate currencies6 against domestic ban/ guarantees and are deositing
suc4 ad-ances )it4 ban/s in Indian (uees for interest rate arbitrage3
.urt4er6 t4e guarantees are being issued e-en before t4e receit of t4e
ad-ances6 )it4 a ro-iso t4at t4e guarantees )ould be oerational onl!
uon receit of t4e ad-ances3 <4e guarantees 4a-e been issued at ar
-alues6 against t4e discounted -alues of t4e exort ad-ances3 <4e
exorters 4a-e also been allo)ed to freel! boo/6 cancel and reboo/
for)ard contracts )it4out an! cr!stalliDed exorts and / or ast
erformances6 in contra-ention of t4e .E;A regulations3 It 4as also been
obser-ed t4at t4e exorters /ee a substantial art of t4eir Indian (uee A
8' 9ollar leg of t4e currenc! exosure oen6 t4ereb! exosing bot4 t4e
exorters and t4e domestic ban/s to foreign exc4ange ris/3 In suc4
cases6 generall! no exorts 4a-e ta/en lace and t4e exorters 4a-e
neit4er t4e trac/ record nor t4e abilit! to execute large exort orders3 <4e
transactions 4a-e basicall! been designed for ta/ing ad-antage of t4e
interest rate differential and currenc! mo-ements and 4a-e imlications for
caital flo)s3
1ii2 0uarantees are ermitted in resect of debt or ot4er liabilit! incurred b! an
exorter on account of exorts from India3 It is t4erefore intended to
facilitate execution of exort contracts b! an exorter and not for ot4er
uroses3 In terms of extant instructions ban/s 4a-e also been ad-ised
t4at guarantees contain in4erent ris/s6 and t4at it )ould not be in t4e
ban/sQ interest or in t4e ublic interest generall! to encourage arties to
o-er-extend t4eir commitments and embar/ uon enterrises solel! rel!ing
on t4e eas! a-ailabilit! of guarantee facilities3 It is6 t4erefore6 reiterated
t4at as guarantees contain in4erent ris/s6 it )ould not be in t4e interest of
t4e ban/s or t4e financial s!stem if suc4 transactions6 as mentioned in
aragra4 abo-e6 are entered into b! ban/s3 $an/s s4ould6 t4erefore6 be
careful )4ile extending guarantees against exort ad-ances so as to
ensure t4at no -iolation of .E;A regulations ta/es lace and ban/s are
not exosed to -arious ris/s3 It )ill be imortant for t4e ban/s to carr! out
due diligence and -erif! t4e trac/ record of suc4 exorters to assess t4eir
abilit! to execute suc4 exort orders3
Bt4er 0uarantees regulated b! .oreign Exc4ange ;anagement (ules@
i3 ;inor 0uarantees
ii3 $an/ 0uarantees - Imort under .oreign Loans/Credits
iii3 0uarantees for Non-(esidents
;inor 0uarantees
Aut4orised 9ealer ban/s ma! freel! gi-e on be4alf of t4eir customers and o-erseas
branc4es and corresondents6 guarantees in t4e ordinar! course of business in
resect of missing or defecti-e documents6 aut4enticit! of signatures and for ot4er
similar uroses3
B#n7 'u#r#nt&&, - I/$!rt un)&r "!r&i'n %!#n,4cr&)it,
$an/s / .inancial Institutions are not ermitted to issue guarantees/ standb! letters
of credit or letters of comfort in fa-our of o-erseas lenders relating to External
Commercial $orro)ing 1EC$23 Alications for ro-iding guarantees/ standb! letters
of credit or letters of comfort b! ban/s relating to EC$ in t4e case of ';Es )ill be
considered b! t4e (eser-e $an/ on merit under t4e Aro-al (oute6 sub7ect to
rudential norms3
Tr#)& Cr&)it, "!r i/$!rt, int! In)i# > I,,u& !" Gu#r#nt&&, - D&%&'#ti!n !"
$!=&r,
Credit extended for imorts directl! b! t4e o-erseas sulier6 ban/ and financial
institution for maturit! of less t4an t4ree !ears is 4ereinafter referred to as Ntrade
credit5 for imorts3 9eending on t4e source of finance6 suc4 trade credit )ill include
suliers5 credit or bu!ers5 credit3 It ma! be noted t4at bu!ers5 credit and suliers5
credit for t4ree !ears and abo-e come under t4e categor! of External Commercial
$orro)ings 1EC$26 )4ic4 are go-erned b! EC$ guidelines modified from time to
time3
A9 ban/s can aro-e trade credits for imorts into India u to 8'9 2: million er
imort transaction for imorts ermissible under t4e current .oreign <rade Polic! of
90.< )it4 a maturit! eriod u to one !ear from t4e date of s4iment3 .or imort of
caital goods classified b! 90.<6 A9 ban/s ma! aro-e trade credits u to 8'9
2: million er imort transaction )it4 a maturit! eriod of more t4an one !ear and
less t4an t4ree !ears3 No roll-o-er/ extension )ill be ermitted b! t4e A9 ban/s
be!ond t4e ermissible eriod3
0eneral ermission 4as been granted to Aut4orised 9ealer ban/s to issue
guarantees/ Letter of 8nderta/ing 1Lo82/ Letter of Comfort 1LoC2 in fa-our of t4e
o-erseas sulier6 ban/ and financial institution u to 8'9 2: million er imort
transaction for a eriod u to one !ear for imort of all non-caital goods ermissible6
under t4e .oreign <rade Polic! 1excet gold2 and u to t4ree !ears for imort of
caital goods6 sub7ect to rudential norms issued b! t4e (eser-e $an/ from time to
time3 <4e eriod of suc4 guarantees/Lo8s/LoCs 4as to be co-terminus )it4 t4e
eriod of credit6 rec/oned from t4e date of s4iment3
As regards reorting arrangements6 A9 ban/s are re=uired to furnis4 data on
issuance of guarantees/Lo8s/LoCs b! all its branc4es6 in a consolidated statement6
at =uarterl! inter-als to t4e C4ief 0eneral ;anager-in-C4arge6 .oreign Exc4ange
9eartment6 EC$ 9i-ision6 (eser-e $an/ of India6 Central Bffice $uilding6 11t4 floor6
.ort6 ;umbai A &:: ::1so as to reac4 t4e deartment not later t4an t4e 1:t4 of t4e
follo)ing mont43
L!#n, #.r!#) #'#in,t ,&curiti&, $r!-i)&) in In)i#:
In terms of (egulation &122 of Notification No3 .E;A38/2:::-($ dated ;a! #6 2:::6
an A9 ma! gi-e guarantee in resect of an! debt6 obligations or ot4er liabilit!
incurred b! a erson resident outside India6 among ot4ers6 )4ere suc4 debt6
obligation or liabilit! is o)ed to a erson resident in India in connection )it4 a bona
fide trade transaction6 ro-ided t4at t4e guarantee is co-ered b! a counter guarantee
of a ban/ of international reute resident abroad3
Gu#r#nt&&, "!r n!n-r&,i)&nt,:
(eser-e $an/ 4as granted general ermission to Aut4orised 9ealer ban/s6 -ide its
Notification No3 .E;A/8/ 2::: dated #rd ;a! 2:::6 to gi-e guarantees in fa-our of
ersons resident in India in resect of an! debt or ot4er obligation or liabilit! of a
erson resident outside India6 sub7ect to suc4 instructions as ma! be issued b! ($I
from time to time3
Aut4orised 9ealer ban/s ma!6 accordingl!6 gi-e on be4alf of t4eir o-erseas
branc4es/ corresondents or a ban/ of international reute6 guarantees/
erformance bonds in fa-our of residents of India in connection )it4 genuine
transactions in-ol-ing debt6 liabilit! or obligation of non-residents6 ro-ided t4e bond/
guarantee is co-ered b! a counter-guarantee of t4e o-erseas Cead Bffice/ branc4/
corresondent or a ban/ of international reute3
Aut4orised 9ealer ban/s s4ould ensure t4at counter-guarantees are roerl!
e-aluated and t4eir o)n guarantees against suc4 guarantees are not issued in a
routine manner3 $efore issuing a guarantee against t4e counter-guarantee from an
o-erseas Cead Bffice/branc4/ corresondent/ ban/ of international reute6
Aut4orised 9ealer ban/s s4ould satisf! t4emsel-es t4at t4e obligations under t4e
counter-guarantee6 )4en in-o/ed6 )ould be 4onoured b! t4e o-erseas ban/
romtl!3 If t4e Aut4orised 9ealer ban/ desires to issue guarantee )it4 t4e condition
t4at a!ment )ill be made6 ro-ided reimbursement 4as been recei-ed from t4e
o-erseas ban/ )4ic4 4ad issued t4e counter-guarantee6 t4is fact s4ould be made
clearl! /no)n to t4e beneficiar! in t4e guarantee document itself3
Aut4orised 9ealer ban/s ma! ma/e ruee a!ments to t4e resident beneficiaries
immediatel! )4en t4e guarantee is in-o/ed and6 simultaneousl!6 arrange to obtain
t4e reimbursement from t4e o-erseas ban/ concerned6 )4ic4 4ad issued t4e
counter-guarantee3
Gu#r#nt&&, I,,u&) t(r!u'( c&rt#in c!rr&,$!n)&nt, > S$&ci#% In,tructi!n,
Gu#r#nt&&, in "#-!ur !" Sri#n $#rti&, t(r!u'( C!//&rci#% B#n7 !" Sri#
Commercial $an/ of '!ria is our onl! corresondent in '!ria3 <4e! insist on certain
terms and conditions to be included in t4e counter-guarantee to be issued b! our
branc4es3 <4ese are
a2 0uarantees to be issued as er official text
b2 8nderta/ing to a! on simle demand )it4in t4e -alidit! eriod regardless of
date )4en suc4 demand reac4es concerned domestic branc4
c2 8nderta/ing and commitment t4at disutes )ill be settled under '!rian la)
$ranc4es s4ould ensure t4at suitable clauses are included in t4e counter-guarantee
obtained from t4e alicants to safeguard t4e interest of t4e ban/3
B.%!, B#n7 Sri#< Sri# > S$&ci#% In,tructi!n,
<4e urose be4ind establis4ment of relations4i )it4 $!blos $an/ is mainl! to
reduce deendenc! on Commercial $an/ of '!ria6 )4ic4 )as our onl!
corresondent t4ereat t4at time6 in guarantee related matters3
Co)e-er6 man! a time t4e counter guarantees issued b! our branc4es in fa-our of
$!blos $an/ '!ria do not conform to t4eir re=uirements and6 accordingl!6 issuance
of guarantees b! t4em in fa-our of '!rian beneficiaries is getting considerabl!
dela!ed and also resulting in a-oidable corresondence3 <4erefore6 branc4es s4ould
contact $!blos $an/ '!ria b! t4e fastest mode of communication and s4ould submit
t4eir counter guarantee in a mutuall! agreed format3
JOB SET UP:
Bn receit of guarantee roosal from t4e alicant or 'tandb! LC/Counter
guarantee from t4e o-erseas $ranc4/Corresondent6 t4e guarantee can be issued
under t4e extant instructions issued b! 0lobal ;ar/ets 8nit6 >ol/atta6 .E;A
guidelines from time to time3
Ensure t4at t4e guarantee roosal/format contain atleast t4e follo)ing details@
a2 Name and Address of t4e $eneficiar!
b2 Amount of 0uarantee
c2 Commencement date and Exir! 9ate of t4e guarantee
d2 $rief 9etails of t4e underl!ing transactions to )4ic4 t4e guarantee relates
e2 An! reference number
f2 <4e t!e of guarantee i3e3 bid or erformance etc is ascertainable from t4e
bod! of t4e roosal/format3
Bbtain necessar! aro-al from t4e concerned official3
Enter t4e transaction in Eximbills and generate t4e accounting entries for roforma
and to)ards commission/out of oc/et exenses3
0enerate 'FI.< ;<*%: and transmit t4e message as er 'FI.< standards and
rocedures3
If t4e guarantee is being issued fa-ouring a resident beneficiar! against t4e counter-
guarantee of a foreign office/corresondent6 issue t4e guarantee as er t4e counter-
guarantee 1sub7ect to obtention of aro-al from 0;8->ol/atta6 )4ere-er
alicable2 and send t4e guarantee dul! signed b! t)o aut4orised signatories3
If t4e commission/c4arges are to t4e account of t4e foreign office/corresondent6
note to claim t4e same from foreign office/corresondent3 Ensure t4at Fit44olding
tax6 if an!6 is borne b! t4e foreign office/corresondent and s4ould not be deducted
from t4e commission recei-able3
Acc!untin' Pr!c&)ur&
$an/ 4as s)itc4ed to multi-current accounting in resect of LC/$0 transactions3 In
-ie) of t4e ne) accounting s!stem6 $ranc4es are ad-ised to oen LC/$0 liabilit!
accounts in C$' for all customers currenc!-)ise6 b! referring to aroriate
Contingent roducts list and $0L list circulated b! <rade .inance 9eartment3
<4ese accounts are to be oened b! t4e $ranc4es for all customers en7o!ing foreign
currenc! LC/$0 facilit! and lin/ed to Customer/$an/ ;odule of Eximbills3 <4e list of
currencies in )4ic4 a $ranc4 can issued LC/$0 is aended belo)3 In case t4e
$ranc4es need to ta/e some exosure in an! exotic currenc!6 t4e same )ould need
to be referred to 0;8-> before con-e!ing t4e decision/intent to t4e customer3
'l No3 .oreign $0 LC 1Bt4ers2 LC 1Caital
0oods2
1 AC9 AC9 AC9
2 AE9 AE9 AE9
# A89 A89 A89
& CA9 CA9 CA9
+ CC. CC. CC.
% 9>> 9>> 9>>
* E8(B E8(B E8(B
8 0$P 0$P 0$P
" JP? JP? JP?
1: NB> NB> NB>
11 NY9 NY9 NY9
12 'A( 'A(
1# 'E> 'E> 'E>
1& '09 '09 '09
1+ 8'9 8'9 8'9
1% YA( YA( YA(
1* Z C>9 C>9
18 $C9
1" >F9
2: ;?(
21 B;(
22 RA(
2# $9<
2& $<N
2+ E<$
2% L>(
2* ;A9
28 ;8(
2" NP(
#: '?P
#1 <N9
ZNot ermitted for t4e resent3 (eference could6 4o)e-er6 be made to 0;8-> on a case-to-case basis3
Pr!c&)ur& "!r )&#%in' =it( c%#i/, in c#,& !" in-!c#ti!n
$ranc4es s4ould be guided b! t4e follo)ing instruction in dealing )it4 claims from
t4e .oreign $an//$eneficiaries under t4e guarantees issued b! t4em3
a2 In-o/e t4e counter-guarantee of t4e customer on )4ose be4alf t4e guarantee
is issued3
b2 F4ene-er claims are referred under a guarantee ro-iding for a!ment
t4ereunder on first demand and )it4out demur or rotest 1most of t4e
guarantees issued b! our offices ro-ide t4at2 t4e amount under suc4 a
guarantee s4ould be remitted b! our office to t4e concerned
corresondent/foreign office immediatel! on first demand and )it4out a rior
reference to t4e alicant3 A clear mandate to t4is effect s4ould in-ariabl! be
obtained from t4e alicants in t4e counter-guarantees furnis4ed b! t4em3
c2 In t4e e-ent of t4e alicant of t4e guarantee obtaining a restraining order
from an Indian Court before a!ment under t4e guarantee is effected6 t4e
issuing office )ill 4a-e to coml! )it4 t4e court5s order3 <4e matter must6
4o)e-er6 be reorted b! t4e issuing offices to t4eir controlling aut4orities
fort4)it43 <4e issuing office s4ould also mo-e t4e court exeditiousl! for
-acation of t4e in7unction order3 In case it is decided6 in consultation )it4 t4e
controlling aut4orities6 t4at t4e demand under guarantee be met b! t4e $an/
out of its o)n funds6 a secial disensation from t4e court to t4is effect must
be obtained
In order to a-oid suc4 situations6 in terms of aragra4 no3 +3+3 of ($I ;aster
9$B9 No3 9ir3$C318/1#3:#3::/2::&-:+6 it is absolutel! essential for t4e
branc4es to araise t4e roosal for guarantees also )it4 t4e same
diligence as in t4e case of fund based limits and obtain ade=uate co-er b!
)a! of margin so as to re-ent t4e constituents to de-elo a tendenc! of
defaulting in a!ments )4en in-o/ed guarantees are 4onoured b! t4e ban/s3
d2 If 4o)e-er6 a guarantee issued b! an office does not ro-ide t4at t4e $an/5s
liabilit! t4ere under is absolute and t4at t4e amount t4ere under is to be aid
on first demand )it4out demur or rotest6 a rior reference to t4e alicant
)ould be necessar! in t4e $an/5s interest3 In suc4 a case6 t4erefore6 before
meeting a claim under t4e guarantee6 office s4ould ma/e a rior reference to
t4e alicants and obtain t4eir consent for meeting t4e claim3
Mi,c&%%#n&!u,
$an/ 0uarantees fa-ouring .oreign $eneficiaries A Incororation of Jurisdiction and
0o-erning La)
a2 F4ile issuing .$0s6 t4e clause regarding e&clusi#e jurisdiction of t4e
Courts s4ould be clearl! selt out )it4 due concurrence of t4e
beneficiar!/alicant3 <4e lace of t4e Courts 4a-ing 7urisdiction s4ould be
clearl! selt out in t4e .$03 .urt4er6 /eeing in -ie) t4e comarati-e
7udicial strengt4 of some countries6 t4e 7urisdiction of Courts be normall!
acceted as under@
b2
Area Jurisdiction of t4e Courts in
Canada6 Nort4 America and 'out4
America
Ne) ?or//India
;iddle East nations6 'ub-'a4aran
countries6 'out4 Africa and Euroe
London/India
'out4 East Asia6 Australia and
Jaan
'ingaore/India
Accordingl!6 t4e follo)ing clause s4ould in-ariabl! be included in .$0s@ I<4is
.$0 is sub7ected to t4e 7urisdiction of t4e courts situated
in[[[3/in[[[[3
a2 In all .$0s6 t4ere must be a suitable clause sub7ecting t4em to Indian
Laws
b2 It is ad-isable t4at t4e clauses relating to 7urisdiction and go-erning la)
as indicated abo-e are incororated in .$06 )4ic4 are sub7ected to
8(90 ICC Pub No3 *+8 also3
c2 In case )4ere t4e alicant/beneficiar! are reluctant to agree to t4e
7urisdiction of t4e abo-e secified courts and/or for Indian la)s6 t4e
sanctioning aut4orit! )ould assess t4e ris/ in-ol-ed and examine
ta/ing aroriate additional cas4 securit! as also arrange to c4arge
aroriatel! for t4e additional ris/ in-ol-ed3 Also6 it is necessar! for
t4e $ranc4 to get t4e imlications of t4e foreign la) and t4e foreign
7urisdiction examined b! a reuted legal counsel/concerned La)
9eartment before acceding to suc4 re=uests3
d2 In t4e e-ent of an! .$0 being in-o/ed6 a!ment s4ould be effected
immediatel! ro-ided t4e rocess of in-ocation and reasons of
in-ocation6 as stated in t4e .$06 4a-e been comlied )it43
e2 In case t4e alicant brings an in7unction6 t4e 7urisdiction and
go-erning la) clauses s4ould be /et in mind and in7unction got
-acated exeditiousl!3
f2 If t4e aroriate Court in t4e countr!6 )4ose 7urisdiction 4as been
acceted in t4e .$06 issues a a!ment order decree6 it s4ould be
comlied )it4 immediatel! if it does not contain an! infirmities3 If t4e
order is not sound6 it s4ould be contested immediatel!3
A/&n)/&nt t! In)i#n C!ntr#ct Act
Indian Contract Act )as amended effecti-e 8
t4
Januar! ""* b! inclusion of an
additional clause in 'ec 28 of t4e Act3 <4e amended 'ec 28 4as a bearing on
t4e standard limitation clause adoted b! $an/ for limiting t4eir liabilit! under
$an/ 0uarantees issued3 <4e imact of t4e amendment in t4is regard 4as
been examined b! t4e $an/ as )ell as some of t4e ot4er $an/s3 I$A 4as also
examined t4is matter and 4a-e issued certain ad-ices to t4e $an/s in t4is
regard3
It is decided to roceed on t4e basis t4at t4e amended section of t4e Act does
not ad-ersel! affect t4e $0 transaction 4andled b! t4e $an/3 A re-ised
limitation clause as suggested b! I$A )ill 4encefort4 be incororated in t4e
$0s issued b! us3
$0s are no) issued )it4 a re-rinted and number standard first age of t4e
guarantee form )4ic4 contains t4e limitation clause3 F4ile t4e re-rinted
form is to be used for all $0s6 branc4es are allo)ed to issue a $0 on non-
7udicial stam aer6 if in t4e case of a $0 fa-ouring a 0o-t3 9eartment6 t4e
concerned 9et3 ob7ects to t4e use of re-rinted form3
<4e abo-e rocedure )ill continue to be follo)ed6 sub7ect to t4e follo)ing
c4anges3
Cencefort46 in all $0s issued6 t4e limitation clause suggested b! I$A6 =uoted
belo)6 s4ould in-ariabl! be incororated at t4e end of t4e text3
INot )it4standing an!t4ing contained 4erein@
a2 Bur liabilit! under t4is $an/ 0uarantee s4all not exceed
(s[[[[[[[3 1(uees[[[[[[[[[[[[3 Bnl!2
b2 <4is $an/ 0uarantee s4all be -alid uto [[[[[[33 and
c2 Fe are liable to a! t4e guaranteed amount or an! art t4ereof under t4is
$an/ guarantee onl!6 and onl! if !ou ser-e uon us a )ritten claim or
demand on or before[[[[[[3 1date of exir! of guarantee2
T&r/in#ti!n !" BG
After t4e exir! of eac4 $06 a registered A9 letter is re=uired to be sent to t4e
beneficiar! ad-ising t4at t4e guarantee 4as exired and re=uesting t4e
beneficiar! to return t4e original guarantee document3 <4e letter is to ma/e it
clear t4at t4e beneficiar! is no longer entitled to in-o/e t4e guarantee3
'ubse=uentl!6 after t4e lase of a eriod of sa! one mont46 and )4et4er or
not t4e original $0 is returned6 branc4es are re=uired to re-erse t4e entries
relating to $03
N3$@ .or Proforma of Counter-0uarantee/;odel 0uarantee etc3 Please refer to 0;8-> Codified
Circulars3

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