Merchanting trade compliance: banks must verify dual leg transactions, limit exposure, and report defaults under forex rules. Revised guidelines specify merchanting trade qualification where goods do not enter the Domestic Tariff Area and remain untransformed, require compliance with applicable export/import formalities, and mandate that both legs be routed through the same AD Category I bank which must verify transactional documents, observe KYC/AML, enforce time and outlay limits, permit short term credit and limited advance handling subject to safeguards, allow EEFC utilization and LCs against confirmed orders, and require one to one matching, half yearly default reporting and caution listing for significant defaults.
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Merchanting trade compliance: banks must verify dual leg transactions, limit exposure, and report defaults under forex rules.
Revised guidelines specify merchanting trade qualification where goods do not enter the Domestic Tariff Area and remain untransformed, require compliance with applicable export/import formalities, and mandate that both legs be routed through the same AD Category I bank which must verify transactional documents, observe KYC/AML, enforce time and outlay limits, permit short term credit and limited advance handling subject to safeguards, allow EEFC utilization and LCs against confirmed orders, and require one to one matching, half yearly default reporting and caution listing for significant defaults.
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