Reserve Bank of India (RBI) has informed that recently a case of foreign exchange violation in Ashok Vihar Branch of Bank of Baroda was reported. Advance import remittances were permitted without verifying the bonafide of transactions and without carrying proper due diligence of both Indian clients as well as overseas suppliers.

RBI has taken various steps to stop recurrence of such instances which inter-alia include (i) comprehensive guidelines on handling of export / import transactions to authorized dealer Banks (AD Banks), (ii) constitution of a working group to devise an Import Data Monitoring and Processing System, (iii) direction to strict adherence on extant guidelines on export / imports and strengthening of internal security / system administration, (iv) continued follow up of all cases of advance remittance for import, irrespective of value, (v) taking steps on priority to upload shipment and realization details and to convey the progress in special fortnightly reports.

This was stated by Shri Arjun Ram Meghwal, Minister of State in the Ministry of Corporate Affairs in written reply to a question in Lok Sabha today.

Foreign exchange compliance: RBI mandates stricter due diligence and enhanced monitoring for authorized banks handling import remittances. A public sector bank permitted advance import remittances without verifying transaction bonafides or performing proper due diligence of Indian clients and overseas suppliers. In response, the regulator mandated comprehensive guidelines to authorized dealer banks, constituted a working group to devise an Import Data Monitoring and Processing System, directed strict adherence to export/import rules and strengthened internal security, required follow-up of all advance remittances irrespective of value, and prioritized uploading of shipment and realization details with special progress reports.