Merchanting Trade Transaction

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..../ or payment to any third party. • (c) Submit all relevant documents to the AD to establish the genuineness of the transaction. [ Regulation 16(1) ] The Authorised Dealer must: • Verify the genuineness of each cross-border MTT transaction before crediting or debiting the customer's account and appropriately update or close entries in EDPMS and/or IDPMS. • Monitor and follow up to ensure both legs of the merchanting trade are completed within the prescribed time and manner as specified in these Regulations. [ Regulation 16(2) ] Unrealised exports [ Regulation 13 of the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 ] If the expor....

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....e handling such transactions. • The entire merchanting trade is to be routed through the same AD bank. The AD bank shall verify the documents like invoice, packing list, transport documents and insurance documents (if originals are not available, Non-negotiable copies duly authenticated by the bank handling documents may be taken) and satisfy itself about the genuineness of the trade. The AD bank may, if satisfied, rely on online verification of Bill of Lading/ Airway Bill on the website of International Maritime Bureau or Airline web check facilities. However, the AD bank shall ensure that the requisite details are made available /retrievable at the time of Inspection/Audit/investigation of the transactions. • The....

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....of export leg LC where payment for import leg is still to be made (even if partially), the proceeds shall be utilized in the manner prescribed at point no. 2 (viii) above. • Payment for import leg may also be allowed to be made out of the balances in EEFC account of the merchant trader. • Merchanting traders may be allowed to make advance payment for the import leg on demand made by the overseas supplier. In case where inward remittance from the overseas buyer is not received before the outward remittance to the overseas supplier, AD bank may handle such transactions based on its commercial judgement. It may, however, be ensured that any such advance payment for an import leg beyond USD 500,000/- per transaction, s....

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..... C.14.3 Write-off of unrealized amount of export leg: i. AD bank may write-off the unrealized amount of export leg, without any ceiling, on the request made by the Merchanting trader, in the following circumstances: • The MTT buyer has been declared insolvent and a certificate from the official liquidator specifying that there is no possibility of recovery of export proceeds has been produced. • The goods exported have been auctioned or destroyed by the Port / Customs / Health authorities in the importing country and a certificate to that effect has been produced. • The unrealized amount of the export leg represents the balance due in a case settled through the intervention of the Indian Embassy....