This Circular has granted powers to banks to permit exporters to receive advance from the foreign buyer where the export agreement permits shipment of goods beyond one year from the date of receipt of advance, subject to the following conditions:
(i) KYC and due diligence exercise has been done by the bank for the overseas buyer. (ii) Compliance with the Anti-Money Laundering Standards has been ensured. (iii) Export advance received by the exporter must be utilised to execute export and not for any other purpose i.e., the transaction is a bona fide transaction. (iv) Progress payment, if any, must be directly received from the overseas buyer strictly in terms of the contract. (v) Rate of interest, if any, payable on the advance payment must not exceed LIBOR + 100 basis points. (vi) Exporter should not have refund of amount exceeding 10% of the advance payment received in the last three years. (vii) Documents covering the shipment must be routed through the same bank. (viii) If the exporter is unable to make the shipment, partly or fully, he will have to obtain prior approval of RBI before remittance towards refund of unutilised portion of advance or towards interest payment is made to the foreign buyer.