MUMBAI, Jan 29: The Reserve Bank of India (RBI) has allowed banks to open letters of credit (LoC) and make remittances in the case of companies importing goods into bonded warehouses. The measure is seen as another step towards an easing of exchange controls.Earlier, applications for opening letters of credit and remittances to pay for such imports were required to be referred to the Reserve Bank for approval. Imports fall under two categories: the open general licence list, where the importer does not need a special licence to open a letter of credit; and import of goods by foreign diplomatic missions or a foreign-bound vessel, where a special licence is required and a window has to be created for such imports.
In a circular issued recently, the central bank said: "It has been decided to delegate powers to authorised dealers designated by importers who have been granted the facility for import into bond to open letters of credit or make remittances covering the cost of such imports without importlicences."
The Reserve Bank has also set out new procedures where the importers who have been granted the special facility should advise the bank about the name and address of the authorised dealers. The remittances will be made for payment of goods imported into bond under advice to the authorised dealer.
The authorised dealer can open letters of credit for import of goods into bond without the approval of the Reserve Bank. "The regulations governing payments for imports into the country will apply in this case," according to the RBI directive. The central bank has further said that the importer should furnish a declaration to authorised dealers that he will submit the exchange-control copy of the bill of entry into bond within three months from the date of opening of the letter of credit.
The designated authorised dealer, the Reserve Bank has instructed, should, after opening the letter of credit on behalf of the importer, follow up with him and ensure submission of bill of entry for bond. It hasfurther stated that while opening the LOC, which covers the cost of import of goods into bond, the authorised dealer should ensure that the importer holds a valid approval from the Reserve Bank and that the goods proposed to be imported do not fall under the list of `prohibited items' for imports. The banks will also have to maintain a separate register to record details of the LOC, the circular says.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
