The revised FEDAI Rules (10th edition) for export transactions came in to force with effect from 01 April 2019. The FEDAI rule 2.1 deals with Post shipment Credit in Rupees, Application of Interest, Normal Transit Period, Substitution/Change in Tenor, and Export Bills sent for collection.
Post shipment credit in Rupees:
The exchange rate for post-shipment Foreign Currency bills will be purchased/discounted/negotiated credit in Rupees at the current bill buying rate or contracted rate. The Authorised Dealer (AD) has to simultaneously recover interest for the normal transit period and/or usance period upfront.
Crystallisation and Recovery of export bills:
Individual banks shall formulate their own policy for crystallisation of foreign currency liability into rupee liability, in case of non-payment of bills on the due date. As per FEDAI guidelines, AD branches should display crystalisation policy of the bank so that policy in this regard should be transparently available to the customers. While crystalising foreign currency liability into Rupee liability, the AD branch shall apply the TT selling rate. The amount converted into Rupees by crystalisation recoverable along with interest and charges, if any. Interest shall be recovered on the date of crystallisation for the overdue period at the appropriate rate; and thereafter till the date of recovery of the crystallized amount. The export bills payable in countries with externalisation issues shall also be crystallised as per the policy of the authorised dealer, notwithstanding receipt of advice of payment in local currency. At the time of realisation of Bill after crystallization, Authorised Dealers (ADs) shall apply TT buying rate or contracted rate (if any) to convert Rupees into foreign currency proceeds.
Dishonour of export bills:
In case of dishonour of an export bill before crystallisation, the Bank shall recover Rupee equivalent amount of the bill and foreign currency charges at TT selling rate. Authorised Dealer shall also recover appropriate interest and rupee- denominated charges.
Rate of interest applicable for export transactions:
Banks shall charge rate of interest on all export transactions as per the guidelines of Reserve Bank of India from time to time. Banks shall recover overdue interest if payment is not received within normal transit period in case of demand bills and on/or before notional due date/actual due date in case of usance bills, as per RBI directive.
Early Realisation of export bills:
In case of early realization of the export bill, interest for the unexpired period shall be refunded to the customer. In the event of early delivery under a forward contract, the bank shall also pay or recover notional swap costs. Interest in outlay or inflow of funds for such SWAPS shall also be recovered or paid.
Read following articles related to FEDAI rules
- What is the role of FEDAI?
- Important FEDAI Rules
- FEDAI rules regarding Foreign Exchange Contracts
- FEDAI rule: Transfer of funds between Vostro Accounts with two banks explained
- FEDAI rules related to clean instruments/ inward remittance
- FEDAI rules related to import transactions
- FEDAI RULEs related to export transactions
- FEDAI Rule: Export Bills sent for collection
- FEDAI rules: Interest/Swap charges in case of Substitution/Change in Tenor of a bill
- FEDAI rules related to Normal Transit Period and the notional due date
- FEDAI RULES: Business Hours for quoting FX rates
