Handling import documents is a sensitive job. In the past, there were several instances of remittances made by the banks on behalf of unscrupulous persons who have submitted fake import bills for the purpose of siphoning out the country’s foreign exchange. The risk of fake import bills is highest for import bills received on a collection basis, particularly those relating to new or relatively new customers. Such customers normally do not have any credit arrangements with the authorized dealer or customers whose business relationship with the bank by and large restricted to retiring import bills. Hence the authorised dealers should exercise great care while handling such transactions on behalf of import customers with reference to their line of business, financial standing, frequency of import, etc, to establish the genuineness of import.
The following are the important points to be borne in mind while handling import bills.
- The Authorised Dealer will have to satisfy that the importer is known to be trading in items mentioned in the shipping documents or that the items are required for his actual use.
- Inquiries should be made about whether they are regular importers and their experience in the line. Whether other importers/exporters in this line know this person/firm and also their reputation in the business. Especially for large value transactions, banks should satisfy themselves with the authenticity of the import and the standing of the importer in that particular business.
- In addition to the points noted above, at the time of acceptance of the documents/making payment the dealing official need to contemplate the checking of the bills whether they are fraudulent import bills i.e. bills that might be drawn against the non-existent import, notably fake invoices, Bills of Lading/Airway bills, certificate of origin, import licence and bill of entry, etc.
- The AD can cross-verify with the Airlines in respect of Airway bills and custom authority for the Bills of entry. Particularly, in case of a new connection, it is advisable to send copies of a few bills of entry on a random basis for verification to the customs and follow up for confirmation of the report from them.
- In case the importer is not the constituent of the import handling bank, AD has to insist on a certificate from their bankers in support of the genuineness of importers.
- Authorised Dealers should not accept import bills received directly by the importer from the overseas seller. Import bills should be received from the overseas seller’s banker by the buyer’s banker in India. However import bills up to USD 5000/= may be directly received by the buyer’s banker, directly from an overseas seller. However, such instances should not be too frequent and the Branch Manager of the AD branch should be satisfied with the financial standing/status and track record of the importer customer.
- Branch Managers/officials in the branch will be required to apply their minds and specifically consider the following while retiring the import bills and making remittances abroad:- (i) AD should arrange to obtain a report on the overseas seller from an overseas banker. The report from the overseas bank or a credit agency like Dun and Bradstreet should inter-alia; specifically, comment on whether the seller firm is ordinarily engaged in the purchase/sale of goods sought to be exported to India and whether the seller is good for ordinary business engagements. (ii)Whether sales of importing firms are regularly credited to its business account or there are only occasional credits to the account. It should be also ascertained whether credits are mostly by way of cash deposits and also whether non-cash deposits represent mostly pay-orders/drafts/cheques; if so whether credit represents normal business funds from one account to another account. (iii) In case of doubt, the authorized dealer may insist on the verification of the importer’s books of accounts and inspection of the importer’s place of work.