What changed
Previously, exporters had to approach RBI directly for set-off requests. Now, AD Category-I banks can handle these cases themselves, provided they meet specified conditions such as the import being under the Foreign Trade Policy, submission of relevant documents, and the same overseas counterparty for both transactions.
What it means for you
This liberalization reduces the compliance burden on exporters and speeds up cross-border transaction settlements. Banks must now carefully verify documents, ensure no ACU country involvement, and report transactions separately in 'R' Returns before releasing GR forms.
What you must do
- Verify that the import is compliant with the current Foreign Trade Policy.
- Ensure invoices, Bills of Lading/Airway Bills, and Exchange Control copies of Bills of Entry are submitted.
- Confirm that the import payment is still outstanding and both transactions involve the same overseas buyer and supplier.
- Report the sale and purchase separately in 'R' Returns and release GR forms only after full export proceeds are adjusted or received.
- Exclude any export/import transactions with ACU countries from this set-off arrangement.
Who it affects
AD Category-I banks, Exporters and importers using set-off arrangements, Compliance and trade finance departments in banks
Can we process set-off for transactions with ACU countries?
No, the circular explicitly excludes export/import transactions with ACU countries from this arrangement.
What documents must the importer submit for set-off?
The importer must submit invoices, Bills of Lading/Airway Bills, and Exchange Control copies of Bills of Entry for home consumption.
When can we release the GR form?
The GR form should be released only after the entire export proceeds are adjusted or received.