RBI notifies Amendments in Provision on Advance Payment against Exports under FEMA [Read Notification]

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The Reserve Bank of India (RBI) notifies amendments in provision regarding Advance payment against exports under Foreign Exchange Management Regulation.

The RBI notified Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2021 which seeks to amend Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 by amending Regulation 15(1)(ii).

In the Principal Regulations, in Regulation 15, in sub-regulation 1, for clause (ii), the following shall be substituted, namely “the rate of interest, if any, payable on the advance payment shall not exceed 100 basis points above the London Inter-Bank Offered Rate (LIBOR) or other applicable benchmark as may be directed by the Reserve Bank, as the case may be; and”.

Regulation 15 pertains to Advance payment against exports which reads, where an exporter receives advance payment (with or without interest), from a buyer or third party named in the export declaration made by the exporter, outside India, the exporter shall be under an obligation to ensure that the rate of interest, if any, payable on the advance payment does not exceed the rate of interest London Inter-Bank Offered Rate (LIBOR) +100 basis points or other applicable benchmark as may be directed by the Reserve Bank, as the case may be.

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