How to Handle Non-Realization of Export Proceeds & RBI Reporting?

Exporting goods & services opens doors to global opportunities, but what if your international clients are late with their payments? 

If Indian exporters experience difficulties with the non-realisation of export proceeds, it may have a significant impact on their cash flow & credibility with banks or regulators. 

This is all while the Reserve Bank of India (RBI) is closely monitoring these transactions. So, what should you do when payments are delayed or remain unrealised? 

Continue reading for practical steps to handle the non-realisation of export proceeds, ensuring your business remains compliant without unnecessary stress. 

Export proceeds are the payments you receive from your overseas buyer after delivering goods or services abroad. The RBI clearly defines the deadline for when that money should be in your account, so here is where things start to get serious. 

The proceeds must be realised within 9 months from the date of export for most exporters. A maximum of fifteen months is allowed for SEZ units & select designated exporters. 

Missing these deadlines is a significant warning sign for compliance. Your Authorised Dealer (AD) bank plays a key role here. 

They’re the ones who track these payments as well as submit reports to the RBI on the status of these payments. So, keeping them informed is essential.

When export proceeds aren’t realised within the RBI’s prescribed timeline, things can get tricky. This goes beyond a simple payment delay; it may indicate a breach of FEMA regulations, which might lead to a show-cause notice or fines imposed by the RBI. 

Your reputation with banks or regulators is at risk due to this. The non-realisation may affect your claim or future coverage if you have obtained Export Credit Insurance from ECGC.

Why does this happen? It includes buyer insolvency or even geopolitical issues in the buyer’s country. Sometimes, it’s as simple as documentation delays or miscommunication. Dealing with non-realised strategy promptly is essential for legal compliance.

Here are some steps to take if you haven’t received your export payment:

Follow up with the buyer

Start by sending courteous reminders via email or giving a phone call to find out why there was a delay.

Consider legal options

It may be required to use legal recovery processes if the buyer does not respond or disputes the payment.

Notify your AD bank

Share details, such as invoices & your communication trail, to keep them informed.

Apply for an extension

You can ask your AD bank or the RBI to extend the realisation period if more time is needed.

Write it off if needed

Proceeds should be written off by the RBI’s criteria, provided there is appropriate documentation, if recovery appears impossible.

The Export Data Processing & Monitoring System is the digital tracker for export transactions maintained by the RBI. All export payment reporting must go through this system. 

Your AD bank notifies EDPMS of the shipment invoice as well as the specifics of the payment. An outstanding status indicates that payment has not been received, which may trigger compliance alerts.

It may be necessary to submit an XOS (Export Outstanding Statement) in such a situation, particularly if the payment delay exceeds the allowed period. You can find out why the funds haven’t been released in this statement.

The exporter’s potential to get future loan or shipment approvals is impacted if banks alert them while an unresolved GR (export bill) remains outstanding. This is where working with DGFT Consultants can help you navigate the process to ensure you avoid any fines.

• Being proactive might help you avoid the stress that comes with non-realisation. Begin by conducting regular reconciliations with your AD bank to make sure that all export transactions are accurately recorded. 
• In the event of an audit or an RBI check, having records of all communications with buyers, including emails & other correspondence, may be invaluable. 
• Get ECGC insurance to save yourself from financial ruin if your customer fails or declares bankruptcy. 
• Use ERP or CRM tools to automate reminders & monitor timelines rather than completely relying on manual tracking.

Protecting your company while staying compliant with RBI requirements is more important than chasing payments when dealing with non-realisation of export proceeds. 

Every step is important, whether it’s following up with purchasers promptly or reporting through EDPMS. You can avoid needless hassle as well as fines by keeping up with your AD bank & understanding when to seek an extension or write-off. 

When things become too complex, don’t hesitate to consult experts or DGFT consultants who can provide guidance. To ensure your export business runs smoothly, you need to be proactive.