Merchanting Trade Transactions

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..... 2003 and July 19, 2003 respectively, containing directions relating to merchanting or intermediary trade transactions. In the light of the recommendations of the Technical Committee on Services/Facilities to Exporters (Chairman: Shri G. Padmanabhan) to further liberalise and simplify the procedure, the existing guidelines for merchanting or intermediary trade transactions have been reviewed. A .....

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..... bank. The bank should verify the documents like invoice, packing list, transport documents and insurance documents and satisfy itself about the genuiness of the trade. III. The entire merchanting or intermediary trade transactions should be completed within an overall period of nine months and there should not be any outlay of foreign exchange beyond four months. IV. The commencement of mercha .....

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..... the close of each half year. In case of repeated defaults i.e. three cases or more in a year, ADs should restrain the traders from entering into any further transaction in merchanting or intermediary trade and consider recommending caution listing of the trader, to the Reserve Bank of India; 3. The merchanting traders have to be genuine traders of goods and not mere financial intermediaries. Con .....

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..... The export LC should be issued in the name of original merchanting trader in India and import LC should be favouring the original supplier. In case export leg payment is received in advance, AD banks need not insist on opening of export LC. 5. In case advance against the export leg is received by the merchanting trader, the advance payment may be held in a separate deposit / current account in .....

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..... Import S0108 Goods acquired under merchanting /payment against import leg of merchanting trade 7. AD Category-I banks may bring the contents of this circular to the notice of their constituents concerned and note the guidelines for strict compliance. 8. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign E .....

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