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Foreign Exchange Operation - Volume 3 CHAPTER 6 Foreign Exchange Operations IMPORTS 1.Import trade is regulated by the Office of the Director General of Foreign Trade and its Regional Offices functioning under the Ministry of Commerce, Government of India. The Exchange Control aspects relating to the imports are set out in RBI Master circulars issued from time to time. 1.1.While handling import business, Branches perform functions such as establishment of letters of credit, handling of import documents received under letters of credit/collection basis, making remittances towards payment of import bills and other connected purposes, end use verification etc. 1.2.Branches handling import transactions should ensure compliance of: (a)the provisions of the current Export-Import Policy, as may be amended by the Government of India through the issue of public notices from time to time. (b)the provisions of RBI Master circulars issued from time to time. the current FEDAI guidelines (c)INCOTERMS 2010 ( also available in our FED Online) (FX Permanent 105 dated 28.12.2010) (d)the provisions of Uniform Customs and Practice for Documentary Credits (2007 Revision) ICC Publication No. 600 (hereinafter referred to as UCPDC) in respect of Documentary Credit transactions, ISBP (ICC 681) (e)the provisions of the Uniform Rules for Collection, ICC Publication No. 522 in respect of non-LC collections (f)the current directives of various departments of RBI and (g)the procedural guidelines contained in various circulars issued by Treasury (Foreign) Department, Credit Support Services Department and other departments of Central Office in regard to handling of import transactions. 1.3.Branches handling import transactions should ensure that the importer-customer for whom an LC is to be established or a remittance (towards import) to be made has a valid Importer-Exporter Code Number allocated by the Director General of Foreign Trade or its Offices and the item of import for

which the LC is to be established or the remittance is to be made is allowed to be imported into India as per the current Export Import Policy. In respect of import of items not covered by the Negative List in the current EXIM policy, branches can establish LCs and arrange remittances without the need for specific import licence. 1.4.Wherever branches are not satisfied with the information furnished by the importer regarding compliance of conditions of import specified in the import licence/Policy Book and need further clarification, importers should be advised to produce the required information/clarification from the Regional Licensing Authorities. 1.5.Branches establishing LCs or arranging remittance towards imports should ensure compliance of the Permitted Methods of Payment prescribed in RBI AP DIR Circulars & Master circulars issued from time to time. Payments in respect of imports must be made in a currency appropriate to the country of shipment of goods. 2.Import Licences 2.1.Branches should not open letters of credit or allow remittances for the import of goods included in the negative list unless the importer submits a licence marked For Exchange Control Purposes. Special conditions if any, attached to the licence should be adhered to while opening letters of credit or making remittances. 2.1.1.Branches should verify the genuineness of the import licence tendered by the importers by reference to special features like security paper, water mark and security seal of the licence issuing office. 2.2.Branches may open letters of credit or make remittances where the Exchange Control copy of the relative import licence has been issued in the name of a party other than the applicant provided the applicant produces a letter of authority obtained from the import licence holder in his favour authorising him, inter alia, to open letters of credit or make remittances in payment towards import under the licence. 2.3.Branches establishing letters of credit as well as handling import bills received for collection covered by import licence should ensure that c.i.f. value of goods and the commission, if any, payable to the local/foreign agents do not exceed the face value of import licence. 2.4.Branches should note to endorse on the EC copies of the import Licences under their stamp and

signature the details of letters of credit opened or forward contracts booked or remittances made in foreign currency as also the amount of insurance, freight and commission paid by the importer locally in rupees. 2.4.1.Branches should endorse the value of the back to back inland letters of credit opened by them on behalf of duty free licence holders (including transferees) 2.5. Branches may return EC copies of import Licences to their importer customers (after endorsement) if they have been partially utilised and further remittances are to be made through another bank. The EC copies of import Licences should be preserved by AD branch for inspection by internal/RBI Inspectors after they have been fully utilised. Imports through post: 3. Branches may allow remittances against bills received for collection in respect of imports by post parcel provided the goods imported are normally despatched by post parcel. In these cases, the relative parcel receipts must be produced as evidence of despatch through post. Importers should also submit post parcel wrappers within three months from the date of remittance. If the parcel has already been received in India, the parcel wrapper should be produced in support of remittance application. Where goods are imported by post parcel and where the branch is not satisfied about the bonafides of the application, the case should be referred to RBI for prior approval with full particulars together with relative parcel receipts (or wrappers). 3.1. Branches may allow remittance towards books, samples etc through post parcel, on production of original invoice by the importer without insisting on submission of parcel receipt / postal wrappers provided the import is made in accordance with the current EXIM policy and a declaration is furnished by the applicant that the goods have been imported through post parcel. 3.2. Branches may allow remittances towards import of books by post parcel by book sellers/publishers against bills received for collection, irrespective of the amounts involved without prior approval of RBI against endorsement on the import licence where applicable in the normal course. Branches may allow remittances even if import Licences have been issued subsequent to the date of import subject to endorsement on such Licences. Imports through Courier: 3.2.1Branches should refer to the instructions contained in RBI Master circulars issued from time to time regarding imports through courier and be guided accordingly.

4.Branches should maintain a Licence Movement Register wherein particulars of all import Licences received by them (for all LC/Non-Lc/Advance remittances) should be recorded. Suitable entries should be made in the register, whenever any licence is returned to the importer-customer or surrendered to RBI. Whenever any licence is handed back to the customer, his acknowledgment for having received the licence should be obtained in the Licence Movement Register. 5.Branches should issue freight certificates in form FRC(I), and/or insurance certificates in form INC only on specific request from the importer customer and after marking off the freight and or insurance amount/s on the Exchange Control copy of import licence (if the import is subject to a specific import licence). 6. For the purposes of retirement of import bills whether under LC or not under LC, branches should apply the bills selling rate ruling on the date of retirement or the forward sale contract rate, as the case may be. In this connection, attention of branches is invited to FEDAI guidelines in Rule no. 3 of FEDAI Rules booklet (latest revision) and to relevant paras on Rates of Exchange and Reporting Systems inchapter 1 of this volume of Book of Instructions. 7. Branches should follow the guidelines contained in RBI Master circulars issued from time to time regarding remittance of interest on import bills under LC or not under LC. 8.Remittance towards Import of Technology - Report u/s 4(2) of R&D Cess Rules Attention of branches is invited to Section A (iii) of Reserve Bank of Indias (RBI) Master Circular on Imports of Goods and Services wherein it is mentioned that Compliance with the provisions of Research & Development Cess Act, 1986 has to be ensured for import of drawings and designs. Technology Development Board is the Administrative Authority of R&D Cess matter under the Research & Development Cess Act, 1986. 2.2 As per Rule 4(2) of the R&D Cess Rules, 1996 every industrial concern shall on or before making any payment towards the import of technology, furnish to the Authorised Dealer through whom such payment is made, the counter foil of the Challan Form TR 6 evidencing the payment of Cess payable under the Act. Therefore Branches are advised to call for counter foil of the form evidencing the payment of Cess payable under the Act before making payment towards Import of Technology. In case if the customer fails to produce the said counterfoil form, the remittance need not be refused but has to report such transactions to Technology Development Board at the address given below within a period of 30 days. Technology Development Board Wing A, Ground Floor, Vishwakarma Bhawan Shaheed Jeet Singh Marg New Delhi 110 016 AD Branches are advised to strictly adhere to the instructions given herein and note to Board within the said period of 30 days. report the

remittance of import of technology transactions without Challan Form to Technology Development

(FX permanent 100 dt.12.11.2010) FORM A1 8.For all remittances for imports, (exceeding USD 500 or its equivalent) A.P.(DIR Series) Circular No.106 dated June 19, 2003 including advance remittances towards imports into India, branches should obtain appropriate application in Form A1 duly completed and signed by the importer. On being satisfied about the bonafides of the application and correctness of statements/declarations by the importer, branches should complete the certificate portion in the form.

8.1.Under no circumstance, the form A1 should be signed by branches on behalf of their customers. In case of any dispute, where the importer refuses to submit the form A1 exceeding an import value of USD500 or equivalent, branches should report the fact to FED/RBI explaining the reasons why the importer refuses to sign the form and branches may sign the same after securing prior approval of RBI. 8.2.In respect of rupee remittances (towards imports into India) for credit to non-resident bank accounts with Treasury Foreign/Other Banks in India, branches should ensure that Forms A1 are duly filled in and signed by the importers and not by remitting branches. 8.3.In respect of imports made/to be made by customers of NAD branches, the NAD branch concerned should get the form A1 duly completed by the customer and forward it to the designated AD branch who will complete the certificate portion in the form. 8.4.In respect of remittances (towards imports) exceeding the powers delegated to the Authorised Dealers, form A1 should be obtained in duplicate from the customer and forwarded to RBI with necessary enclosures. The remittance should be made only on receipt of one copy of form A1, carrying the approval of RBI and on satisfying the conditions, if any, stipulated in the approval by RBI. Branches should keep the import documents received whether under LC established by them or on collection basis in separate folders in a chronological order and retain the folders overnight in the strong room or fire proof safe. 9. Branches should keep the import documents received whether under LC established by them or on collection basis in separate folders in a chronological order and retain the folders overnight in the strong room or fire proof safe. 10. Branches should ensure that rupee payments towards retirement of import bills drawn under LC

as well as import bills received from abroad for collection are received, irrespective of the amount, by debit to the account of the importer with themselves or by means of a crossed cheque drawn by the importer on his other bankers. Under no circumstance, branches should accept cash payments for retirement of import bills, except in respect of private imports for less than the rupee equivalent of Rs.50,000/-or the amount as may be prescribed by FED,RBI from time to time. 11.When local payments are to be made out of the proceeds of the foreign currency import bill, branches should note to deduct the foreign currency amount of the local payment from the bill amount at the time of remittance. The full amount of the bill should be arrived at the appropriate bills selling rate and the foreign currency amount of the local payment should be converted into rupees at the prevailing TT buying rate. 12.For the purposes of determining the rupee equivalent of usance bills to be stamped under Indian Stamp Act, branches should note to convert the foreign currency amount of the bills into rupees at the exchange rate prevailing on the date of acceptance of the Usance bill. 13.Branches should not deliver shipping documents to a party other than the drawee of the bill. In case of imports covered by specific import licence, the drawee should be the holder of the import licence or the letter of authority transferring the licence in his favour. Doubtful cases should be referred to RBI with full particulars. 14.Under Customs regulations, importers have to submit to Customs at the time of clearance of goods a copy of the invoice attested by the AD branch through whom remittance has been made, as corroboratory evidence of the value of goods declared in Customs Bill of Entry. To enable the importer to comply with this requirement, AD branches should furnish the importer with a duly attested copy of the invoice in all cases where relative bills of exchange and/or shipping documents were received through their medium. Where documents are received by importer directly, AD branches may attest a copy of invoice, provided the remittance has been or will be made through them. Evidence of Import: 15. For all the remittances (including advance remittances) of USD 100,000 and above made on account of imports into India, (whether under LC or not under LC) AD/NAD branches should follow up with the importer customers and ensure submission of the evidence of import into our country (Exchange Control copy of Bill of Entry/Postal wrapper) as per guidelines contained in RBI Master circulars issued from time to time. AD branches should verify and preserve the documentary proof of import submitted by the importers (including the importer-customers of NAD branches) and report the particulars of defaulters on account of non-submission of documentary evidence of import into our

country to FED/RBI in the form BEF every half year as per guidelines contained RBI Master circulars issued from time to time. For imports of value USD100000 or less the customer should be advised to be in readiness to submit BEF in case of need In case of lesser known customers or one time importers it is better to hold the BOE at our end. 15.1. Branches should scrutinise the Bills of Entry submitted by importers with particular care to ascertain its genuineness. Branch Manager may at his discretion and particularly in respect of new/relatively new accounts through which import bills are routed, send copies of few Bills of Entry selected at random basis for verification to the Office of Customs concerned. Branch should follow up for confirmation or report from them. To facilitate checking by customs, branches may send a list containing details of Bills of Entry such as serial number, date, amount, importers name, item of import, tariff-heading etc. AD branches are advised to randomly send bill of entry to customs authorities for verification. Regional Offices, during their inspection should verify the above and incorporate in their inspection report.

(FX Permanent 96 dated 15.09.2010) 15.1.1. Branches may also depute their officials to the Customs Office in such cases to get the Bill of Entry verified to ensure prompt follow up. 15.2. All such correspondence should be kept on records for verification by internal auditors and inspecting official of RBI. 15.2.1. Internal Inspectors or auditors (appointed by the Bank) should carry out 100% verification of all EC copies of Bills of Entry/Postal wrappers of imports above USD 100,000 and AD Branch should forward a certificate to that effect to RBI. 15.3. The Exchange Control copies of bills of entry for Home consumption/Postal wrappers should be preserved by branches for a period of one year from the date of verification as above. In respect of cases, which are under investigation by investigating agencies, the EC copies of bills of entry should be preserved till the investigating agency concerned gives clearance for destruction. 16.The entries to be passed by designated AD branches and NAD branches while handling various import transactions on account of the customers of NAD branches are furnished in Annexure VI. ESTABLISHMENT OF IMPORT LETTER OF CREDIT 17.Only the AD branches of our bank are permitted to establish letters of credit covering import of

goods or services into our Country. NAD branches receiving requests from their customers for establishment of import letters of credit should take up with the designated AD branch, observing the procedural formalities in the relevant paras in this chapter. Before forwarding the request for opening import LC to the designated AD branch, the NAD branch should examine the request and ensure that the transaction is in accordance with the various rules and regulations in force. The designated AD branch shall arrange for issuance of the LC, if the application is found in order, and forward two copies of the LC to the NAD branch, of which one should be given to the importer and other should be retained by the NAD branch as their office copy. NAD branches should verify and authenticate the signature of the importer on the LC application form. 17.1.Branches should ensure that letters of credit are established only on account of their customers, who maintain accounts with them and are known to be participating in the trade. NAD branches forwarding requests from their customers to establish LCs should confirm (in their forwarding letter) to the designated AD branch that the applicant to the LC satisfies the above criteria. 17.2.Branches establishing transferable LCs should be guided by article 38 of Uniform Customs & Practice for Documentary Credits, 2007 Revision, ICC Publication No.600 They should also seek approval of Regional Office for opening transferable LCs. 17.3.Before entertaining requests for establishing import LCs on account of their customers, branches should verify and ensure that the customer enjoys an unexpired /sanctioned limit or the LC to be established is well within the discretionary powers of the branch manager. The LC sought to be established plus the outstanding under the LCs so far established together with outstanding under LCBR/Acceptances under LCs should not exceed the total LC limit made available to the customer or the discretionary powers of the branch. Branches should not establish LCs on account of customers who have not been prompt in meeting their commitments and /or who have not been submitting the documentary proof of import into India (viz. Bill of Entry/Post Parcel Wrapper) in time and such cases should be referred to the Regional Office for decision. 17.4.Branches receiving requests to establish revolving letters of credit should seek permission of Regional Office. 17.5.As no post import finance is normally extended to meet the import bills when received, branches should call for and verify the cash flow statements and satisfy themselves about the importers ability to retire the bills when received, without need for a last minute rush for additional credit facilities. Branches should also be aware of the rate/amount of import duty payable on the items of imports for which LCs are to be established and that the customer has adequate source to meet the duty

commitments. 17.6.Branches should ensure execution of proper documents by the authorised person/partners/directors of the importer-customer for the LC limit, as per the Documentation Manual of our bank. Branches should also ensure compliance of the norms fixed for holding imported raw materials, spares, etc. for purposes of assessment of working capital finance and any deviation from the norms should be supported by valid reasons and documentary proof, there for and approved by the sanctioning authority. 17.7.Branches should call for and verify the original sales contract/proforma invoice/indent and the Exchange Control copy of import licence (if the item is subject to import licence) in the name of the importer-customer. Import LCs should not be established based on lapsed/expired sales contract/proforma invoice/indent. On being satisfied that the proposed import transaction is in accordance with the Trade/Exchange Control Regulations in force, branches should get the Documentary credit application-cum-agreement (in form 104x) filled in by the importer-customer. Additionally, branches should ensure that the form 104x is duly stamped at the appropriate place (i.e. in page 3, the Agreement proper) as per Stamp Act of the State concerned. 17.8. NAD branches should obtain the application in form 104x duly executed by the importer customer along with the Exchange Control copy of import licence (wherever applicable) and the underlying original sales contract. 17.8.1 After ensuring that the application has been properly filled up and the LC to be opened is within the sanctioned LC limit/discretionary powers of the NAD branch, the NAD branch should forward the LC application (104x), the original sales contract and the import licence (in original) to the designated AD branch. NAD branch should also obtain an authorisation letter along with each LC application (as per annexure I) from the importer agreeing to the NAD branch for issuing the letter of credit through the designated AD branch and to abide by banks internal procedure in regard thereto that may be in force from time to time, including the procedure for fixation of exchange rate for the import bill that may be received under the LC. 17.8.2. NAD branches should retain photocopies (duly certified by the Branch Manager of the NAD branch) of the LC application (104x) and the relevant enclosures in their files for reference purposes. 17.9.Branches should ensure that form 104x is signed by the authorised official of the importer and the Importer-Exporter Code Number is also indicated therein. All the corrections/alterations should have been duly authenticated by the authorised official of the importer. Signatures on the LCs should

be verified by the NAD branch. 17.10.Branches should agree to establish LCs in favour of beneficiaries on whom they hold satisfactory credit reports. These credit reports should be up dated at least once in every year and every time the limit is sought to be renewed/enhanced. 17.11.Branches should advise the importer-customers to furnish precise and complete details regarding type of availability of credit, description. quantity and unit price of item of import, currency and amount of credit, port of shipment, port of destination, partial shipment, transhipment, documentary requirements, place of expiry of LC, time limit for presentation of documents, mode of advising the LC, etc. in the LC application. Any correction/alterations in the terms of the application should be got authenticated by authorised official of the importer. 17.12. The details furnished in the application should be compared with the underlying sales contract and import licence (wherever applicable) to ensure that a.description of goods, quantity, value, unit price, terms of sale, etc. conform to the details as found in the underlying sales contract; b.description and quantity of goods in the application conform with those in the import licence and the value of imports (including agency commission, if any) is within the CIF value of imports; c. last date of shipment/despatch proposed is within the validity period of the import licence d.expiry date of LC indicated in the application is not later than 15 days from expiry date of import licence; e.the country from which the goods are proposed to be imported is permitted by the import licence and the currency/method of payment is appropriate to the country of shipment of goods; f.the documentary requirements proposed in the application are in accordance with the terms of underlying sales contract and that they do not contravene any Exchange Control Regulation in force in our country. Branches should additionally ensure that special conditions, if any, in the licence are also complied with. 17.13. FEDAI had advised that banks at their discretion may not insist on stipulating the maximum age of vessel in the LCs established by them. Although discretion is given as above regarding age of vessel, branches should bring it to the attention of importer customers the implications of shipment of cargo by old vessels, which would ordinarily attract over age premium. If the importer customer desires to retain stipulation regarding age of the vessel, branches should comply with the instructions of the customer.

17.13.1. If however, the importer desires to dispense with age requirement, the same need not be incorporated in the LC. In such cases, following clause may be incorporated. "Shipping Companies/Shipping Agents Certificate that the vessel is registered with an approved Classification Society as per Institute Classification Clause and Class maintained equivalent to Lloyds 100 A1 and vessel is sea-worthy". 17.14. Branches may at their discretion permit waiver of preshipment inspection certificate if specifically requested by the applicant and subject to the LC amount being less than Rs.200,000 and compliance of the following conditions: i.past track record of the importer in honouring documents is good. ii.the beneficiary of credit is internationally well reputed and satisfactory current credit report on the beneficiary is held at the branch. iii.the import is being done on a regular basis from a known supplier over a period. 17.14.1. Where the amount of LC to be established exceeds the equivalent of Rs.200,000/-, branches should take up with the Credit Sanctioning Authority for prior approval for permitting the waiver and the details of the sanction letter from RO should be recorded in the Outward Documentary Credit Register and the letter preserved along with the LC/documents. (In respect of LCs established by AD branches on account of NAD branches, the approval for waiver should be obtained by the concerned NAD branch.) 17.15. Branches should scrutinise the LC application and additionally ensure that a.in respect of air consignments, Airway bill evidencing consignee as Indian Overseas Bank...................... (Issuing branch) (with notification about arrival of cargo to the issuing branch and the applicant) is called for; b.in respect of shipments by sea, full set of clean on board bill of lading made out to order of the consignor and blank endorsed or made out to order of issuing branch (with notification about arrival of cargo to the issuing office and the applicant) is called for; c.in respect of CIF and C&F consignments, the transport documents, marked freight prepaid are called for; d.in respect of FOB and C & I consignments, the transport documents, marked freight to pay are called for; e.in respect of CIF and C&I consignments, insurance documents incorporating appropriate Institute Cargo Clauses are called for, with claims payable in India;

f.in respect of FOB and C&F consignments, the LC application is accompanied by relative contingency insurance cover note taken by the applicant from GIC/its subsidiaries. 17.16. Branches should ensure that the LC application as well as the LC contains the following mandatory clause regarding commercial invoice: (X) Invoices for amounts in excess of amounts drawn under the credit are not acceptable 17.17. Branches should note that LCs established by them should provide for payment only against delivery of shipping documents. Applications for opening of LCs providing for payment against other than shipping documents such as warehouse receipts, rail bill of lading, etc. should be referred to FED/RBI. Branches may note that such permissions are given by RBI only in respect of imports covered by CG/HEP Licences. The applicant should be advised to incorporate following clauses regarding transport documents in the LC application: i.Transport documents must not indicate the place of final destination as being different from the port of discharge. (This will not apply in the case of multimodal transport document) ii.Transport documents must not be dated prior to the date of credit. iii.Transport documents indicating as the consignor of the goods a party other than the beneficiary of the credit are not acceptable. Third party transport document is not acceptable. iv.Short form/blank back transport documents are not acceptable. v.Non negotiable seaway bill is not acceptable. 17.18. As a policy and in view of the large number of maritime frauds, branches should not issue LCs accepting charter party bills of lading. Hence, LC applications with such clauses should not be entertained by branches. Any waiver in this connection, should be with the prior approval of Credit Sanctioning Authority. Branches should not stipulate conditions such as stale bills of lading/documents acceptable and even if such conditions are stipulated by the applicant in the application, branches should advise the applicant to delete such clauses. Branches should not agree to open LCs with such onerous clauses. 17.19. Where the applicant desires to call for Multi Modal Transport Document, following wordings must be incorporated in the LC Application (104x) as well as in the LC (80 B): "Full set in triplicate Signed Multimodal Transport Document made out to order and blank endorsed/made out to order of Indian Overseas Bank, marked "Freight Prepaid/Payable" and notify ourselves and applicant mentioning the credit number and date." 17.20. By its very nature, Multimodal Transport Document cannot be issued (initially) as On board; if

any applicant calls for Multimodal Transport Document with on board notation, it may be called for, however noting that immediate presentation of documents is not possible as the notation would be made only when the goods are on board vessel after covering the initial part of the transport by road or rail. 17.21. For documents other than transport documents, insurance documents and commercial invoices, branches should ensure that the LC application/LC clearly stipulates a.by whom the documents should be issued and b.their wording/data content. (e.g. Packing list in duplicate issued by the beneficiary evidencing that goods ordered are packed in Cardboard boxes, each box containing 5 dozens of .............). Branches should note that unless specific instructions as indicated above are given in the LC, the nominated/negotiating bank shall accept the documents as tendered provided that their data content is not inconsistent with any other stipulated documents presented. 17.22. After scrutiny of the LC application with the sales contract and import licence/negative list as per current EXIM Policy, and ensuring that the transaction is in accordance with the Trade/FEMA Guidelines and FEDAI Rules, the LC application, along with other documents should be referred to the Manager in the business referred register, furnishing following details: LC limit LC outstanding Margin LCBR o/s Acceptances under LCs Inspection Irregularities Comments on the current application : For deletion/modification of certain mandatory clauses in the application like third party Bill of Lading not acceptable etc, Branches should take up with credit sanctioning authority for prior permission. The branch manager should signify his approval or otherwise on the application as well as in the Business Referred Register. 17.23.On approval by the Manager, details of the LC to be established should be recorded in the Outward Irrevocable Documentary Credits Register (R.45-revised) and the underlying sales contract/proforma invoice, etc. should be branded with the branch stamp, carrying the LC number and : : : : : : (Sanction/Discretion)

date. The LC number should be indicated in the register and other documents as follows: Branch/IMP. /Advising banks/Serial /Calendar LC./Code / abbreviation -/Number/ Year / place / e.g.015/ IMP LC/CMB-NY/115/2000 (CMB-NY: Chase Manhattan Bank, New York.) 17.24.Commission as per our banks latest service charges booklet updated from time to time should be collected and credited to branch P & L account. The amount of commission collected and the date on which it is collected should be recorded in the Outward Documentary Credit Register under the initials of the authorised official of the branch. In respect of LCs to be established by AD branches on account of the customers of NAD branches, the NAD branch should forward IBSA instrument (for the LC commission) along with application and other documents. 17.25. Branches should normally collect the margin amount, as per sanction terms, from the importer customer only. However, in exceptional cases, branches may collect margin from a party other than the importer-applicant, provided branch is satisfied (by studying his cash flows) that though the importer-applicant is not in a position to provide the margin now, he will be in a position to meet the bill himself, when it is received. Wherever margin is received by way of term deposit receipt/s, the deposit receipt/s with undated discharge of the depositor/s over a revenue stamp affixed on the reverse of the deposit receipt along with form 60H executed by the depositor/s should be obtained and kept with the documents executed by the importer for the LC limit. Details of margin collected should be recorded in the Outward Documentary Credit Register under the initials of the authorised official of the branch. 17.26. In respect of LCs opened on account of customers of NAD branches, margin, if any, collected should be held by the NAD branch in its books. 17.27. If the item of import is subject to import licence, the Exchange Control Copy of import licence should be endorsed as per guidelines in para above, applying Bills Selling Rate/Forward Sale Rate or the pre-determined exchange rate indicated in the CG (capital goods) licence. In respect of imports on C&F, FOB and C& I basis, branches should note to earmark sufficient amount towards freight and /or insurance. 17.28. Branches should decide the mode of issuing the LC based on the instructions of the applicant in form 104x. Branches should utilise the following formats prescribed by Treasury Foreign for issuing import LCs.

i. Tele transmission format - Pre-advising by short tele transmission of issuance of Documentary Credit - Refer to Annexure II ii. Tele transmission format for issuance of Irrevocable Documentary Credit Refer to Annexure III iii. Swift Format 700 series iv. LC to be advised by airmail Form 80B 17.28.1. Branches should note to send mail confirmation in form 80B for all short cable telex/cable pre-advices issued by them and the airmail confirmation carrying the remark In confirmation of our Short tele transmission pre-advice of date should be sent on the day the short tele transmission preadvice is transmitted. (Branches are also advised to refer to the relevant articles of Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication no 600 .) 17.28.2.As in the case of LCs issued by Airmail/courier, the office copies or authorised version of the message to be transmitted by telex/swift, after being drafted and corrected, should be signed by the authorised officials viz Desk Officer and DM/Manager/Sr. Manager/Head of the Branch. Only after such authentication, should the telex/swift message be sent to the official handling test keys. The Official handling test keys should not affix/provide test cypher unless the message copy is properly authenticated. Unless the swift message copy is properly authenticated, Swift Section should not transmit the message. 17.28.3. Letters of Credit exceeding the value of US Dollar 100000 should apart from being signed by two Officials mentioned above should also be countersigned by the Head of the Branch. 17.29. For establishing LCs by airmail, branches should utilise form 80B. Form 80B should be neatly typewritten in a set of four copies. The authorised official (of the AD branch) handling import transactions should verify the contents of the LC with the LC application and other documents and if found in order, affix his signature with S.S. Number and also obtain the signature of another authorised official of the branch, preferably, the branch Manager. The officials signing the LC should also affix their initials with date in the Outward Documentary Credit Register. 17.30. Branches should note to affix the original copy of LC with special adhesive stamp of requisite value and mail the first two copies to the advising bank, the third copy to applicant and the fourth copy, the office copy. When LCs are established by designated AD branches, on account of the NAD branches linked to them, form 80B should be typewritten in a set of 5 copies, of which the third and fourth copies should be sent to the NAD branch with instruction to deliver the third copy to the applicant, retaining the fourth as their (NAD branchs) copy.

17.31.When LCs are advised by telex/cable or by short tele transmission pre-advices followed by mail confirmation, branches should note to send a copy of the telex/cable messages (without the test) to the applicant. In respect of LCs for which pre-advices are sent by telex/cable, a copy of the mail confirmation sent to the advising bank should also be sent to the beneficiary. 17.32. Before signing the LC, the authorised officials signing the LC must take extra care to ensure that a.name and address of the issuing branch, telex/telegram addresses are correctly incorporated b.names and addresses of the applicant and beneficiary are properly furnished c.name/s and address/s of the advising/nominated bank are indicated as per the updated List of Correspondents circularised by Treasury Foreign . d.the type of availability of credit and the attendant instructions are properly given. In this connection, branches are advised to follow the guidelines contained in the subsequent paras scrupulously. e.the ISO currency code is indicated correctly and the currency and amount in words and figures tally with each other. (Please refer to Annexure V to this chapter for ISO Currency codes.) f.the amount of credit is indicated as per the Standard British Nomenclature, viz., i. In figures: Commas inserted after every 3 zeroes. e.g. 10,00,000 (ten lacs) should be indicated as 1,000,000 (one million); 25,10,00,000 (Twenty five crores and ten lacs) should be indicated as 251,000,000 (Two hundred and fifty one million). ii. In words: The words lacs and crores should not be used. Instead the amount should be expressed in terms of Thousands, millions and billions. e.g. one lac should be indicated as one hundred thousand, ten lacs as one million and one crore as ten million. g.Description of commodity, quantity and unit price are indicated as per sales contract/import licence terms. (Branches should note to give complete and precise instructions regarding the item of import; but in the name of giving complete instructions, branches should not furnish excessive details in the LC as it will only lead to confusion. Branches should discourage the habit of enclosing copies of sales contract/proforma invoice to the LC.) h.the documentary requirements are properly furnished in the LC (taking into account the terms of sales contract, Trade/Exchange Control guidelines and the relevant provisions of UCPDC and guidelines of FEDCO from time to time.) * i. date of issue of LC is indicated. (While indicating dates in the LC - whether date of LC or last date of shipment or expiry date of LC branches should adopt the system of mentioning the month, date and

year, in that order. e.g. July 19, 2000; October 25, 2000; February 28, 2000). j.the last date of shipment, along with the period of time (after date of issue of transport document) for presentation of documents and expiry date for presentation of documents are indicated as per the terms of sales contract and Trade/ Exchange Control regulations in force. k.instructions regarding despatch of documents by the nominated/confirming bank in one lot or two lots and the mode of despatch (viz. courier/air mail) are furnished properly. l.appropriate reimbursement instructions are given in the copy of LC to be mailed to the advising bank and in the copy to be retained by the issuing branch. (Please refer to relevant paras below.) m.the number of signed pages in the LC is indicated at the bottom of each page of LC (e.g. This document consists of TWO signed pages). if there are any additional documents/conditions, branches should use continuation sheet in form 80C. (*) Date of Credit For Exchange Control purposes, the date on which the terms of the LC are transmitted, by mail/ teletransmission to the advising bank shall be deemed to be the date of establishment of the LC for an import transaction. In view of this Exchange Control requirement, branches should ensure that LCs are despatched/transmitted on the dates indicated in the LC as date of issue. In respect of pre-advices sent by short teletransmission, the mail confirmation (in form 80B) is sent on the day on which the short teletransmission was transmitted. The receipts issued by post offices for the airmail despatches and the acknowledgments issued by telegraph offices should be preserved along with office copies of the LCs issued and the date of despatch/transmission should be recorded in the Outward Irrevocable Documentary Credits register under the initials of the authorised official of the branch. 17.33. Branches should ensure that the credit is advised through one of our correspondents (as per instructions of Treasury Foreign in this regard from time to time) and the credit is made available with the advising bank. Regarding the choice of availability of credit, branches should be guided by the applicants instructions in form 104x. Simultaneously suitable reimbursement authority should be prepared as per guidelines in subsequent paras and mailed to the reimbursing bank indicated in the second copy of LC, marked to the Advising bank. 17.34. Branches should note that establishment of LCs providing for payment on deferred payment terms (i.e. remittance either in full or in part beyond six months from date of shipment/expiry date of import licence) is as per the procedural guidelines laid down in the latest Master circular on external commercial borrowings issued by RBI and updated from time to time. Branches are advised to follow the separate guidelines given in this chapter for establishing LCs providing payment on deferred payment terms. However, branches can establish LCs available with a nominated bank abroad by deferred payment, where payment shall be made to the beneficiary after expiry of prescribed period from date of shipment or presentation of documents by the beneficiary, provided the due date for payment does not fall beyond six months from date of shipment abroad. (Branches are advised to

note the above distinction between credits providing for payment on deferred payment terms and credits available with a nominated bank by deferred payment terms and for any clarification in this regard, to write to D & A section, Treasury Foreign.) 17.35. When the applicant desires to have the credit available by Deferred Payment, branches should ensure compliance of the following aspects: a.The LC shall not call for any draft; b.The LC must specify at which maturity (other than sight) payment is to be made and how such maturity is to be determined (e.g. 45 days after date of shipment; 15 working days after presentation of documents, etc.). Subsequently when the credit is prepared, branches should indicate the availability of credit as follows: "Credit available with _____________________ (Nominated bank) by (x) deferred payment against presentation of documents detailed herein and marked (X) _ _ _ _ _ _ _ _ _ _ (so many days) after shipment/presentation of documents, for full/ % of invoice value. 17.36. As credits available by deferred payment saves stamp duty on drafts, and also helps the bank in funding our Nostro account in time, branches should advise their importer-customers to have the credit available with the nominated bank by deferred payment. Wherever credits are to be made available by deferred payment, branches should get the following clause incorporated under item 4A in page 3 of the LC application (104x) under the signature of the importer: " To pay on maturity/on the due date the value of the documents received by me/us released by you under the credit and you are hereby authorised to debit without previous notice to me/us the amounts of payments made by you on the due date pursuant hereto my/our current account with you." 17.37.Even in cases where importers apply for issuance of LCs available by sight payment or negotiation of drafts, branches may advise the customers to agree for issuance of LCs available by deferred payment (i.e. deferring payment by 2 or 3 days from date of presentation), as the customers can save on transit period interest and the bank can also benefit on overdraft interest on funding Nostro account. 17.38.When the applicant specifically desires to have the credit available with the nominated bank by sight payment, branches should indicate the availability of credit as follows: "Credit available with __________________________ (Nominated bank) by (x) sight payment against presentation of documents detailed herein and marked (X) and beneficiarys draft at sight on the nominated bank(*) for full/ % of invoice value."

(*) When the applicant does not call for drafts, branches need not call for beneficiarys drafts. 17.39.When the applicant desires to have the credit available with a nominated bank by acceptance, the LC should call for Usance drafts of specific duration drawn on the nominated bank; branches should indicate the type of availability of credit as follows: "Credit available with _________________________ (Nominated bank) by (X) acceptance against presentation of documents detailed herein and marked (X) and beneficiarys draft at days sight drawn on the nominated bank for full/ % of the invoice value. 17.40.Where the applicant desires to have the credit available by negotiation with any bank, it is desirable to limit the free negotiability to specific country or city (refer Place of expiry in form 104x). (e.g. any bank in Australia or any bank in Sydney). 17.40.1.In case the applicant desires to open a credit restricting negotiation to a nominated bank, branch should decide the choice of the nominated bank and applicant should be advised to indicate whether the drafts are to be drawn at sight or at a stated tenor (as per terms of sales contract). 17.40.2.Irrespective of the type of availability of credit, LC should indicate whether the credit is available for full value or so much percentage of the invoice value, depending on the terms of underlying sales contract based on which the LC is sought to be opened. 17.41.If specifically requested by the applicant in his application (104x) based on underlying sales contract, issuing branch may request the correspondent (viz. the advising bank) to add confirmation to the credit issued by them Reimbursement instructions 17.42.Branches should follow the guidelines in these paras and incorporate suitable reimbursement instructions in the copy of LC marked for advising bank, depending on the type of availability of credit and also have them recorded in the office copy to be retained by the issuing branch. As reimbursement instructions are not part of the LC terms, branches should not incorporate reimbursement instructions in the original LC. However, in respect of LCs issued by full operative telex/cable, these clauses may be incorporated in the operative instrument itself. 17.43.When branches are specifically requested by their importer customers to establish LCs available for negotiation by any bank, branches should not incorporate instructions to debit our account with a correspondent abroad, as even a non-correspondent bank may evince interest in the documents and if

the documents are not in accordance with the terms of LC, reclaiming the reimbursement from the negotiating (non-correspondent) bank may prove difficult and time consuming. Branches are advised to incorporate the following reimbursement instructions in LCs available for negotiation by any bank: On receipt of the drafts and accompanying documents at our counters, we shall remit the value of the drafts for your account as indicated by you. 17.44.When branches issue credits available with a nominated bank abroad by deferred payment, branches should note to incorporate reimbursement instructions, as per guidelines below, in the second page of the copy of LC marked for advising bank and in the office copy of LC to be retained by the issuing branch. " Please advise us and our Treasury (Foreign) Department Chennai by an authenticated telex/cable * message details of the drawing immediately on presentation. Debit our Central Office, Chennai account no.......... with you on the due date." OR "Please advise us and our Central Office, Chennai by an authenticated telex/cable * message details of the drawing immediately on presentation. We have authorised .......................... to honour your claim at maturity to the debit of Indian Overseas Bank, Central Office, Chennai account with them. If the claim is not satisfied by them on first demand, we are to be informed by telex/cable." * In the case of credits denominated in US Dollars and Great Britain Pounds, where the value of the credits are below certain specified amounts say USD 50,000 or GBP 25,000/-, branches need not request the nominated bank to advise Treasury Foreign of the drawings in the above instructions. In respect of all other currencies, the instructions are valid irrespective of the amount. 17.45.Branches may incorporate suitable reimbursement clauses as per guidelines below: 17.45.1. Debit our Central Office, Chennai account number _ _ _ _ _ __ _ _ _ with you. This instruction should be used in case of a credit available by sight payment or by negotiation calling for sight drafts and advised through our correspondent with whom our bank maintains Nostro account in the currency of credit. (e.g. LC issued in US Dollars and advised through CITI Bank, New York.) Debit our Central Office, Chennai account number ________________________ with you on due date. This instruction should be used in case of Usance credit/deferred credit advised through our correspondent with whom our bank maintains Nostro account in the currency of credit. Though advising bank is also the reimbursing bank in the above instances separate reimbursement authority (in form 380) should be made to the advising/reimbursing bank and copy retained along with copy of LC and other documents.

17.45.2.We have authorised _ _ _ _ _ _ _ _ _ _ _ _ _ _ to honour your claim to the debit of Indian Overseas Bank, Central Office, Chennai account number _ _ _ _ _ _ _ _ with them. If the claim is not satisfied by them on first demand, we are to be informed by telex/cable. This instruction should be used in the case of sight payment credit or negotiation credit issued when reimbursement is provided through a third bank. (e.g. LC issued in US Dollars and advised through Midland Bank, London and reimbursement provided through CITI Bank, New York.) We have authorised _ _ _ _ _ _ _ _ _ _ _ _ _ _ to honour your claim AT MATURITY to the debit of Indian Overseas Bank, Central Office, Chennai account number _ _ _ _ _ _ _ _ _ _ with them. If the claim is not satisfied by them on first demand, we are to be informed by telex/cable. This instruction should be used in case of credits available by deferred payment where reimbursement is provided through a third bank. While the above instructions shall be recorded in the copy of credit marked for advising bank, separate reimbursement authority (in form 380) should be prepared and mailed to the reimbursing bank indicated in the copy of LC marked for the advising bank. Copy of the LC need not be mailed to the reimbursing bank. 17.45.3. Please advise us by an authenticated teletransmission message details of the payment/negotiation. On receipt of such an advice, we shall remit the value of drafts for your account as indicated by you. This instruction should be used to provide TT reimbursement under a sight payment credit or negotiation credit. Please advise us and/Central Office Chennai by an authenticated teletransmission message details of the payment/negotiation. On receipt of such an advice, we shall remit the value of the drafts for your account as indicated by you. This instruction should be used to provide TT reimbursement under sight payment or negotiation credit of large value. (viz. USD 500,000 or equivalent) to enable Treasury Foreign to fund the Nostro account without delay. Wherever drafts are not called for in the credit, the word draft should be substituted by documents. 17.45.4. On receipt of the drafts and accompanying documents at our counters, we shall remit the value of the drafts for your account as indicated by you. This instruction should be issued for providing reimbursement after receipt of documents in all the types of credits. In the case of sight payment and deferred payment the words drafts and accompanying should be deleted to read as: ( ) On receipt of the documents at our counters, we shall remit the value of the documents for your account as indicated by you.

Usually this instruction should be used in LCs issued and advised through banks with whom we are not maintaining any Nostro account. 17.46.Wherever reimbursement instructions are given to the advising bank to claim reimbursement from our Correspondent, copy of the reimbursement authority (in form 380) should be sent to the Correspondent, authorising them to honour the reimbursement claim specifying the LC number and date, currency and amount of reimbursement and the name of nominated bank. 17.46.1.Even in respect of LCs where the advising bank is authorised to reimburse themselves to the debit of our account with them, a separate reimbursement authority (in form 380) should be sent to the advising bank authorising them to debit our account with them, indicating the currency and amount that can be debited. 17.46.2.Wherever LCs are advised by full operative teletransmission, branches should note to send the reimbursement authority also by authenticated teletransmission. Branches should not stipulate presentation of compliance certificate by the nominated/confirming bank to the reimbursing bank. Issuance of LCs to be confirmed by correspondents 17.46.3. Based on the instructions of the applicant, branch may request the advising bank to advise the LC adding their confirmation to credit. In such cases, in the instructions to the advising bank in the second page of the LC, an (X) mark should be placed against the instruction Adding confirmation or authorise you to add confirmation. If the advising bank (correspondent bank) reverts and informs that they are not in a position to confirm our credit, branch should promptly inform the applicant and seek his instructions whether the credit maybe advised without adding confirmation by the correspondent. If the applicant agrees in writing for advising the LC without adding confirmation, branch should promptly pass on the instructions to the advising bank. Details of refusal of the correspondent bank to add confirmation should also be advised expeditiously to Correspondent Banking Section, Central Office. When bank requested to add confirmation seeks amendments to the credit, branches should take up with the applicant and act according to his instructions. 17.46.4.Regarding the charges that would be levied by the bank that adds confirmation to the credit, the LC application and LC should stipulate as to whether the confirmation charges would be for the account of the applicant or for the account of the beneficiary to the credit. Branches should verify the underlying sales contract and accordingly incorporate a suitable clause in the LC.

17.47.Simultaneous with the despatch of the LC to the advising bank, following accounting entry should be passed by the AD branch in their books, in respect of the LCs established on account of their customers: Debit: Customers liability under LC (Foreign) Credit: Banks liability under LC (Foreign) The above contra entry should be passed at the current bills selling rate or forward rate, as the case may be. Entry should also be made in the LC liability register. Accounting entries for collection of margin, commission and postages should also be passed on the date of issuance of the LC. The accounting entries in respect of LCs established by AD branches on account of the customers of NAD branches are furnished in Annexure-VI. 17.48.Subsequent to despatch of the LC to the advising bank and copy of the LC to the applicant/NAD branch, office copies of the LC and reimbursement authority, if any underlying sales contract and import licence should be retained in a separate Outward LC Folder, in a chronological order. These documents should be carefully preserved like any other advance documents taken by the branch. 17.48.1A copy of LC (opened by air mail or by SWIFT) should be given to the customer duly incorporating in the covering letter that the LC has been opened as per application provided by the customer. IT should be verified for correctness and if there is any corrections needed, it should be immediately brought to the notice of the branch. If the branch does not hear within 48 hours from the date of receipt of LC, it will be construed that they have accepted the LC as advised, with all the information contained therein. Amendments 17.49.When the importer-customers request issuance of an amendment to an LC already issued, branches should call for and verify amendment to the underlying sales contract and if the amendment relates to description, quantity, unit price, last date of shipment or expiry date of LC, Branches should ensure that these amendments sought for are in accordance with the provisions of current EXIM Policy/Import licence and Exchange Control Regulations in force. 17.50.Branches should obtain a written request to amend the LC along with the underlying sales contract and Exchange Control copy of import licence (where applicable) and indicate the mode of sending the advice of amendment. The request for amendment should be referred to the Manager in the Business Referred Register for his approval. On his approval, the details of the amendment should

be recorded in the relative folio in Outward Documentary Credit Register and details of commission and postages collected should be entered in the register against the initials of the authorised official of the branch. 17.51.When an amendment is for enhancement of the amount of credit, branches should note to collect additional margin, endorse the Exchange Control copy of import licence and pass contra for the increase in amount of credit debiting Customers Liability under LC (foreign) and crediting Banks Liability under LC (foreign) at the same exchange rate as the original credit. 17.52.Branches should use Form 288 for sending amendments by air mail. When credits are to be amended by teletransmission, branches should utilise the format given in Annexure IV to this chapter, get the message tested by authorised official of the branch and advise the beneficiary through the same advising bank through whom the original credit was advised. If at the time of establishing LCs, Swift Formats have been used, for amendments also, the prescribed swift formats must be used. 17.53.When the amendment is to be advised by airmail, branches should forward two copies to the advising bank (through whom the original credit was advised), one copy to the applicant and retain a copy for their files. When the amendment is to be advised by teletransmission, copy of the message (without the test)should be sent to the applicant. 17.54.In respect of credits to which our overseas correspondents have added their confirmation, the advice of amendment should be sent through the advising/confirming bank to the beneficiary. Where the advising/confirming banks are two different banks, branches should send the advice of amendment to the advising bank with an instruction to advise the amendment through the confirming bank. 17.55.Where the amendment results in enhancement of amount of credit and advising bank has been given reimbursement instructions to debit our account with them or with a third bank, suitable reimbursement instructions should be given to the advising bank for debiting our account with them/third bank for the enhanced amount and also send a reimbursement authority to the reimbursing bank to honour the claim of nominated/negotiating/confirming bank for the enhanced amount. 17.56.In respect of amendment of LCs issued on account of customers of NAD branches, the request for amendment should be verified by the NAD branch and if found in order, the request along with other relevant documents should be forwarded to the designated AD branch, which will arrange to issue the amendment and forward two copies of the amendment to the NAD branch, of which one

should be delivered to the importer. NAD branches should collect commission as per Central Office guidelines issued from time to time and credit percentage of the commission to the designated AD branch; the IBSA instrument should be sent to the AD branch along with the recommendation of the NAD branch for issuance of amendment. 17.57.Copy of the amendment and amended reimbursement authority sent should be retained by branches along with copy of relative LC and other documents. 17.58. ARRANGEMENT FOR ADVISING OF U.S. BASED LETTER OF CREDITS BY WELLS FARGO BANK Wells Fargo Bank (formerly Wachovia Bank) is one of our prime correspondent with whom we have US Dollar account. Wells Fargo Bank has a good network in USA with more branches spread throughout the country. They are providing various services and share income with us. We have good correspondent relationship with Wells Fargo Bank and have various arrangements including Private Label Trade Services for re-issuing LCs in Hong Kong for specified Asian countries through which we are earning sizeable income. With the intention of providing seamless service for advising LCs bound for U.S., we have now entered into an arrangement with Wells Fargo Bank for advising all the Letters of Credit established by all our AD branches favoring the beneficiaries in USA through their New York office. Their extensive network will be an added advantage for us to advise the LCs to the beneficiaries or the bank through whom the LCs are to be advised. Branches are advised to route all the U.S. based LCs through Wells Fargo Bank only where the beneficiary is in USA. Branches have to send the LCs to the SWIFT address of PNBPUS3NNYC.The income earned will be passed on to the branches periodically. (FX Permenent 94/2010-2011 dated 02.08.2010) IMPORT ON DEFERRED PAYMENT TERMS 18.Branches receiving applications for issuance of import LCs on deferred payment terms or issuance of deferred payment guarantees should follow the guidelines contained in updated master circular on guarantees/imports issued by RBI and updated from time to time and collect commission/postages as per our latest service charges booklet updated from time to time. 18.1.Branches should note that import of goods (whether under LC or not under LC) where payment to the overseas supplier/seller is to be made on deferred payment terms (i.e. over a period of time beyond six months from date of shipment/expiry date of import licence) is as per the procedural guidelines laid down in the latest Master circular for external commercial borrowings issued by RBI and updated from time to time. 18.1.1.In cases of invocation of deferred payment guarantees branches should verify whether such invocation is valid and proper, and, after satisfying themselves about it, remit the amount due properly. Branches should also forward a report to RBI along with a copy of the claim received from the overseas beneficiary. Branches should also send a detailed report to Treasury Foreign about the invocation with copies to Regional Office. The amount remitted should be recovered from the importer customer immediately.

18.1.2Branches should not issue any deferred payment guarantee for import of goods (or services) into India without obtaining prior approval of FED/RBI. They should get approval by sending a letter in duplicate to RBI along with the draft of the guarantee. The permission given by RBI for issuance of the guarantee includes permission for the outward remittances if the guarantee is invoked. In such cases of invocation of deferred payment guarantees branches should verify whether such invocation is valid and proper, and, after satisfying themselves about it, remit the amount due properly. Branches should also forward a report to RBI along with a copy of the claim received from the overseas beneficiary. Branches should also send a detailed report to Treasury (Foreign) about the invocation with copy to Regional Office. The amount remitted should be recovered from the importer customer immediately. 18.2.Branches should not establish import letters of credit on deferred payment terms or issue deferred payment guarantees unless the item of capital goods to be imported is covered by a specific import licence issued on deferred payment terms. (i.e. Branches should not establish import LCs on deferred payment terms in respect of items not included in the Negative List of capital goods and such LCs should be established providing for payment to beneficiary within a maximum time limit of six months from date of shipment.) 18.2.1.Branches should not establish LCs providing for payment on deferred payment terms or issue deferred payment guarantees or arrange remittances on collection documents received on deferred payment terms on Licences issued on cash basis i.e. where Import Trade Control Authorities have not indicated any deferred payment terms on the licence. 18.3.NAD branches receiving applications from their importer-customers to establish LCs on deferred payment terms should note to examine the application in the light of the foregoing instructions and forward them to the designated AD branch, which will establish the LC. 18.4.Only AD branches shall issue deferred payment guarantees on behalf of customers of NAD branches, observing the relevant Trade/Exchange Control and FEDAI guidelines in force. All the required papers/documents should be submitted by the NAD branches to the designated AD branch. In respect of remittances under guarantees, AD branches shall advise NAD branches in advance the approximate rupee equivalent so that the NAD branch can debit the party and credit the AD branch with the rupee equivalent. The relative form A1 and other documents should be obtained by the NAD branch from its customer and forwarded to the AD branch along with the IBSA instrument. Reports to Treasury (Foreign) and returns to RBI should be submitted by the AD branches.

18.5.Branches establishing LCs on deferred payment terms or issuing deferred payment guarantees towards import of goods into India should ensure that the LC/DPG to be issued is in accordance with the terms and conditions stipulated by the sanctioning authority. 18.6.Branches establishing LCs on deferred payment terms or issuing deferred payment guarantees should obtain separate agreement/counter indemnity from the applicant for issuance of the LC/Guarantee in which he should undertake, among other things, to make the payment on the due dates to be specified therein. For this purpose, branches should take appropriate instructions from the Legal Services Department, Central Office on a case to case basis. 18.7.In respect of documents received under LCs issued on deferred payment terms established on account of the customers of NAD branches, AD/NAD branches should note to follow the relevant guidelines in the subsequent paras. NAD branch should ascertain the approximate rupee equivalent of each instalment in advance, recover the same to the debit of importers account and credit it to the AD branch, so that the latter can arrange the remittance to the nominated bank abroad on the due date.

RETIREMENT OF IMPORT BILLS UNDER LETTERS OF CREDIT 19.Branches receiving documents under LCs established by them should enter them in the Inward Letters Received Register and affix the branch stamp (with date) on the covering schedule of the remitting bank. 19.1.The authorised official of the branch (handling imports) should verify whether all the documents listed in the covering schedule of the remitting bank have in fact been received. In case the duplicate set of documents has been received first, branch should act on it in the same way as the original set, but keep the remitting bank advised of the non-receipt of the first set. 19.2.Branches should examine the documents afresh with the office copy of the LC to ascertain that the documents are in strict conformity with the terms of credit and that there are no discrepancies. Branches should bear in mind that a discrepancy is a discrepancy and there is no classification like Major or Minor discrepancy. Branches should record their observations in a scrutiny sheet and refer the bill to the Manager in the Business Referred Register for instructions. The scrutiny sheets should be serially numbered and preserved along with the documents. 19.2.1.Branches should complete the scrutiny of documents with least possible delay and within a reasonable time not exceeding 5 working days. A check list for scrutiny of various documents is

appended in Annexure VII. 19.3.All foreign currency import bills under LCs should be crystallised into rupee liability on the 10th day from the date of receipt of documents at the LC issuing branch, in case of demand bills and on the due date, in case of Usance bills. In case the 10th day or the due date falls on a holiday or Saturday, the importers liability should be crystallised into rupee liability on the next working day. However, the import bill payable on demand may be crystallised before the said period of 10 days with the specific understanding and written request from the customer. If the crystallisation of the rupee liability of an import bill under Forward Exchange Contract results in early/late delivery, the bank shall recover swap charges and interest if any as per FEDAI guidelines. Branches should arrive at the rupee equivalent at the bills selling rate as on the date of crystallisation or the forward sale rate, in case a forward sale contract has been booked. 19.4.Branches should note that the ten day time limit referred in the above para is for fixing exchange rate of import bills under LCs established by the branches and should not be construed as the time limit for examining/rejecting the documents. Branches should note to examine the documents (whether under DP terms or under DA terms) and decide to take up/refuse the documents within reasonable time from date of receipt of documents. If the documents are in accordance with the LC terms or if the documents are discrepant but the applicant has agreed in writing to pay for the documents, branch should crystallise the liability a.within 10 days from date of receipt of documents, if the documents are to be delivered to applicant against payment or b.on the due date, if the documents are to be delivered against acceptance of the drawee. 19.5.Branches handling rupee/foreign currency import bills under LC should collect commission/late payment commission/postages, as per our latest services charges booklet updated from time to time. 19.6.Branches should note to follow the procedural guidelines in Para 12 of this chapter regarding stamping of Usance bills and Para 15.1, Para 15.2 and Para 15.3 regarding follow up and receipt of documentary proof of import and reporting of defaulters on account of non-submission of bill of entry to ECD/RBI. 19.7.On reversal of the LC contra, as per guidelines in subsequent paras, branches should note to round off the LC number in the Outward Documentary Credit Register. However, branches should retain copy of LC, reimbursement authority, underlying sales contract, etc. along with the relative import documents, until liquidation of the liability by the applicant. On liquidation of the import bill

liability under the LC, copies of LC, correspondents covering schedule and copy of invoice should be preserved in a separate file for verification by inspectors from our bank/Reserve Bank of India. 19.8.Branches should follow up with the nominated/confirming bank and ensure receipt of both the sets of documents. When one set of documents is delivered to the importer/applicant against payment/ acceptance, and the other set is received subsequently, branches should note to deliver the second set of documents (branded with the branch stamp and bill reference number) against the acknowledgment of the importer/drawee in the import bills register. (Branches should not affix any endorsement on any of the documents received under the second set.) Documents complying with LC Terms 20.Sight bills 20.1.Where the documents are free from discrepancies, branch should forward a bill intimation memo to the applicant (in form 121C), after entering the details of the documents received in the LCBR (Letters of Credit Bills Receivable Register R.55). Copy of form 121C should be preserved along with rest of the documents received from the remitting bank. 20.1.1.Branches should maintain a diary to diarise the 10th day after the date of receipt of documents. Before expiry of the 10th day after the date of receipt of documents, if the applicant wishes to retire the documents making full payment, branch can fix the exchange rate (Bills selling rate/forward sale rate, as the case may be) and report the sale to Treasury Foreign as appropriate. If the documents remain unpaid even on the 10th day after the date of receipt of documents, branches should crystallise the rupee equivalent of the foreign currency bill on the tenth day, by applying the bills selling rate or forward sale rate, as the case may be. In case the 10th day falls on a holiday or a Saturday, the importers liability shall be crystallised into Rupee liability on the next working day. 20.1.2.Branches should follow the procedural guidelines contained in Chapter 1 of this volume for obtaining exchange rates and reporting the transactions to the Dealing Room. 20.1.3.Branches should record the rate and rupee equivalent of the bill in the LCBR register and pass the accounting entries given in the subsequent paras. While lodging the bill in the LCBR register, branches should note to compute interest (at the rate prescribed by the Bank from time to time) on the rupee equivalent from the date of debit to our Nostro account to the date of lodgement and credit the same to Treasury Foreign along with the rupee equivalent of foreign exchange sold. This interest need not be collected on bills drawn under LCs against which remittance is made by the branch after

receipt of the documents in terms of the credit or where TT reimbursement is provided. In case of remittances by way of credit to the rupee account of non-resident banks, this interest should be collected and remitted as per the instructions of the negotiating bank and in terms of the letter of credit. 20.1.4.In case of documents, where the branch is convinced that they conform to the credit terms but the applicant for the credit refuses to honour the documents, alleging discrepancy in the documents, the crystallisation should be done on the 10th day after the date of receipt of documents. For any clarification needed by the branch, reference should be made to the D & A Section, Treasury Foreign. 20.1.5.Branches should also be familiar with the procedure contained in the Handbook of Procedures of EXIM Policy for taking delivery of cargo, as the Joint Holder of Import Licence. Branches should refer the full facts of such cases to the sanctioning authority/Legal Services Department, Central Office and obtain their instructions/permission, before exercising this right as Joint Holder of Import Licence to have access to goods. 20.1.6.Immediately on crystallisation of the rupee liability, branches should make a debit entry in the LCBR liability register and send an intimation (in duplicate) to the importer/applicant in form 121 A seeking prompt payment of the bill and retain office copy of form 121 A along with the documents, branded with LCBR stamp carrying branch name and date of lodgement. 20.1.7.On crystallisation of the rupee liability, branches should reverse the debit entry in the LC liability register and reverse the LC contra passed at the time of issuance of LC. Where the LC provides for partial shipments/drawings, the LC liability/contra should be reversed only to the extent of documents received and liability crystallised. even by creating OD/excess in the account. 20.1.8.Branches should obtain form A1 duly completed by the applicant, endorse the import licence in column no.4. of Exchange Control copy of import licence (wherever applicable) and deliver the documents to the applicant against his acknowledgment in the LCBR register. Branches should retain two copies of the invoice (one to be pinned with form A1 and kept in R Return folder, and another with correspondents remittance schedule and filed in LCBR file). The authorised official of the branch should complete the certificate portion of form A1 and retain it in the R Return folder, after making entry in the R Return Register. 20.1.9. While delivering documents to the applicant against his acknowledgment in the LCBR register, the draft should be branded with the following stamp Received payment LCBR should be reversed on the same day

Principal Interest Commission Others(specify) Total Manager

Rs. ....... Rs.. ...... Rs.. ...... Rs....... Rs........

and the bill of lading should be endorsed in favour of the applicant. Where the transport document received is an airway bill, branches should note to issue delivery order favouring the airline company to deliver the cargo to the applicant. 20.1.10.Branches should note to follow up with the party and receive/examine the documentary evidence of import into our country. 20.2.Usance bills 20.2.1.For the Usance bills received under LC and conforming to the credit terms, branch should forward a presentation memo to the applicant in form 121 C, after entering the details of the documents in the LCBR register. In the bill presentation memo, branches should advise the applicant to call at the branch and take delivery of documents .A separate letter (as per format given in Annexure VIII) should be obtained from the applicant accepting and acknowledging receipt of documents and undertaking to make the payment of the bill amount on the due date in terms of the LC application. 20.2.2.In respect of usance bills, where the Usance is to run from the date of shipment or from date of bill of lading, the correspondent forwarding the documents would have advised the due date in the covering schedule itself and the due date should be indicated to the applicant in form 121 C. 20.2.3.As per UCPDC 600 a credit should not be issued available by draft(s) on the applicant and if the credit nevertheless calls for draft(s) on the applicant, banks will consider such draft(s) as on additional document. When a Usance draft under the LC is drawn on the LC Issuing Bank, there is no need to draw a separate draft or Usance promissory note on the applicant and get the same accepted by him while delivering the documents received under the LC. In case drafts drawn on the applicant are received, the same should be handed over to the applicant along with the documents. The applicant also need not co-accept drafts drawn on the LC Issuing Bank.

20.2.4.The draft (drawn on the Issuing Bank) received from the negotiating bank (or nominated bank) need not be stamped and should be returned after acceptance to the negotiating bank. 20.2.5.The contra passed at the time of establishing the LC should be reversed. To account for the liability on the due date, the following contra entry should be passed making suitable remarks in the LCBR register. Debit: Customers liability under acceptances, endorsements and other obligations Credit: Acceptances, endorsement and other obligations as per contras The above contra entry may be passed for the rupee equivalent at the bills selling rate/forward sale rate. 20.2.6.Branches should obtain form A1 duly completed by the applicant and deliver the documents (other than two copies of invoice) to the applicant, against his acknowledgment in the LCBR register. While delivering the documents, the bill of lading should be endorsed in favour of the applicant. Where the transport document received is an airway bill, branches should note to issue delivery order favouring the airline company to deliver the cargo to the applicant. Branches should retain the form A1, two copies of the invoices along with copies of LC, import licence, etc. in a separate folder in a chronological order. 20.2.7.While delivering documents to the applicant, branches should advise the applicant-customer to deliver the customs certified Exchange Control Copy of bill of entry immediately on clearing the cargo, without waiting for any reminder from the branch. Branches should follow up and ensure compliance of this stipulation without much delay. 20.2.8.Branches should diarise the due date and follow up with the applicants sufficiently in advance about retirement of the bill on the due date. On the due date, the foreign currency liability should be crystallised in Indian rupees by applying the ready bills selling rate/forward sale rate (as appropriate) and the sale reported to Treasury Foreign as per guidelines in chapter 1 of this volume of Book of Instructions. Whatever be the reason adduced by the applicant, branches should not delay crystallisation of the liability beyond the due date. The rate applied and rupee equivalent should be recorded against the relative import bill in the LCBR register. The Acceptances/Endorsements contra passed at the time of acceptance of the bill by the applicant should be reversed on crystallisation of the liability on the due date. 20.2.9.On crystallisation of the rupee liability, an intimation should be sent to the applicant in form 121A and the rupee liability recovered (along with interest at the rates prescribed by CO from time to

time) without delay. If the import is subject to import licence, the same should be endorsed and retained along with form A1 (obtained at the time of acceptance of the bill). Entry should be made in the R Return Register and the form A1 (along with fully utilised/expired import licence and a copy of invoice) with the certificate portion duly completed by the authorised official of the branch should be kept in the R Return folder separately. Documents under credits available by deferred payment 20.3.In respect of documents received under credits available by deferred payment, the Correspondent forwarding the documents would have indicated the due date on which he will be claiming reimbursement and the due date fixed by the correspondent should be indicated in form 121C sent (in duplicate) to the applicant. The applicant should return a copy of form 121C agreeing to pay for the documents on the due date indicated therein. Branch should deliver the documents to the applicant only after obtaining applicants concurrence in F.121C to pay on the due date.On due date, branch should crystallise the rupee liability of the applicant and ensure recovery of the same to the debit of the applicants account. 20.3.1.The other formalities like obtaining form A1, follow up with importer for documentary proof of import, crystallisation and recovery of rupee liability on due date, reporting to Dealing room and entry in R Return register should be followed as in the case of Usance bills received under negotiation credits. Documents not conforming to LC terms 21.1.Branches should scrutinise all documents received under LC with copy of the LC to ascertain that the documents are in strict conformity with the LC terms. If there are discrepancies, the same should be informed expeditiously (by authenticated teletransmission to the remitting bank/beneficiary (if the documents are received from the beneficiary directly) in accordance with the provisions of the relevant articles of Uniform Customs & Practice for Documentary Credits 2007 Revision, ICC Publication no. 600 , indicating that the documents are held at their disposal. Simultaneously, the discrepancy should be notified to the applicant in form 121 B to seek his instructions. Branches are advised to expeditiously deliver F.121 B to the applicant in person against proper acknowledgment. 21.1.1.On receipt of applicants agreement (in writing on copy of F.121.B) to honour the documents, branch should send an authenticated teletransmission intimating applicants agreement to pay for the documents, despite the discrepancies (indicated in the earlier telex/cable ref. no....) and seeking their concurrence to deliver the documents to the applicant. Only on getting the concurrence of the

remitting bank/beneficiary (as the case may be), branch may deliver the documents to the applicant against payment/undertaking to make payment to the remitting bank/beneficiary, adopting the procedural aspects prescribed for the documents complying with terms of the credit. 21.1.2.When the applicant does not respond within two days of sending F.121B, branch should send a telex/cable to the remitting bank to refund the amount reimbursed to them under LCs in which branch has permitted the nominated/confirming/ negotiating bank to claim reimbursement to the debit of Treasury Foreign Nostro account abroad. In such cases, branches should keep the Correspondent Banking Section, Treasury Foreign, Central Office informed about the facts of the case and if necessary, seek their assistance to claim the refund of reimbursement claimed by nominated/confirming/ negotiating bank. 21.1.3.In case of disputes/difficulties in interpretation of the LC terms, branches should take up with Treasury Foreign , Central Office, through the Regional Office concerned, with full particulars and copies of LC, relevant documents and exchange of correspondence between branch and applicant/remitting bank. 21.2.AD branches should pass the following accounting entries while crystallising the rupee liability of import bills under LCs established on account of their customers. The entries to be passed by AD/NAD branches while handling import documents under LC established by AD branches on account of customers of NAD branches are furnished in Annexure VI.At the time of fixing the exchange rate : Debit: Credit: Credit: LCBR (Foreign) account COMPASS account Treasury Foreign a/c................ (Correspondent) P& L a/c commission (as per our latest service charges booklet updated from time to time)

{For rupee equivalent + transit period interest (wherever applicable)} In case of rupee bills, if the proceeds are to be remitted to an AD in India for credit of non-resident banks rupee account, entries as applicable to outward remittances (inland) are to be made. On Retirement Debit: Credit: Credit: Current a/c party LCBR (Foreign) P & L a/c Discount (for interest)

Documents under LCs on account of customers of NAD branches 22.When AD branches receive documents under LCs established by them on account of customers of NAD branches, the following procedure should be adopted by the designated AD branches and NAD branches:

22.1.When the documents are in accordance with the LC terms, the bill presentation memo in form 121C should be sent to the applicant, through the NAD branch, as expeditiously as possible. The AD branch should hold the documents in case of sight bills till the 10th day after date of receipt of documents to fix the exchange rate. On the 10th day, AD branch should lodge the bill in LCBR register and crystallise the rupee liability, under report to Treasury Foreign . 22.1.1.The designated AD branch should specifically indicate in its telephonic/telegraphic/telex report/credit Treasury Foreign advice that the transaction relates to sale of exchange on account of the named NAD branch. On crystallisation of the liability, the designated AD branch should inform the rupee liability of the applicant to the NAD branch, who should recover the amount to the debit of the applicants account with them and send the IBSA instrument to the designated AD branch, along with form A1 completed by the applicant. Only on receipt of the IBSA instrument along with A1 (completed by the applicant) from the NAD branch, the AD branch should arrange to deliver the documents to the applicant, through the NAD branch, after completing formalities like endorsement of import licence, etc. and after properly endorsing the documents, wherever necessary. 22.1.2.If the importer desires to retire the documents before the 10th day after receipt of documents, NAD branch should ascertain the exchange rate and amount in rupees from the AD branch and credit to the AD branch, along with form A1 duly completed by the importer/applicant. 22.1.3.AD/NAD branches should co-ordinate with each other, follow up with the applicant and ensure compliance of formalities like obtention of form A1 and follow up receipt of documentary proof of import into our country. 22.1.4.In case of Usance bills (under negotiation credits), the drafts and documents should be sent to NAD branch, along with form 121C addressed to the applicant, provided the documents conform to LC terms. Before sending the documents to the NAD branch, the designated AD branch should record the details of the documents in its LCBR register. The NAD branch should send the form 121C received from AD branch to the applicant and advise him to call at the branch for acceptance and on acceptance by him, convey the due date to the AD branch expeditiously. AD branch should diarise the due date and crystallise the rupee liability on the due date. NAD branch should release the draft only on complete discharge of the liability by the applicant. 22.1.5.On the due date, AD branch should fix exchange rate, crystallise the rupee liability, report the sale to Dealing room and send bill intimation memo in form 121A to the applicant under copy to the NAD branch concerned. NAD branch should follow up with the applicant for payment on due date; it

should get in touch with the designated AD branch on the due date, ascertain the rupee equivalent and other charges to be credited to the AD branch and send IBSA instrument to the AD branch (to the debit of applicants account with NAD branch) without delay. The AD branch should reverse the LCBR (F) outstanding in their books on receipt of IBSA instrument from the NAD branch. 22.1.6.In respect of documents received under deferred payment credit, the AD branch should send the documents under cover of 121C (in duplicate) indicating the due date on which payment is to be made by the applicant. NAD branch should deliver both the copies of form 121 C to the applicant and obtain the duplicate copy duly signed by him, agreeing to make the payment on the due date. Only on obtaining the agreement of the applicant in writing in (the duplicate copy of) form 121C, NAD branch should deliver the documents to the applicant under advice to the designated AD branch. On the due date, AD branch should crystallise the rupee liability of applicant and ensure recovery of the same to the debit of applicants account with NAD branch. 22.1.7.AD branch should share the charges collected from the applicant as per details in chapter 1 of this volume of Book of Instructions. 22.1.8.For documents not in conformity with credit terms, the AD branch should inform the remitting bank by teletransmission as per provisions of the relevant articles of UCPDC and simultaneously send the form 121 B (discrepancy memo) to the applicant for the credit under advice to the NAD branch concerned. NAD branch on receipt of copy of F.121 B, should take up with the applicant to honour the documents. In case of, his refusal to pay or dispute regarding interpretation of discrepancies in documents, reference should be made to Regional Office/Treasury Foreign Central Office, through the designated AD branch. 22.1.9.The entries to be passed by AD and NAD branches while handling documents under LCs established by AD branches on account of customers of NAD branches are furnished in Annexure VI to this volume of Book of Instructions. HANDLING OF DOCUMENTS RECEIVED FOR COLLECTION 23.Branches should normally handle/collect import documents on account of their customers only. While handling such collection, branches should exercise due care to examine their line of business, financial standing, frequency of imports etc to establish genuineness of import. 23.1.The risk of fake import bills is highest for bills received on collection basis particularly those relating to new customers or customers who do not have any credit arrangement with Bank or

customers whose business relationship with the Bank is by and large restricted to the retiring of import bills. Hence, branches should handle import documents only for customers who are banking with us for a reasonably long time with satisfactory operations in the account and whose accounts are properly introduced. Line of Business: 23.1.1.Branches should ascertain the line of business of their new importer clients by: a.Visiting their place of business/godowns. b.Enquiring about their business experience with other importers / exporters in the same trade. c.Whether the customer is an established dealer/trader/user of goods sought to be imported. d.Examining the Balance Sheet of the customer before entertaining their request for remittance. e.Obtaining credit opinion/report about the overseas seller from their bankers abroad. 23.1.2.Operation of the Account: Branches should monitor such accounts to ascertain: a.Whether the sale proceeds of the importers firm are regularly credited to their business account or there are only occasional credits to their account. b.Whether the credits are mostly payorder/drafts/cheques drawn on other branches by importers. If so, whether credits and debits represent normal business transactions or simple transfer of funds from one account to another account. In such cases, branches should be more cautious while handling their import bills. Branches should follow the above procedural drill even in respect of opening import letter of credit with cash margin upto 100% so that the financial antecedents of the Indian importer and overseas seller are clearly established. 23.1.3.Instructions as to the disposal/payment of import bill should be given by the Branch Manager bearing in mind the above guidelines. These directions should be given in writing in the Import Bills Register and the reason for the decision taken should be clearly recorded. 23.Officials handling inward import collection bills should be familiar with the provisions of Uniform Rules For Collection, ICC Publication no. 522, besides the other reference materials/guidelines referred to in para 1.3 of this chapter.

23.1.NAD branches receiving import bills/documents from overseas branches/correspondents should forward the same (including the covering schedule of remitting bank) to the designated AD branch and advise the overseas branch/bank to address all future correspondence in respect of the collection to the AD branch, furnishing the full postal, telex/telegraphic addresses and telephone numbers of the AD branch. 23.2.All documents received from our overseas branches/correspondents should be recorded in the Registered Posts Received Register and the covering schedule of the correspondent/overseas branch should be branded with received stamp of the branch, with date. 23.3.Branches should verify the documents with the covering schedule of the remitting bank to ensure that all the enclosures listed in the covering schedule are received in tact. If any document or copy of document is found missing, branch should send a telex/cable to the remitting bank indicating the details of the document missing and seek further instructions. Branches should ensure that they are not required to undertake any responsibility or liability other than merely collecting the bill. 23.4.If the documents listed in the covering schedule of the remitting branch/bank have in fact been received, branches should verify the instructions of the remitting branch/bank and the documents received to ensure that the transaction does not contravene the provisions of the Trade/Exchange Control Regulations relating to imports. Wherever the instructions of the remitting branch/bank and/or the transaction as per the documents are contrary to the Trade/Exchange Control Regulations in force, branches should immediately advise the remitting branch/bank by cable the inability of the branch to handle the documents and seek disposal instructions. In this connection, branches may avail of the assistance of Treasury Foreign Central Office (D & A Section) wherever necessary. 23.5.When documents are received for collection on account of non-customers, branches should politely inform the remitting bank of their inability to handle the collection and seek their further instructions, as it would be very difficult to follow up with non-customers regarding compliance of various Exchange Control regulations like submission of bill of entry, etc. 23.6.Branches should note that remittance against bills received on collection in respect of imports into India can be made provided the bills are accompanied by shipping documents. In case of clean bills, importer must be asked to produce customs certified Exchange Control copy of bill of entry that the goods have been actually imported into India, before arranging the remittance. Where, however, the goods have not arrived, branches should call for and verify documents evidencing shipment/despatch (viz. bill of lading, airway bill or post parcel receipt) and Exchange Control copy of import licence (wherever applicable) before agreeing to make the remittance. In case

of doubts, branches should refer the matter to ECD/RBI with full particulars, under advice to Treasury Foreign , Chennai. 23.7.Branches should enter the details of the documents in the Inward Demand/Usance Bills (Foreign) Register, brand all the documents with IDBF/IUBF stamp and indicate the bill reference number. In respect of IUBF bills, branches should ensure that they are duly stamped with special adhesive stamps of adequate value as per Indian Stamp Act, at the time of acceptance of the Usance bill. (Please refer to Para 12 of this chapter for relevant guidelines in this regard.) 23.8.Branches should prepare the bill presentation memo (in form F.121D) in duplicate incorporating all the relevant instructions of the remitting branch/bank, and advising the importer to bring Exchange Control Copy of import licence (if the item of import is subject to import licence) and mail one copy of the same to the drawee indicated in the bill/documents and retain the other copy with the documents to be preserved in a chronological order in a separate folder. Details of the bill presentation memo sent should be recorded in the IDBF/IUBF register. 23.9.In respect of drawees who are banking with a branch other the branch that has received the collection, the drawee should be advised to produce a letter of identification by the branch with whom he is maintaining the account. Suitable instructions in this regard should be incorporated in the bill intimation memo itself. 23.10.Immediately on lodgement of the bills in the IDBF/IUBF registers, branches should pass the following contra entries in their books: DEMAND BILLS Debit : Credit : Inward Demand Bill (Foreign) Lodged (for the total amount of bills lodged) Inward Demand Bill (Foreign) Collection Usance Bills Debit: Credit: Inward Usance Bill (Foreign) Lodged (for total amount of bills Lodged) Inward Usance Bill (Foreign) Collections

23.11.Before accepting payment from the drawee/arranging for acceptance of Usance bill by the drawee, branch should call for and verify the Exchange Control Copy of import licence (wherever

applicable) and ensure that the description, quantity and value of goods are as per terms of the import licence. 23.12.Branches should be guided by the time limit, if any, given by the remitting bank for acceptance/payment by the drawee. The time limit should be indicated in the bill presentation memo sent to the drawee. In the event of the bill not being paid/accepted within the time limit given by the remitting bank, branches should send without delay advice of non-payment/non-acceptance to the remitting bank. Branches should ascertain the reasons for such non-payment or non-acceptance and advise accordingly the bank from which the bill was received. If no reply or instruction is received from the remitting bank within 90 days from date of notice of non-payment/non-acceptance, branches should return the documents to the bank from which they were received originally (and reverse the contra entries passed at the time of lodgement, as per guidelines in subsequent paras). 23.13.In respect of bills accepted by drawees but dishonoured on due date, branches should inform the remitting bank in a manner as indicated in the covering schedule of the remitting bank forwarding the documents and seek their instructions. Any charge incurred in noting/protesting bills dishonoured by drawees on the due date should be collected from the remitting bank. 23.14.Branches should note to comply with the procedural aspects regarding quoting of rates and reporting systems contained in chapter I of this volume of Book Instructions Demand Bills 24.On being satisfied with the bonafides of the drawee and after ensuring that the transaction is in accordance with the Trade/Exchange Control Regulations in force, branches should obtain form A1 duly completed and signed by the importer. 24.1.Branches should collect the rupee equivalent from the importer to the debit of his account with the branch at bills selling rate as on date of retirement or forward contract rate, in case a forward contract has been booked for the transaction and pass the following accounting entries in its books. Debit : Partys a/c (for the bill amount plus commission as per our latest service charges booklet updated from time to time Credit : Treasury Foreign Credit : P & L a/c commission While passing the above accounting entries, branches should reverse the contra passed at the time of lodgement of the bill in the IDBF register.

24.2.Branches should obtain form A1 duly completed by the importer, and endorse Exchange Control copy of import licence (as per guidelines in the latest master circular on imports by RBI updated from time to time . Authorised official of the branch should complete the certificate portion in form A1 and retain the same with (fully utilised/expired) import licence. 24.3.The documents should be delivered to the importer duly endorsed wherever necessary, against his acknowledgment in the IDBF register. Branches should not deliver the documents to a person other than the drawee, who should also be import licence/letter of authority holder. 24.4.Branches should follow up with the importer and obtain documentary proof of import within the time limit prescribed by Exchange Control and examine and retain the same in a separate file as per guidelines contained in latest master circular on imports by RBI updated from time to time. The defaulters with regard to submission of bill of entry within the prescribed time limit should be reported to ECD/RBI as per guidelines in latest master circular on imports by RBI updated from time to time. Usance Bills 25.When the drawee calls at the branch to accept the Usance bill, branch should establish the bonafides of the drawee and affix the foreign bill stamps of appropriate value on the bill of exchange and obtain the acceptance of the drawee on the bill. The drawee should indicate his acceptance on the bill of exchange as follows: Accepted for payment at Indian Overseas Bank, ....... Branch on ................ (due date) The accepted draft should be kept under proper custody in the bill box which itself must be kept overnight inside strong room or fire proof cupboards. 25.1.Branches should recover the stamp duty from the drawee, record the due date in the relative folio of IUBF register and advise the due date to the remitting bank/branch. The due dates are to be diarised properly. 25.2.In case the drawee refuses to accept the bill, the fact should be informed to the remitting bank/branch, as per instructions in their covering schedule. Branches should also ensure compliance of further instructions received from the remitting bank/overseas branch. 25.3.Branches should note to obtain form A1 (duly completed by the importer) at the time of acceptance of the bill and the same should be retained with accepted bill.

25.4.In respect of Usance bills accepted by the drawee, branches should note to follow up with the importer and obtain documentary proof of import within reasonable time from date of acceptance and examine and retain the same in a separate file as per guidelines contained in in latest master circular on imports by RBI updated from time to time. Particulars of Importers who do not submit the documentary proof of import within the time limit prescribed by RBI should be reported to ECD/RBI as per guidelines contained in latest master circular on imports by RBI updated from time to time. 25.5.On the due date, branches should pass the accounting entries as in the case of retirement of demand bills and send the sale report to Treasury Foreign in a manner appropriate to the amount involved. 25.6.Branches should also ensure prompt compliance of other formalities like endorsement of import licence, entry in R Return register and retention of fully utilised/expired import licence with form A1. Documents received on account of customers of NAD branches 25.7.Whenever import documents are handled by AD branch for an NAD branch, AD branch should insist on a detailed Status Report Cum Certificate from the Branch Manager of NAD branch concerned. Where warranted, the Branch Manager of AD branch may depute an Officer to make detailed enquiries at the NAD branch to establish bonafides of the customer. 25.8.In respect of documents received on account of customers of NAD branches, the AD branch shall send the bill intimation memo to the drawee/importer under advice to the NAD branch concerned. The NAD branch should personally follow up with the importer, obtain importers concurrence to retire the import bill against payment/acceptance. 26.1.Demand Bills 26.1.1.On receiving the written concurrence of the importer to retire the bill, the NAD branch should, after ensuring that the importer has sufficient balance in his account, get in touch with the designated AD branch over phone/telex, request them to arrange for the remittance, ascertain the rupee equivalent and charges to be remitted, recover the amount to the debit of importers account and remit the funds by authenticated Telegraphic/telex/telephonic transfer to the AD branch. NAD branch should also give a letter of identification to the importer-customer, attesting his signature thereon, so that he can receive the documents from the AD branch without delay/difficulty. 26.1.2.On receipt of telegraphic transfer/BC from NAD branch for the remittance, the AD branch

should respond the same, fix the exchange rate, arrange for the remittance and send report to Treasury Foreign as laid down. The documents should be handed over to the importer on production of identification letter issued by NAD branch, after obtaining form A1 completed by the importer and endorsing the Exchange Control Copy of Import licence (wherever applicable). 26.2. Usance Bills 26.2.1.On receiving the written concurrence of the importer to accept the bill, the NAD branch should advise the importer to call at the AD branch and accept the bill of exchange and take delivery of the documents. NAD branch should issue a letter of identification to their importer customer so that he can accept the bill of exchange and take delivery of documents from the AD branch without difficulty. The AD branch shall arrange to deliver the documents after acceptance of the bill adopting the same procedure as acceptance of bills by its customers. AD branch should advise the due date to the remitting bank under copy to the NAD branch. 26.2.2.Both the AD and NAD branches should diarise the due date, follow up with the drawee and ensure recovery of the rupee equivalent from the importer. On the due date, NAD branch should get in touch with the designated AD branch over phone/telex, request them to arrange for the remittance, ascertain the rupee equivalent and charges to be remitted, recover the amount to the debit of importers account and remit the amount by telex/telephonic transfer/BC to the AD branch. 26.2.3.On receipt of telegraphic transfer or BC from NAD branch for the remittance on the due date, the AD branch should respond to the same , fix the exchange rate, arrange for the remittance and send report to Treasury Foreign. The bill of exchange must be delivered to the importer. Import Documents received directly by the Customers: 27.As a general rule, import bills and documents should be received from the banker to the seller by banker of the buyer in India. Branches should not therefore, make remittances where import bills are received directly by the importers from the overseas sellers except in the following cases a.Where the value of import bill does not exceed USD 300000 (Master Circular on Imports) b.Import bills received by Wholly Owned Indian subsidiaries of foreign companies from their principals. c.Import bills received by Status Holders, 100% Export Oriented Units in Free Trade Zones, Public Sector Undertakings, Public Limited Companies and Deemed Public Limited Companies and Private Limited Companies.

27.1.While handling such import documents received by customers, branches should strictly comply with the trade control and exchange control regulations in force as applicable to import documents received on collection basis. Branches should apply TT selling rate for all such remittances as per Treasury Foreign guidelines in force. Import Documents received from Overseas Seller: 28.At the request of the importer clients, branches may receive import bills directly from the overseas seller for amounts upto USD 300000 (Master Circular on Imports)and handle them provided the Branch Manager (I Line) is fully satisfied about the financial standing/status and track record of the importer customer. If otherwise, should return the document citing the reason for return to the overseas seller. 29.Advance remittance on account of Import bill 29.1.Branches may allow advance remittance for import of goods subject to compliance of guidelines set out in latest master circular on imports by RBI updated from time to time . 29.1.1.Documentary evidence indicating the cost of goods and the insistence of the overseas seller on advance payment should be submitted by the importer. 29.1.2.The importer should hold the Exchange Control copy of a valid import licence if the goods to be imported are those included in the Negative List of imports given in EXIM Policy. 29.1.3.The remittance should be made direct to suppliers by applying TT selling rate. 29.1.4.Physical imports into India should be made within six months (three years in the case of capital goods) from the date of remittance and the importer should give an undertaking to furnish documentary evidence of import within 15 days from the close of relevant period. (Branches should promptly diarise and follow up with the importer customers for submission of copies of Bills of Entry/Post Parcel Wrappers). 29.1.5.If the amount of advance remittance exceeds USD 100000 or its equivalent , a guarantee from an International Bank of repute situated outside India or a guarantee of an AD in India, if such a guarantee is issued against counter guarantee of an International Bank of repute situated outside India should be obtained.

The guidelines for effecting advance remittances of more than USD 100,000 are as follows: 1. The importers are classified into three, viz., Non-Customers, Customers. 2. Public Sector Undertakings and

For Non-customers no waiver of overseas bank guarantee is permitted.

3. In case of the importer being a Public Sector or a Department/Undertaking of Government of India/State Government/s branches are permitted to waive overseas bank guarantee for effecting advance remittances of more than USD 100,000 subject to a specific waiver from Ministry of Finance, Government of India. 4. The clearance/approval should be given duly taking a view on the customers standing, track record, sales turnover, line of business, usefulness of the services to be imported in the business, customers capacity to raise funds, financial position including implications, integrity, etc. For our customers, 1. For advance remittances not exceeding USD 100,000, AD branches are permitted to effect the remittance as done hitherto. 2. For advance remittances in excess of USD 100,000 and upto USD 1 Mio for import of goods and in excess of USD 100,000 and upto USD 500,000 for import of services, the discretion to waive bank guarantee shall be vested with the respective Regional heads irrespective of their grade. For advance remittances in excess of USD 1 Mio and upto USD 5 Mio (without any limit in case of import of rough diamonds from specified mining companies listed above) the discretion to waive bank guarantee shall be vested with General Mangers in respect of Regions headed by General Managers and with Corporate Credit General Managers, in respect of other regions. 3 Waiver of overseas bank guarantee for making advance remittances for import of aircrafts/aviation related products in excess of USD 5 Mio but upto USD 50 Mio may be permitted by CMD. General conditions 1 The customers account should be fully compliant with our KYC/AML guidelines. 2 3. KYC and due diligence exercise should be done on overseas manufacturer/supplier also. Satisfactory credit report on the overseas supplier should be obtainedF.

4. Customer should furnish request cum willingness letter to remit advance payment without obtaining guarantee. 5. Documentary evidence of suppliers request for advance remittance/inability or refusal to furnish bank guarantee should be obtained. 6. The branch should undertake the transactions based on their commercial judgement and after being satisfied about the bonafides of the transactions. 7. Advance payments towards import of goods/services should be made strictly as per the terms of the sale contract and should be made directly to the account of the supplier/service provider

concerned and not through numbered accounts or otherwise. 8. Advance remittances may be permitted for import of rough diamonds without any limit if the import is being made from the undernoted mining companies: a) b) c) d) e) f) De Beers Limited RIO Tinto, UK BHP Billiton, Australia ENDIAMA, E.P. Angola ALROSA, Russia Gokharan, Russia

9. In case of import of rough diamonds, the should be a recognized processor of rough diamonds as per the list approved by Gems & Jewellery Export Promotion Council (GJEPC) and should have a good tract record of export realization and the import should be from any one of the mining companies listed above. 10. No remittance is permitted for import of conflict diamonds. 11. In case of import of aircraft and aviation sector related products, prior to making the remittance, branches should ensure that the requisite approval of Ministry of Civil Aviation/DGCA/other agencies in terms of extant Foreign Trade Policy are available. 12. Physical import of goods into India should be made within six months (three years in case of capital goods) from the date of remittance and the importer should given an undertaking to furnish documentary evidence of import, within 15 days from the close of the relevant period. Branches should follow up for submission of Bill of Entry/documents evidencing import of goods into the country by the importer as per guidelines in force. In case of import of aircrafts/aviation related products, if the advance is paid as milestone payments, the date of last remittance made in terms of the contract will be reckoned for the purpose of submission of documentary evidence of import. 13. Branches should ensure that in the event of non-import of goods (except rough diamonds), the amount of advance remittance is repatriated to India or is utilized for any other purposes for which release of exchange is permissible under the Act, Rules or Regulations made thereunder and in case of advance remittances against services and import of aircraft/aviation sector related products, the beneficiary fulfils his obligation, failing which the amount should be repatriated to India. 14. branches should submit a report of all advance remittances made without a bank guarantee for import of rough diamonds, where the amount of advance payment is equivalent to or exceeds USD 5,000,000 to RBI on a half yearly basis in March and September every year within 15 calendar days after the close of each half year. (FX Permanent 63/2008-2009 dated 06.01.2009) (FX Permanent 80/2009-2010 dated 22.12.2009) 29.1.6.Branches should ensure that in the event of non-import of goods, the amount of advance remittance is repatriated into India. 29.2.Branches should note that such remittances should be undertaken only for customers having relationship for a reasonably long period of time with excellent track record. The customers track record in submitting Bill of Entry for imports in the past should be satisfactory. Branches should obtain a comprehensive and satisfactory credit report on the overseas seller from his banker stating whether he is good for the commitment including the amount involved.

29.3.Branches should advise the customers that substitution of the goods for which advance remittance has been sent or any change in the kind of quality/quantity of the goods to be imported is not permitted under guidelines contained in latest master circular on imports by RBI updated from time to time Branches should be aware of the risks and responsibilities attached to Advance Remittance against imports and act accordingly. SHIPPING GUARANTEES 30.The procedure for issuing shipping guarantees is laid down in Volume II- Chapter 18 of Book of Instructions. Branches should strictly follow the guidelines/ instructions contained in this Chapter at the time of issuing shipping guarantees. Registers, Books and Forms 1. Business Referred Register. 2. Outward Documentary Credit Register. 3. LC Liability register 4. LC Application-cum-agreement 5. Licence movement register 6. LCBR register 7. IDBF / IUBF register 8. LCBR intimation memos 9. IDBF/IUBF intimation memo 10. Form A1 11. Form BEF 12. Bills of Entry/Post parcel wrapper file Annexures i. Specimen of undertaking letter to be obtained by NAD branches from applicant of LC ii.Teletransmission format pre-advising by short teletransmission of issuance of Documentary credit iii.Teletransmission format for issuance of irrevocable documentary credit. iv.Teletransmission format for amendment of documentary credit. v.SWIFT Currency Codes. vi.Accounting procedure for handling Import business by NAD branches. vii.A check list for scrutiny of various documents received under LC. viii.Format of the letter to be obtained from Importer while delivering documents under Usance Letter of Credit. ANNEXURE I (Specimen of Undertaking letter to be obtained by NAD Branches from Applicant of the credit) The Manager Indian Overseas Bank ...................... Branch

Date : Dear Sirs, Our application dated ............................................... for letter of credit ....................................................... for .............................................................. (Amount) in favour of ................................................................ In respect of the above application, we hereby further agree to your arranging to open the said letter of credit through another branch of your bank and to abide by the Banks internal procedure in regard thereto that may be enforced from time to time, including the procedure for fixation of the rate of exchange for the import bill that may be negotiated under the letter of credit. Yours faithfully, (AUTHORISED SIGNATURE)

ANNEXURE II Teletransmission format pre-advising by short teletransmission of Issuance of Documentary Credit To Advising Bank Sequence Text 1.Test or * We have requested our .................................................. Office to authenticate this message directly to you. 2.We hereby issue our Irrevocable Documentary Credit No........................... 3.Date of issuance ......................................................................................... 4.Expiring in ....................... on .................................................................... . Credit Applicant ......................................................................................... 6.Beneficiary ................................................................................................ 7.Amount not exceeding (in figures and in words) ......................................... 8.Partial Shipment ......................................................................................... 9.Transhipment ............................................................................................ 10.* Shipment/despatch/taking in charge at/from .......................................... for transportation to ................................................................................

11.Latest date ............................................................................................... 12.Merchandise ............................................................................................. FOB/CIF/C&F ............................................................................................... 13.Details of Import Licences : 14.* Full details to follow/Details airmailed/Mail confirmation will be the operative credit instrument. * to be inserted as appropriate. ANNEXURE III Teletransmission format for issuance of Irrevocable Documentary Credit To Advising Bank Sequences Text 1.Test or * We have requested our ............................................ Office to authenticate this message directly to you. 2.We hereby issue our Irrevocable Documentary Credit No................ 3.Date of issue ........................................................................... 4.Expiring in ....................... on .................................................. 5.Credit applicant ....................................................................... 6.Beneficiary ............................................................................ 7.amount not exceeding (in figures and in words) .......................... 8.Available with ...................... by .............................................. 9.* Against presentation of documents and Draft(s) at for full/ ....... % of invoice value 10.Partial shipment .................................................................... 11.Transhipment ..................................................................... 12.* Shipment/despatch/taking in charge at/from ........................... for transportation to ..................................................................... 13.Latest date:........................................................................... 14.Documents:............................................................................ 16.Further conditions : 17.Charges : All Bank charges outside India are for the account of........................... 18.Presentation period ................................................................. 19.All documents unless otherwise must be atleast in duplicate. Drafts if called for should bear this credit No. date and name of issuing Bank. 20.Except so far as otherwise expressly stated this credit is subject to Uniform Customs and practice .......................... drawn on .................

for Documentary Credits (1993 revision) ICC, Paris, France Publication No. 500. 21.Advising Instruction : Please notify credit to beneficiary ........................................................................ your confirmation. 22.Through ................................................................................ (if required to be advised through another intermediary bank) 23.Reimbursement instructions: 24. Instructions for the nominated bank : The original documents should be sent to us by first available Registered Airmail and the rest of the document by the next Registered airmail. * to be inserted as appropriate. ANNEXURE IV Teletransmission format for amendment of Documentary Credit To Advising Bank Sequence 1. Test Text or * We have requested our ............... Office to authenticate this message directly to you. 2. Our irrevocable Documentary Credit No.. .................................. 3. Date of issue .......................................................................... 4. Your Ref. No. .................................. date ............................... 5. Applicant ................................................................................ 6. Beneficiary ............................................................................. 7. Credit amended as follows : Text of amendment 8. All other terms and conditions remain unchanged. 9. Please notify amendment to beneficiary. * to be inserted as appropriate. ANNEXURE V CURRENCY CODES (SOURCE SWIFT)

SWIFT CODE USD GBP

CURRENCY NAME US DOLLAR POUND STERLING

CAD CHF JPY HKD MYR SGD AUD DKK NOK SEK NZD AED EUR

CANADIAN DOLLAR SWISS FRANC JAPANESE YEN HONG KONG DOLLAR MALAYSIAN RINGITT SINGAPORE DOLLAR AUSTRALIAN DOLLAR DANISH KRONER NORWEGIAN KRONER SWEDISH KRONER NEW ZEALAND DOLLAR UAE DIRHAM EURO

ANNEXURE VI - Accounting Procedure for handling import business by NAD branches IMPORT LETTERS OF CREDIT NAD BRANCH At the time of opening LC: 1.Debit: Customers Liability on LC (For nominal amount of Rs.1) Credit: Banks liability on LC (For nominal amount of Rs.1) contra entry 2.On receipt of documents from AD branch: a. Reverse contra entry b. Debit: LCBR Account Credit: COMPASS Account AD Branch (IBSA Instruments to be sent to AD branch) 3.Debit: Importers Account Credit: LCBR Account Credit: Discount Account AD BRANCH: At the time of opening LC 1.Debit: Customers Liability on LC (NAD Branches) Credit: Banks liability on LC (NAD branches) (contra entry) 2.On Crystallisation of the bill drawn us (a)Reverse contra (b)Debit: LCBR Credit: COMPASS A/c FEDCO IMPORT BILLS RECEIVED ON COLLECTION BASIS: NAD BRANCH:

While giving instructions to AD branch (for retiring a bill) Debit: Importers Account (At provisional rate) Credit: Sundry Creditors account Debit : Sundry Creditors Account Credit: COMPASS Account - AD branch concerned (IBSA instrument should be sent to AD branch) AD BRANCH: 1.Debit: IDBF/IUBF Lodged Credit: IDBF/IUBF Collection (contra entry) (Depending upon whether it is demand/Usance bill) When the IDBF/IUBF is paid: 2.Debit: Compass A/c NAD Branch Credit: Compass Account FEDCO Correspondent Account concerned (IBSA instrument should be sent to FEDCO 3.Reverse contra entry at the time of retirement .of IDBF/IUBF bill. (Note: Vouchers are to be passed as in the case of Inland bills for collecting margin, commission, discount etc.) ANNEXURE VII checklist for scrutiny of various documents received under LC. Branch should verify the following: In respect of Commercial Invoice whether: 1. The description of merchandise correspond with the description mentioned in the LC. 2. The price and quantity are mentioned as per the LC. 3. It mentions the rates as per LC. 4. It is made out in the name of the opener of the LC. 5 The amount of invoice matches with the amount of LC. 6. Customs/consular invoices submitted (if stipulated by LC) 7. The marking, number of the packing mentioned in the Bill of Lading are identical with those given in the invoice. In respect of DRAFT OR BILL OF EXCHANGE whether: 1. It is dated, drawn or endorsed to the order of the Bank. 2. It is drawn by the party indicated as the beneficiary of the credit. 3. It is marked as drawn under the LC, quoting the LC number, date etc. 4. The tenor (DP, DA etc) is in conformity with that stipulated in the LC. 5. The amount is identical with the amount mentioned in the invoice. 6. The amount in figures corresponds with words.

7. The alterations are duly authenticated. In respect of TRANSPORT DOCUMENT whether: 1.Full set of bill of lading is submitted (minimum two copies) including non-negotiable copies as stipulated in the LC. 2.The date of shipment indicated in the bill of lading is on or prior to the last date of shipment stipulated in the LC. (The date on which the shipment is put "on board" is considered as the shipment date. If Received for shipment bill of lading is submitted, whether it comes as a separate notation On board with date and initialed under stamp of the carrier). 3.The bill of lading is to the order of the Bank or to the order of the party as per LC. 4.The description of goods, marks, number/quantity and weight given in the bill of lading tally with the invoice and consistent with LC. 5.The port of shipment, port of destination, the consignees name, the shippers name given in the bill of lading correspond with those indicated in the LC. 6.The endorsement, if any, made in the bill of lading corresponds to the endorsements stipulated in the LC. 7.The bill of lading is manually signed by the carrier or its agent and properly stamped. 8.The bill of lading is clean one and not a claused one. 9.A certificate to the effect that the vessel is not to touch any specific port has been submitted if called for under the LC. 10.A certificate stipulating that the age of the vessel is not more than particular years if called for under the LC has been submitted. 11.In case of CIF and C & F terms of payment, bill of lading is marked Freight paid and in case of FOB marked Freight Payable at the destination. 12.On Deck bill of lading is submitted and if so whether LC provides for the same. 13.The bill of lading is submitted within the date stipulated in the LC (Last date of negotiation). 14.The beneficiarys name is shown as consignor unless LC permits third party bill of lading. 15.The bill of lading is adequately stamped. 16.In case of Airway Bill/Post Parcel receipts, Branch should verify whether the consignment is in favour of the Bank and not in the name of the buyer and AWB indicates flight number and date. In respect of INSURANCE DOCUMENTS whether: 1.The insurance policy is in the negotiable form signed by an agent or underwriter of an insurance company. (Certificate of Insurance/brokers cover note is not acceptable in place of policy) 2.It is made to the order and endorsed in favour of the bank. 3.It is stamped as per the laws of the country concerned.

4.The date of insurance policy is not later than the date of bill of lading. (Or the policy should specifically state that cover of risk commences from the date of shipment). 5.The insurance is payable in the currency of the draft at the destination of the merchandise or as stipulated in the LC. 6.The amount insured is for a minimum cover of 10% above the CIF value or for the amount stipulated in the LC. 7.The details given in the policy such as description of merchandise, shipping marks, numbers, the name of the vessel, bill of lading number etc identical with those given in the bill of lading and invoice. 8.All the copies of Insurance Policy (negotiable and non negotiable) are submitted. 9.The policy covers Deck shipment risk if the LC mentions `shipment on board. 10.The beneficiary as Assured takes out policy. (Third party policy is not acceptable). 11.The policy indicates Warehouse to warehouse cover if stipulated by LC. Branch must also verify whether the following documents if stipulated in LC are submitted: OTHER DOCUMENTS:

o o o o o o o o

Certificate of Origin Consular Invoice Customs Invoice Weight List Packing List Inspection Certificate Quality Certificate Quarantine Certificate The contents of the above documents should correspond with other documents. ANNEXURE VIII Letter from Importer under Usance LC From The Importer Customer To Indian Overseas Bank, ........................Branch. Date:

Usance Letter of Credit No............................ dated........................... Please refer your bill intimation memo__ dated ______. We hereby acknowledge receipt of the following documents in respect of the above documentary credit and confirm that the documents are in terms of credit. We have noted that the draft received under the above LC has been accepted by the Bank. In terms of the LC application executed by us on _____we remain liable and undertake to make the payment on ________being the due date of the bill drawn under the above LC for_______(FCY amount) with interest, commission and other charges if any, incurred by you or by your correspondent. 1. Invoice Number and Date : 2. Bill of Lading or AWB No. and Date : 3. Packing List No. and Date : 4. Draft No. and Date (If any on the applicant) : 5. Others : Signature of the Importer