Write-off of unrealized export bills

Reserve Bank of India (RBI) vide Section 7 of Foreign exchange Management Act (FEMA), 1999 read with Export Regulations, 2016 regulates the export of goods and services. There are certain cases wherein exporters are unable to realize their outstanding export receivables.

Following are the provisions specified in the regulations for writing off such outstanding export receivables:

1. An exporter who has not been able to realize the outstanding export dues despite best efforts, may either :     

·               Self-write off or

·         Approach the AD Category – I banks who had handled the relevant       shipping documents      

2.                   The limits prescribed for write-offs of unrealized export bills are as under:

Type	Rate
Self “write-off” by an exporter (Other than Status Holder Exporter)	5%*
Self “write-off” by Status Holder Exporters	10%*
Write-off” by Authorized Dealer Bank	10%*

   
 *of the total export proceeds realized during the previous calendar year

3.       The above write-off will be subject to conditions that the relevant amount has remained outstanding for more than one year, satisfactory documentary evidence is furnished in support of the exporter having made all efforts to realize the dues, and the case falls under any of the under noted categories: 

•   The overseas buyer has been declared insolvent and a    certificate from the official liquidator indicating that there is no possibility of recovery of export proceeds has been produced. 

·        The overseas buyer is not traceable over a reasonably long period of time. 

·     The goods exported have been auctioned or destroyed by the Port /  Customs / Health authorities in the importing country.

·    The unrealized amount represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organization; 

·       The unrealized amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value) remaining outstanding and turned out to be unrealizable despite all efforts made by the exporter;

·   The cost of resorting to legal action would be disproportionate to the unrealized amount of the export bill or where the exporter even after winning the Court case against the overseas buyer could not execute the Court decree due to reasons beyond his control; 

·       Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges but the amounts have remained unrealized consequent on dishonor of the bills by the overseas buyer and there are no prospects of realization.

4.        The exporter must surrender proportionate export incentives if any, availed of in  respect of the relative shipments. 

5.        In case of self-write-off, the exporter should submit to the concerned AD bank, a Chartered Accountant’s certificate (indicating the export realization in the preceding calendar year, amount of write-off already availed of during the year, export benefits availed of by the exporter which have been surrendered, relevant EDF to be written off, Bill No., invoice value, commodity exported, country of export). 

However, the following would not qualify for the write off facility:

·           Exports made to countries with externalization problem

·    EDF which are under investigation by agencies like, Enforcement Directorate,   Directorate of Revenue Intelligence, Central Bureau of Investigation, etc. as also the outstanding bills which are subject matter of civil / criminal suit.

Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India.