How Does RBI’s Directive Affect Indian Exports?

As an Indian exporter, you know the processes and compliance requirements to follow. While our government offers many schemes and concessions to support export businesses, meeting bank-related requirements can become a hassle, especially if you are a small business owner.

Keeping this in mind, the Reserve Bank of India (RBI) has instructed banks to simplify the processes required to reconcile transactions up to $1000. These guidelines aim to ease the burden of compliance for exporters doing inward remittances, especially those engaged in small-value e-commerce shipments.

Banks previously required the export business to reconcile shipping bills through the Export Data Processing and Monitoring System (EDPMS), which was both expensive and time-consuming. This was particularly burdensome for small or medium-sized businesses with volumes below $1,000, where compliance costs eroded profit margins.

Here’s a comparison of the current process with the proposed method:

Aspects	Before the New Directive	As Part of the New Directive
Reconciliation	Small transactions had to be reconciled within the prescribed period, increasing costs.	Relief for exports up to $1,000, where statements by exporters will suffice, simplifying the process.
Compliance Fees	Banks charged ₹1,000-2,000 per shipping bill for reconciliation, affecting profitability.	Banks should no longer charge fees for small-value transactions, reducing costs.
Routing of Courier Bills	Mandatory routing of courier bills through EDPMS for all transactions.	Exporters’ statements can now close reconciliation without requiring an Electronic Bank Realisation Certificate (eBRC)>.
KYC and AML Adherence	Businesses needed to follow KYC and AML regulations.	The same KYC, AML, and combating the financing of terrorism regulations apply.

This latest directive focuses on smaller export businesses that are focused on e-commerce business models and will help in the following aspects:

It will help streamline export-related processes: Exports require a lot of paperwork related to invoices, bills of lading, inward remittances, bank reconciliation, transportation charges, and more. With the new directive, small businesses dealing with smaller volume transactions will see a marked reduction in paperwork and faster transaction processing.

It will help small businesses grow. Small businesses, especially those involved in B2C (business-to-customer) rather than B2B (business-to-business) transactions, will find this new directive a relief. It will allow them to concentrate on expanding their business base rather than the paperwork involved in exporting.

Acts as an incentive for overall exports: When fewer trade barriers exist internationally, the overall volume of exports will increase when smaller businesses are encouraged to participate. This, in turn, leads to increased inflow of foreign currency, better employment, and growth of related industries.

Helps Indian businesses become competitive: The reduction in costs will make the rates offered by Indian companies more competitive, which will, in turn, help them compete internationally.

Marked improvement in banking operations: Banks can also improve their efficiency and speed when the compliance requirements for low-volume exports become easier. This, in turn, will help them offer better financing options to exporters with due diligence and attractive rates.

As a small or medium-sized export business, you face numerous challenges. Considering these factors, LeRemitt offers various solutions like an inward remittance platform, trade finance solution, and much more. We aim to ease the operational aspect of the export business with transparent, quick, and secure solutions and ensure compliance with the applicable laws.

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