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Export Refund Liberalisation for Poor Quality Goods

No longer current — replaced by RBI simplifies write-off of unrealized export bills

Source: Reserve Bank of India · RBI/2006-2007/313 · issued 05 Apr 2007 · ~2 min read

Quick answerAD Category-I banks can now process refunds for export proceeds on poor-quality goods being re-imported, without requiring prior re-import evidence. Banks must verify exporter track record, transaction bonafides, obtain DGFT/Customs certificate of no incentives surrendered, and ensure re-import within three months.

What changed

Previously, refund of export proceeds required evidence that goods were re-imported into India due to poor quality. Now, AD Category-I banks can consider refund requests before re-import, provided the exporter gives an undertaking that re-import will happen within three months of remittance.

What it means for you

This liberalisation gives banks more flexibility to handle refunds for defective exports, reducing delays for exporters. Banks must tighten due diligence and documentation to prevent misuse, as refunds are now allowed without immediate re-import proof. The three-month re-import undertaking is a key compliance point.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Update internal procedures to allow refund requests without prior re-import evidence for poor-quality goods.
Verify exporter track record and transaction bonafides before approving refunds.
Obtain a DGFT/Customs certificate confirming no incentives availed or surrendered for the export.
Get a written undertaking from the exporter that goods will be re-imported within three months of remittance.
Ensure all normal import procedures are followed for the re-imported goods.

Who it affects

AD Category-I banks handling export proceeds, Exporters dealing with poor-quality goods re-imports, DGFT and Customs authorities for certificate issuance

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-06-19 17:29 IST
partially_modified_by — Write-off of Export Bills Settled by IRDA-Registered Insurers
Superseded by — RBI simplifies write-off of unrealized export bills
Status change: withdrawn 10 Jul 2026, 04:05 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Can we process refunds for any export, or only for poor-quality goods?

Only for goods exported from India and being re-imported into India on account of poor quality. Other reasons are not covered by this circular.

What if the exporter fails to re-import within three months?

The circular does not specify penalties, but banks must ensure the undertaking is enforced. Non-compliance may require reporting to RBI or DGFT.

Do we need to verify the DGFT certificate ourselves?

Yes, you must obtain and verify the certificate from DGFT or Customs that no incentives were availed or surrendered. This is a mandatory step before processing the refund.

📜 This document’s life story (2 recorded events, each backed by RBI’s own words)

Partially modified by Write-off of Export Bills Settled by IRDA-Registered Insurers

RBI’s words: “Such write-off will not be restricted to the limit of 10 per cent indicated in paragraph C 18(b)”

Superseded by RBI simplifies write-off of unrealized export bills

RBI’s words: “Attention of Authorized Dealer Category – I (AD Category –I) banks is invited to A.P. (DIR. Series) Circular No. 12”

📜 Read the original circular — full text as issued by RBI

RBI/2006-2007/313

 A. P. (DIR Series) Circular No. 37

 April 05,  2007

 To,

              All Category – I Authorised Dealer Banks

 Madam / Sir,

 Export of Goods and Services 

 Refund of Export Proceeds - Liberalisation 

 Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to paragraph D.2 of the Annexure to A. P. (DIR Series) Circular No.12 dated September 9, 2000 , in terms of which refund of export proceeds may be allowed by AD Category - I banks provided such goods are re-imported into India on account of poor quality etc. and evidence of re-import has been submitted.

 2. With a view to further liberalising the procedure, it has been decided that AD Category - I banks, through whom the export proceeds were originally realised, may henceforth, consider requests for refund of export proceeds of goods exported from India and being re-imported into India on account of poor quality.  While permitting such transactions, AD Category - I banks are required to : 

 i) exercise due diligence regarding the track record of the exporter;

 ii) verify the bonafides of the transactions;

 iii) obtain from the exporter a certificate issued by DGFT / Custom authorities that no incentives have been availed by the exporter against the relevant export or the proportionate incentives availed, if any, for the relevant export have been surrendered;

 iv)  obtain an undertaking from the exporter that the goods will be re-imported within three months from the date of remittance; and 

 v) ensure that all procedures as applicable to normal imports are adhered to.   

 3. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

 4. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.

 Yours faithfully,

 (Salim Gangadharan) 

 Chief General Manager-In-Charge

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/313 · issued 05 Apr 2007. The plain-English explanation above is BankPulse’s own independent summary.

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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3398&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.