RBI raises advance remittance limit for aircraft imports to USD 50 million
Current · Source: Reserve Bank of India · RBI/2006-2007/447 · issued 29 Jun 2007 · ~2 min read
Quick answerRBI now allows scheduled airlines to make advance remittances up to USD 50 million without bank guarantee for direct import of aircraft, helicopters, or aviation-related purchases, up from the general USD 1 million limit.
The rule, in the simplest words
Scheduled airlines (airlines with a special permit from DGCA, the aviation regulator) can now send up to USD 50 million in advance payment for buying aircraft, helicopters, or other aviation items.
Banks do not need a bank guarantee (a promise from another bank to pay if the airline fails) or a standby letter of credit (a backup payment promise) for these advance payments.
Before sending the money, the bank must check the airline's DGCA permit, do KYC (know your customer checks) on both the airline and the overseas manufacturer, and follow its own board-approved rules.
The airline must bring the aircraft or goods into India within six months (or three years for big items like capital goods) and give proof of import within 15 days after that time ends.
For government-owned airlines, the bank must get a waiver (special permission) from the Ministry of Finance if the advance is over USD 100,000.
How it plays out — a real example
A forex & trade-finance officer in Indore, Priya, is asked by a scheduled airline's finance manager to process a USD 30 million advance payment for a new helicopter. She first checks the airline's DGCA permit, then runs KYC on both the airline and the overseas manufacturer. Satisfied with the documents, she approves the remittance without asking for a bank guarantee, knowing the airline must import the helicopter within six months and show proof of import within 15 days after that.
What changed
Previously, AD Category-I banks could permit advance remittances up to USD 1 million without bank guarantee for imports. This circular raises that limit to USD 50 million specifically for scheduled airlines importing aircraft, helicopters, or aviation-related items, and removes the need for a bank guarantee or standby letter of credit.
What it means for you
This sector-specific liberalisation significantly eases cash flow for scheduled airlines by allowing larger advance payments to manufacturers without collateral. Banks must apply commercial judgment, conduct KYC/due diligence on both importer and overseas supplier, and ensure compliance with DGCA and Ministry of Civil Aviation approvals. The change reduces working capital strain for airlines but increases credit risk for banks, which must frame board-approved internal guidelines.
What you must do
Verify that the airline importer holds a scheduled air transport service permit from DGCA.
Conduct thorough KYC and due diligence on both the Indian importer and the overseas manufacturer.
Ensure advance remittances are made directly to the manufacturer's account per the sale contract.
Frame internal guidelines with board approval for handling such transactions.
Confirm that physical import occurs within six months (three years for capital goods) and obtain an undertaking for documentary evidence within 15 days of the period end.
Who it affects
AD Category-I banks handling aviation import remittances, Scheduled airline companies importing aircraft, helicopters, or aviation-related goods, Overseas aircraft/helicopter manufacturers and suppliers
❓ Common questions
What is the new advance remittance limit for aircraft imports?
Scheduled airlines can now make advance remittances up to USD 50 million without a bank guarantee or standby letter of credit, per this circular.
What conditions must banks ensure before processing such remittances?
Banks must verify the airline's DGCA permit, conduct KYC/due diligence on both parties, ensure payment goes directly to the manufacturer, and confirm import timelines (6 months general, 3 years for capital goods).
Does this circular apply to all importers or only airlines?
It applies only to scheduled airlines permitted by DGCA for direct import of aircraft, helicopters, or aviation-related purchases. Other importers remain under the general USD 1 million limit.
📜 Read the original circular — full text as issued by RBI
RBI/2006-2007/447
A. P. (DIR
Series) Circular No. 77
June 29, 2007
To,
All
Category - I Authorised Dealer Banks
Madam
/ Sir,
Advance Remittance
for Import of aircrafts /helicopters /other aviation related purchases
Attention
of Authorised Dealer Category - I (AD Category - I) banks is invited to A.
P. (DIR Series) Circular No.15 dated September 17, 2003 in terms of which
AD Category - I banks have been permitted to make advance remittance up to USD
1,000,000 (USD one million) or its equivalent, without bank guarantee or an unconditional,
irrevocable standby Letter of Credit, for import of goods into India, subject
to specified conditions.
2. With
a view to further liberalising and simplifying the procedure for import of goods
into India, it has been decided, as a sector specific measure, to allow airline
companies, which have been permitted by the Directorate General of Civil Aviation
to operate as a schedule air transport service, to make advance remittance without
bank guarantee, up to USD 50 million. Accordingly, AD Category – I banks may,
henceforth, allow advance remittance, without bank guarantee or an unconditional,
irrevocable standby Letter of Credit, up to USD 50 million, for direct import
of each aircraft / helicopter / other aviation related purchases.
3.
The remittances for the above transactions shall be subject to the following conditions
:
a) The AD Category - I banks should undertake the transactions
based on their commercial judgment and after being satisfied about the bonafide
of the transactions. KYC and due diligence exercise should be done by the AD Category
- I banks for the Indian importer entity and the overseas manufacturer company
as well.
b) Advance payments should
be made strictly as per the terms of the sale contract and are made directly to
the account of the manufacturer (supplier) concerned.
c)
AD Category - I bank may frame their own internal guidelines to deal with such
cases, with the approval of their Board of Directors.
d)
In the case of a Public Sector Company or a Department / Undertaking of Central
/ State Governments, the AD Category - I bank shall ensure that the requirement
of bank guarantee has been specifically waived by the Ministry of Finance, Government
of India for advance remittances exceeding USD100,000.
e)
Physical import of goods into India is made within six months (three years in
case of capital goods) from the date of remittance and the importer gives an undertaking
to furnish documentary evidence of import within fifteen days from the close of
the relevant period. It is clarified that where 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.
f)
Prior to making the remittance, the AD Category – I bank may ensure that the requisite
approval of the Ministry of Civil Aviation / DGCA / other agencies in terms of
the extant Foreign Trade Policy has been obtained by the company for import.
g)
In the event of non-import of aircraft and aviation sector related products, AD
Category - I bank should ensure that the amount of advance remittance is immediately
repatriated to India.
4. Prior approval
of the concerned Regional Office of the Reserve Bank will be required in case
of any deviation from the above stipulations or for cases which are not covered
under the provisions of this circular.
5.
AD Category - I banks may bring the contents of this circular to the notice of
their constituents and customers.
6.
The directions contained in this circular have been issued under sections 10(4)
and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and
is without prejudice to permissions / approvals, if any, required under any other
law.
Yours faithfully,
(Salim
Gangadhara n)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2006-2007/447 · issued 29 Jun 2007. The plain-English explanation above is BankPulse’s own independent summary.
Confirm that physical import occurs within six months (three years for capital goods) and obtain an undertaking for documentary evidence within 15 days of the period end.
📜 Compliance
Verify that the airline importer holds a scheduled air transport service permit from DGCA.
Conduct thorough KYC and due diligence on both the Indian importer and the overseas manufacturer.
Ensure advance remittances are made directly to the manufacturer's account per the sale contract.
Frame internal guidelines with board approval for handling such transactions.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (AD Category-I banks handling aviation import remittances, Scheduled airline companies importing aircraft, helicopters, or aviation-related goods, Overseas aircraft/helicopter manufacturers and suppliers), your first concrete step on “RBI raises advance remittance limit for aircraft imports to USD 50 million” is: “Verify that the airline importer holds a scheduled air transport service permit from DGCA.” (RBI issued this 29 Jun 2007).
Circular: RBI/2006-2007/447 -- RBI raises advance remittance limit for aircraft imports to USD 50 million
Issued: 29 Jun 2007
Action required: Verify that the airline importer holds a scheduled air transport service permit from DGCA.
Action required: Conduct thorough KYC and due diligence on both the Indian importer and the overseas manufacturer.
Action required: Ensure advance remittances are made directly to the manufacturer's account per the sale contract.
Action required: Frame internal guidelines with board approval for handling such transactions.
Action required: Confirm that physical import occurs within six months (three years for capital goods) and obtain an undertaking for documentary evidence within 15 days of the period end.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
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=3607&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.
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