What changed
Previously, all eligible current account transactions between ACU member countries, including oil/gas imports, had to be routed through the Asian Clearing Union. This circular exempts oil and gas import payments from that requirement, permitting settlement in any permitted currency outside ACU.
What it means for you
Banks handling oil/gas import payments now have flexibility to use non-ACU currencies, potentially reducing settlement delays and currency conversion costs. This could ease liquidity management for importers and AD banks, but requires updating internal systems and client advisories.
What you must do
- Update internal procedures to process oil/gas import payments outside the ACU mechanism.
- Inform corporate clients involved in oil/gas imports about the new settlement flexibility.
- Ensure compliance with FEMA regulations and any forthcoming amendments to the Manner of Receipt and Payment Regulations.
Who it affects
Authorised Dealer Category-I Banks, Oil and gas importers, Corporate clients dealing with ACU member countries
Does this circular apply to all imports from ACU member countries?
No, it specifically exempts only payments for import of oil or gas from the ACU mechanism. Other eligible current account transactions remain subject to ACU routing.
What currencies can now be used for oil/gas import payments?
Any permitted currency outside the ACU mechanism can be used, as per the circular. The exact list of permitted currencies is defined under FEMA regulations.