Home › Circulars › RBI/2010-11/493

Advance Remittance for Import of Goods – Liberalisation

Current · Source: Reserve Bank of India · RBI/2010-11/493 · issued 29 Apr 2011 · ~2 min read
Quick answerRBI has raised the threshold for mandatory bank guarantee on advance import remittances from USD 100,000 to USD 200,000, effective immediately. This eases compliance for importers, except public sector entities, which still need Ministry of Finance waiver for amounts above USD 100,000.
The rule, in the simplest words
How it plays out — a real example

Rahul, a forex & trade-finance officer in Indore, can now process advance remittances up to USD 200,000 without demanding a bank guarantee, reducing paperwork and costs for importers. This liberalisation may increase the volume of smaller import transactions, but Rahul must still apply his bank's internal risk assessment for larger amounts.

What changed

The limit for advance remittances requiring an unconditional, irrevocable standby LC or bank guarantee has been increased from USD 100,000 to USD 200,000. This applies to importers other than public sector companies or government departments/undertakings, which still need a Ministry of Finance waiver for amounts exceeding USD 100,000. All other existing instructions, including the waiver facility for remittances up to USD 5,000,000 based on the bank's Board-approved policy, remain unchanged.

What it means for you

Banks can now process advance remittances up to USD 200,000 without demanding a standby LC or bank guarantee, reducing paperwork and costs for importers. This liberalisation may increase the volume of smaller import transactions, but banks must still apply their internal risk assessment for larger amounts. Public sector importers remain subject to stricter oversight, requiring explicit government waiver for any advance remittance above USD 100,000.

What you must do

Who it affects

AD Category-I banks handling import remittances, Importers (non-public sector) making advance payments for goods, Public sector companies and government departments/undertakings importing goods

❓ Common questions

Does this circular apply to all importers?

No, it applies to importers other than public sector companies or government departments/undertakings. For those entities, the earlier limit of USD 100,000 remains, and a Ministry of Finance waiver is required for any advance remittance exceeding that amount.

What happens if an importer wants to remit more than USD 200,000 in advance?

For amounts above USD 200,000, the existing requirements from earlier circulars apply: an unconditional, irrevocable standby LC or bank guarantee is needed, unless the bank waives it under its Board-approved policy for amounts up to USD 5,000,000 based on the importer's track record.

Are there any other changes to the advance remittance rules?

No, only the threshold for mandatory bank guarantee has been raised. All other instructions, including the waiver facility for up to USD 5,000,000, remain unchanged as per A.P. (DIR Series) Circular No. 09 dated August 21, 2008.

📜 Read the original circular — full text as issued by RBI
RBI/2010-11/493 A.P. (DIR Series) Circular No. 56 April 29, 2011 To All Authorised Dealers in Foreign Exchange Madam/ Sir Foreign Exchange Management Act, 1999- Advance Remittance for Import of Goods - Liberalisation Attention of Authorised Dealer Category – I (AD Category-I) banks is invited to A. P. (DIR Series) Circular No.106 dated June 19, 2003, A. P. (DIR Series) Circular No.15 dated September 17, 2003 and A.P. (DIR Series) Circular No.09 dated August 21, 2008 in terms of which AD Category – I banks are required to obtain an unconditional, irrevocable standby Letter of Credit (LC) or a guarantee from an international bank of repute situated outside India or a guarantee of an AD Category – I bank in India, if such a guarantee is issued against the counter guarantee of an international bank of repute situated outside India, for an advance remittance exceeding USD 100,000 or its equivalent. 2. With a view to liberalising the procedure, it has been decided to enhance the aforesaid limit of USD 100,000 to USD 200,000 or its equivalent, with immediate effect for importers (other than a Public Sector Company or a Department/Undertaking of Central/State Governments where the requirement of bank guarantee is to be specifically waived by the Ministry of Finance, Government of India for advance remittances exceeding USD 100,000 or its equivalent). 3. All the other instructions including the facility to waive the requirement of the standby LC/ bank guarantee for advance remittance up to USD 5,000,000 or its equivalent, where the AD Category – I bank is satisfied about the track record and bonafides of the importer based on their internal Board approved policy, contained in A.P. (DIR Series) Circular No. 09 dated August 21, 2008, shall remain unchanged. 4. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned. 5. The directions contained in this circular have been issued under Section 10(4) and Section 11 (1) of the Foreign Exchange Management Act 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (Meena Hemchandra) Chief General Manager- in Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/493 · issued 29 Apr 2011. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
🏦 Branch Manager
  • Communicate the revised limit to all relevant branches and trade finance teams to ensure consistent application.
💻 IT / Systems
  • Update internal policies and systems to reflect the new USD 200,000 threshold for mandatory bank guarantee on advance import remittances.
📜 Compliance
  • Continue to apply the existing waiver facility for remittances up to USD 5,000,000 based on Board-approved policy and importer track record.
  • For public sector importers, strictly enforce the requirement of Ministry of Finance waiver for any advance remittance exceeding USD 100,000.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are an IT/Systems lead at a bank this circular applies to (AD Category-I banks handling import remittances, Importers (non-public sector) making advance payments for goods, Public sector companies and government departments/undertakings importing goods), your first concrete step on “Advance Remittance for Import of Goods – Liberalisation” is: “Update internal policies and systems to reflect the new USD 200,000 threshold for mandatory bank guarantee on advance import remittances.” (RBI issued this 29 Apr 2011).

  1. Circular: RBI/2010-11/493 -- Advance Remittance for Import of Goods – Liberalisation
  2. Issued: 29 Apr 2011
  3. Action required: Update internal policies and systems to reflect the new USD 200,000 threshold for mandatory bank guarantee on advance import remittances.
  4. Action required: Communicate the revised limit to all relevant branches and trade finance teams to ensure consistent application.
  5. Action required: Continue to apply the existing waiver facility for remittances up to USD 5,000,000 based on Board-approved policy and importer track record.
  6. Action required: For public sector importers, strictly enforce the requirement of Ministry of Finance waiver for any advance remittance exceeding USD 100,000.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. 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.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6365&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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