What changed
RBI issued Master Circular No. 04/2010-11 on July 1, 2010, consolidating all existing instructions on import of goods and services into a single document. The circular included a sunset clause, meaning it would stand withdrawn on July 1, 2011, and be replaced by an updated version. It did not introduce new rules but compiled previous circulars for easier reference.
What it means for you
For AD Category-I banks, this circular simplified compliance by bringing all import-related forex guidelines under one roof. Banks must continue to verify that imports align with FEMA, current account rules, and DGFT policy. The sunset clause signaled that banks should stay alert for annual updates. The circular reinforced existing obligations like using Form A-1 for payments over USD 500 and adhering to KYC norms.
What you must do
- Ensure all import payments exceeding USD 500 or its equivalent are made using Form A-1 as specified in Annex-4.
- Verify import licenses for goods on the negative list under the Foreign Trade Policy.
- Follow KYC guidelines issued by RBI's Department of Banking Operations & Development for all import transactions.
- Adhere to UCPDC norms when opening letters of credit for imports.
- Check compliance with the Research & Development Cess Act, 1986 for imports of drawings and designs.
Who it affects
All Category-I Authorised Dealer banks, Importers and their constituents, Branches handling import payments and letters of credit
What is the purpose of this Master Circular?
It consolidates all existing RBI instructions on import of goods and services into one document for easier reference by AD Category-I banks. It does not introduce new rules but compiles previous circulars.
What is the sunset clause mentioned in the circular?
The circular was issued with a sunset clause of one year, meaning it would stand withdrawn on July 1, 2011, and be replaced by an updated Master Circular on the same subject.
What are the key compliance requirements for banks under this circular?
Banks must ensure imports comply with FEMA, current account rules, and DGFT policy. They must use Form A-1 for payments over USD 500, follow KYC guidelines, and adhere to UCPDC for letters of credit.