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Set-off of export receivables against import payables: Delegation to AD banks

Current · Source: Reserve Bank of India · RBI/2011-12/264 · issued 17 Nov 2011 · ~1 min read
Quick answerRBI has delegated to AD Category-I banks the power to approve set-off of export receivables against import payables, subject to conditions like same buyer-supplier, outstanding import payment, and compliance with FEMA and FTP.
The rule, in the simplest words
How it plays out — a real example

A forex & trade-finance officer in Mumbai receives a request from a jewelry exporter who wants to set off $50,000 of export receivables against an import payment for gold from the same supplier in Dubai. The officer checks that the import is allowed under the Foreign Trade Policy, confirms the import payment is still outstanding, and verifies the invoices and customs documents. She then approves the set-off, reports the sale and purchase separately in the 'R' Returns, and releases the GR form only after the full export proceeds are adjusted.

What changed

Previously, exporters had to approach RBI directly for set-off requests. Now, AD Category-I banks can handle these cases themselves, provided they meet specified conditions such as the import being under the Foreign Trade Policy, submission of relevant documents, and the same overseas counterparty for both transactions.

What it means for you

This liberalization reduces the compliance burden on exporters and speeds up cross-border transaction settlements. Banks must now carefully verify documents, ensure no ACU country involvement, and report transactions separately in 'R' Returns before releasing GR forms.

What you must do

Who it affects

AD Category-I banks, Exporters and importers using set-off arrangements, Compliance and trade finance departments in banks

❓ Common questions

Can we process set-off for transactions with ACU countries?

No, the circular explicitly excludes export/import transactions with ACU countries from this arrangement.

What documents must the importer submit for set-off?

The importer must submit invoices, Bills of Lading/Airway Bills, and Exchange Control copies of Bills of Entry for home consumption.

When can we release the GR form?

The GR form should be released only after the entire export proceeds are adjusted or received.

📜 Read the original circular — full text as issued by RBI
RBI/2011-12/264 A.P. (DIR Series) Circular No. 47 November 17, 2011 To All Category – I Authorized Dealer Banks Madam/Sir, “Set-off” of export receivables against import payables- Liberalization of Procedure Attention of Authorized Dealer Category – I (AD Category – I) banks is invited to the fact that the requests received from the exporters through their AD branches for set-off of export receivables against import payables are considered by the Reserve Bank of India. As a measure of further liberalization, it has been decided to delegate power to AD Category – I banks to deal with the cases of “set-off” of export receivables against import payables, subject to following terms and conditions: The import is as per the Foreign Trade Policy in force. Invoices/Bills of Lading/Airway Bills and Exchange Control copies of Bills of Entry for home consumption have been submitted by the importer to the Authorized Dealer bank. Payment for the import is still outstanding in the books of the importer. Both the transactions of sale and purchase may be reported separately in ‘R’ Returns. The relative GR forms will be released by the AD bank only after the entire export proceeds are adjusted / received. The ” set-off” of export receivables against import payments should be in respect of the same overseas buyer and supplier and that consent for ”set-off” has been obtained from him. The export / import transactions with ACU countries should be  kept outside the arrangement. All the relevant documents are submitted to the concerned AD  bank who should comply with all the regulatory requirements relating to the transactions. 2. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned. 3. 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 are without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (Dr. Sujatha Elizabeth Prasad) Chief General Manager Related Press Release
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/264 · issued 17 Nov 2011. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (AD Category-I banks, Exporters and importers using set-off arrangements, Compliance and trade finance departments in banks), your first concrete step on “Set-off of export receivables against import payables: Delegation to AD banks” is: “Verify that the import is compliant with the current Foreign Trade Policy.” (RBI issued this 17 Nov 2011).

  1. Circular: RBI/2011-12/264 -- Set-off of export receivables against import payables: Delegation to AD banks
  2. Issued: 17 Nov 2011
  3. Action required: Verify that the import is compliant with the current Foreign Trade Policy.
  4. Action required: Ensure invoices, Bills of Lading/Airway Bills, and Exchange Control copies of Bills of Entry are submitted.
  5. Action required: Confirm that the import payment is still outstanding and both transactions involve the same overseas buyer and supplier.
  6. Action required: Report the sale and purchase separately in 'R' Returns and release GR forms only after full export proceeds are adjusted or received.
  7. Action required: Exclude any export/import transactions with ACU countries from this set-off arrangement.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. 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=6822&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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