What changed
RBI increased the self write-off limit for exporters (other than status holders) from earlier levels to 5% of total export proceeds realized in the previous calendar year. For status holder exporters, the self write-off limit was raised to 10%. Authorized Dealer banks can now write off up to 10% of the previous year's export realizations.
What it means for you
Banks can now process higher write-off requests without seeking RBI approval, reducing compliance burden. Exporters get greater flexibility to clean up their books for unrealized export bills, especially for small amounts. However, banks must ensure strict adherence to conditions like surrender of proportionate export incentives and documentary evidence of recovery efforts.
What you must do
- Update internal write-off policies to reflect new limits: 5% self write-off for non-status holders, 10% for status holders, and 10% for AD bank write-offs, based on previous calendar year export realizations.
- Verify that write-off requests meet conditions: outstanding over one year, documentary evidence of recovery efforts, and falling under specified categories (e.g., buyer insolvency, untraceable buyer, etc.).
- Obtain and retain documents evidencing surrender of proportionate export incentives before permitting write-off, as per earlier circular.
- For self write-offs, ensure exporters submit a Chartered Accountant's certificate showing export realization and write-off availed during the year.
- Forward a statement in form EBW to the Regional Office of RBI under whose jurisdiction the bank is functioning, indicating details of write-offs allowed.
Who it affects
All Category-I Authorized Dealer banks, Exporters (status holder and non-status holder), Export-oriented businesses dealing with unrealized export bills
What is the new self write-off limit for status holder exporters?
Status holder exporters can now self write-off up to 10% of their total export proceeds realized during the previous calendar year, cumulatively available in a year.
What conditions must be met for a write-off under this circular?
The amount must be outstanding for over one year, the exporter must provide documentary evidence of recovery efforts, the case must fall under specified categories (e.g., buyer insolvency, untraceable buyer), and proportionate export incentives must be surrendered.
Do banks need to report these write-offs to RBI?
Yes, AD banks must forward a statement in form EBW to the Regional Office of RBI under whose jurisdiction they are functioning, indicating details of write-offs allowed under this circular.