What changed
The earlier mandatory condition of a firm irrevocable order backed by a tripartite agreement for third-party payments has been relaxed. Now, AD banks can accept documentary evidence explaining the circumstances leading to third-party payments or the name of the third party mentioned in the order/invoice. Additionally, the USD 100,000 cap on third-party payments for imports has been withdrawn.
What it means for you
Banks can now process third-party payments more flexibly, reducing compliance burden on exporters and importers. The removal of the import limit allows larger transactions without prior RBI approval, but banks must still verify transaction bona fides and adhere to FATF guidelines.
What you must do
- Update internal policies to accept documentary evidence instead of mandatory tripartite agreements for third-party payments.
- Ensure thorough due diligence on export/import documents like invoices and FIRCs to verify transaction authenticity.
- Apply FATF recommendations when handling third-party payment transactions to prevent money laundering.
- Communicate the relaxed norms to customers to facilitate smoother trade transactions.
Who it affects
All Category-I Authorised Dealer Banks, Exporters and importers using third-party payment arrangements
What replaced the tripartite agreement requirement for third-party payments?
AD banks can now accept documentary evidence showing the circumstances for third-party payments or that the third party's name appears on the irrevocable order or invoice.
Is there still a limit on third-party payments for imports?
No, the earlier USD 100,000 limit has been withdrawn, allowing higher amounts subject to bank satisfaction and FATF compliance.