What changed
The USD 1 million per shipment limit for AD banks to regularize direct dispatch of shipping documents has been removed, allowing regularization for any value. Write-off limits for unrealized export bills have been revised: self-write-off by status holder exporters increased to 10% (from earlier limits not specified in source), and AD banks can now approve write-offs up to 10% of total export proceeds realized in the preceding calendar year, with cumulative limits for self-write-off and bank write-off.
What it means for you
Banks can now process direct dispatch regularization without value constraints, reducing paperwork and delays for exporters. The higher write-off thresholds give AD banks more flexibility to close out aged export bills, improving asset quality and reducing compliance burden, while ensuring conditions like KYC compliance and bonafide checks remain.
What you must do
- Update internal policies to remove the USD 1 million cap on direct dispatch regularization and apply new conditions (full realization, 6-month customer relationship, KYC compliance).
- Revise write-off approval frameworks to reflect new limits: 5% self-write-off for non-status holders, 10% for status holders, and 10% for AD bank approvals, with cumulative tracking.
- Ensure all write-off cases meet conditions: outstanding >1 year, documentary evidence of recovery efforts, customer relationship >6 months, and falling under specified categories (e.g., insolvency, untraceable buyer).
- Train staff on the revised procedures and update system parameters for monitoring cumulative write-off limits against export proceeds realized in the preceding calendar year.
Who it affects
Category-I Authorised Dealer Banks, Exporters (including Status Holder Exporters), Trade finance and forex operations teams
What is the new limit for direct dispatch of shipping documents?
The earlier USD 1 million per shipment limit has been removed. AD banks can now regularize direct dispatch for any value, provided export proceeds are fully realized (except permitted write-offs), the exporter is a regular customer for at least 6 months, KYC/AML compliant, and the bank is satisfied with the transaction's bonafides.
How are the write-off limits calculated?
Self-write-off by non-status holder exporters is capped at 5% of total export proceeds realized in the preceding calendar year. For status holder exporters, it is 10%. AD banks can also approve write-offs up to 10% of the same base. These limits are cumulative, meaning total write-offs (self + bank) cannot exceed the applicable percentage.
What conditions must be met for write-off approval?
The amount must be outstanding for over one year, with documentary evidence of recovery efforts. The exporter must be a regular customer for at least 6 months, KYC/AML compliant, and the bank must be satisfied with bonafides. The case must fall under specific categories like buyer insolvency, untraceable buyer, or where legal action is disproportionate.