Submitting Documents To Bank For Purchase / Collection / Negotiation

Submitting Documents To Bank For Purchase / Collection / Negotiation

Once the goods are dispatched to foreign destination whether by land, sea or post, the exporter should approach his bank (authorized dealer in foreign exchange) with a formal letter called ‘letter to bank’, requesting the bank to realize the export bills from the overseas buyer.

It is obligatory for an exporter to hand over the relative documents within 21 days of shipment to his bank for onward dispatch to the overseas correspondent bank who will arrange payment of the same to his banker. Thus, the legal requirement is that the payment against the export should be realized through an authorized foreign exchange dealer within 6 months of date of shipment (12 months in case of status holder exporters). Status holders have also been permitted to dispatch shipping documents direct to the consignee.

These documents are handed over to the bank with a request either to negotiate the documents if the same are drawn under the letter of credit or to purchase the documents where the bank has granted pre-shipment facility to the exporter or has sanctioned post-shipment limit for purchase of export bills or to collect the bills with or without any advance against the security of these bills.

Payment for export may also be received by the exporter in the following manner:

1. Bank draft, pay order, banker’s or personal cheques.
2. Foreign currency notes/ foreign currency travellers’ cheques from the buyer during his visit to India.
3. Payment out of the funds held in the FCNR/NRE account maintained by the buyer.
4. international credit cards

where the documents are drawn under a letter of credit, the letter to the bank should be enclosed with the documents as prescribed in the letter of credit, if any or stipulated in the export order or such documents which enable the buyer to take the delivery of goods and the documents required by the exporter to claim assistance, if any.

Following documents are required by bank to negotiate or collect necessary payment from abroad and by the exporter:

1. bill of exchange
2. Full set of bill of lading / airway bill (all negotiable copies plus one non – negotiable copy) / post parcel receipt / combined transport document, as the case may be.
3. Commercial invoice including one copy duly certified by the customs. The number of copies should be the same as specified by the buyer plus 2 additional copies. Invoice not certified by the customs may also be acceptable, in cases where the particulars furnished in the GR form agree with those indicated in the copy of invoice produced by the exporter and the value of the invoice agrees with those indicated in the copy of invoice produced by the exporter and the value of goods passed for shipment by Customs.
4. original letter of credit, if any
5. customs invoice / consular invoice
6. Certificate of origin, GSP/ APR Certificate, etc.
7. insurance policy/certificate with complete set
8. packing list
9. foreign exchange declaration forms i.e. GR/PP forms
10. Bank certificate of export realization in the predescribed form (in triplicate)

Other documents like certificate of analysis / inspection certificate, declaration to ECGC, etc.