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Bank realisation certificate

Amar (Business) (89 Points)

28 November 2011

what is BANK REALISATION CERTIFICATE?

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CA Sripal Jain (Associate Finance) (709 Points)
Replied 28 November 2011

Bank Certificate of Export & Realisation is most often sought by companies who have exported their goods under DEPB Scheme (Duty Entitlement Pass Book Scheme). By this policy , as a process of boost foreign currency & exports in country, Government provides you DEPB licence of value (approx 7-10% depending on the commodity you have exported and the rate fixed by Govt. on the same) , the license can be used against your import duties or the best can be transferred to someone else in market and thus making a gain, Government provides certificate only when the export proceeds are realised and Bank Certify the same that the foreing currency were been received , realisation rate is the rate at which currency were converted into INR.

RAMESH KUMAR VERMA ( CS PURSUING ) (43848 Points)
Replied 29 November 2011

thanks jain sahab, please also read the below mentioned link: /forum/bank-realisation-certificate-brc--13405.asp

M. SIVAKUMAR (Manager-Accounts) (76 Points)
Replied 24 December 2011

Dear Sirs,

I require a clarrification regarding the Non-Submission of BRC within the RBI stipulated time period of 6 months from the date of Shipment against Duty Draw Back Scheme.

What are all the legal actions can be taken against the Exporters by RBI or Customs & Central Excise.

Please explain with any notifications or circular available.

Regards

M.Sivakumar

RAMESH KUMAR VERMA ( CS PURSUING ) (43848 Points)
Replied 29 December 2011

Export Documentation

Any exporter of goods / services out of India has to ensure the following:
Exporter is registered with DGFT and has a valid Importer / Exporter Code (IEC). This is mandatory for all exports out of India irrespective of the size of the transactions.
The buyer has to be billed within 15 days from the date of providing the service.
Exporter to declare the exports being made in the specified form with GR/SDF being the form for physical exports and Softex form for exports of Software in non-physical form (if the software is being exported in a CD for e.g. it will be covered under the physical exports) within 30 days from the date of invoice to the certifying authority.
Exporter needs to send the documents related to the export to his bank within 21 days from the date of certification of the Softex form. For software exports it is normally the Softex form and the invoice.
If the declaration in form GR/Softex has been made, then the Banker’s copy of the form is to be submitted along with the documents.

Good part is that there are various points under which the declaration has been exempted. One of these, which I think will be applicable to many transactions, is the exemption for goods and services less than USD 25K in value. In these cases, the transaction can be submitted to the bank without the declaration form and instead the exporter can give a letter confirming that the goods are not more than USD 25K in value. The exporter will still need to have a valid IEC and expected to realize and get the funds into India.

Receipt of Payment

Payment is to be received within a period of 12 months from the date of exports /invoice date
RBI covers only transactions being routed through the banking system so it does not specifically mention anything like a PayPal (which is not a bank) in its regulations.
The options normally used by exporters to get the money into India are to get the buyer to either remit directly to the exporter’s bank account in India using a wire transfer /SWIFT or get the buyer to issue a cheque /International DD.
Once the money comes into India and is processed by the bank, the Bank would issue an FIRC (Foreign Inward Remittance Certificate) which would mention the amount and conversion rate besides other details
Bank would report the transaction to RBI along with the necessary details
FIRC to be submitted along with the documents which would be endorsed against the export transaction and a BRC (Bank Realization Certificate) issued.
If the documents have been submitted prior to the receipt of the funds, then the bank can directly link the inward to the transaction and can directly issue the BRC without the FIRC being issued.

ALSO NOTED:

AS PER FOREIGN TRADE POLICY 2010-11:

RA shall monitor all such cases wherein the Scrip(s) has been issued without Bank Realisation Certificate (BRC) and ensure that the BRC is submitted within 12 months from the date of issuance of the Scrip. In case no RBI extension is produced, RA shall initiate action for recovery of the same. In such cases, DEPB holder (the original applicant) shall deposit in cash or through debit of the valid DEPB / adjustment of pending DEPB claim for an amount equivalent to the Duty Free Credit allowed. If amount realized in Free Foreign Exchange is less, then payable amount would be reduced proportionately. However, if the DEPB holder does not pay the amount within 60 days of the expiry of the 12 months time period from the date of issue of the Scrip, he shall be required to pay the said."AS PER PARA 4.44 OF FTP 2010-11