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CHAPTER X
INWARD AND OUTWARD REMITTANCES
1. Inward Remittances.
The term 'inward remittance" means purchase of foreign currencies in
whatever form and includes not only remittances by M.T., T.T., draft etc., but also
purchase of travellers cheques, drafts under travellers letters of credit, bills of
exchange, currency notes and coins etc. Debit to banks' non-resident Rupee accounts also
constitutes an inward remittance. This chapter, however, does not cover purchase of
foreign currency notes and coins which is dealt with in Chapter XI.
2. Inward Remittance – No Restrictions.
There is no restriction on receipt of remittances from abroad either in foreign
currency or by debit to non-resident Rupee accounts of banks' overseas branches or
correspondents. Authorised Dealers may freely purchase T.Ts, M.Ts, drafts, bills etc.,
expressed and payable in foreign currencies or drawn in Rupees on banks' non-resident
Rupee accounts. There is also no objection to their obtaining reimbursement in foreign
currency from their overseas branches and correspondents in respect of Rupee bills and
drafts which are purchased by them under letters of credit opened by non-resident banks or
under other arrangements.
3. Outward Remittances.
The term "outward remittance" means sale of foreign exchange in any
form and includes not only remittances by T.Ts, M.Ts, drafts etc., but also sale of
travellers cheques, travellers letters of credit, foreign currency notes and coins etc.
Outward remittance can be made either by sale of foreign exchange or by credit to
non-resident Rupee account of banks' overseas branches or correspondents. Authorised
Dealers may sell foreign exchange for approved transactions only in accordance with the
procedure outlined in this chapter. This chapter does not cover sale of foreign currency
notes and coins which is dealt with in Chapter XI.
4. Mode of Remittances.
Authorised Dealers should normally avoid issuing drafts in cover of outward
remittances whenever remittance can be made by T.Ts, or M.Ts, etc. Where, however, the
normal means of transfer is likely to result in unnecessary hardship or inconvenience to
the remitter, drafts may be issued in the name of the beneficiaries of the remittance but
such drafts should be crossed by the issuing bank as "Account Payee only".
5. Prescribed Application Forms.
(i) There are three types of application forms for outward remittances:
(a) Form 'I' is to cover remittance against imports (Appendix V-30 )
(b) Form 'T-1' is to cover sale of exchange for travel (Appendix V-64)
(c) Form 'M' is to cover all other remittances (Appendix V-8)
(ii) Any person who wishes to purchase foreign exchange must lodge an application with an
Authorised Dealer on the appropriate prescribed form duly supported by the requisite
documents. On receipt, the application should be examined by the Authorised Dealer and if
the Authorised Dealer is satisfied that the application is covered by the regulations and
it is empowered to approve the remittance on behalf of the State Bank, it may effect the
sale of foreign exchange. If the transaction requires prior approval of the State Bank,
the application should be forwarded by the Authorised Dealer to the State Bank for
consideration with comments under its stamp and signature.
6. Applications by Letters.
In some cases, applications are made by letters as it becomes difficult for the
applicants to fully describe on the prescribed application form the purpose of purchase of
foreign exchange particularly for travel abroad and for purposes other than import.
In all such cases, letters should be accompanied by Form 'T-1' or 'M' as the case may be,
duly filled in. If the remittance is permissible, the State Bank will return the form duly
approved. In cases where remittance is required to be made in installments at periodical
intervals, the State Bank may issue special permits authorising remittances in the desired
manner.
7. Applications to be submitted to the State Bank only through an Authorised
Dealer.
All applications for foreign exchange should be forwarded to the State Bank
through Authorised Dealers who should arrange their delivery to the State Bank through
their own messengers or through post. All applicants who present their applications
directly to the State Bank will be asked to resubmit them through an Authorised Dealer.
8. Forwarding Applications to the State Bank.
When submitting applications to the State Bank, Authorised Dealers should take
all reasonable precautions to satisfy themselves as to the bonafides of the applicants.
They should verify that the application form has been duly completed and signed by the
applicant and then affix their stamp and signature thereon in token of their having
examined the application and of having satisfied themselves that to the best of their
knowledge and belief, the statements made in the form are correct and that full
documentary evidence as required has been submitted. In this connection, reference is also
invited to para 6 of Chapter 1. The applicant should also be advised that under Section 22
of the Act, it is an offence to give any information or make any statement which he knows
or has reasonable cause to believe to be false or not true in any material particular.
9. Processing of Approved Form etc.
After receipt of approved forms or permits etc., from the State Bank, Authorised
Dealers should see that the forms etc., have been approved by the authorised officers of
the State Bank and that they bear its embossing seal. Authorisations which are signed by
officers whose specimen signatures are not available with the Authorised Dealer, should be
presented to the nearest office of the State Bank for authentication. It is also important
that once a form has been approved by or on behalf of the State Bank, the Authorised
Dealer should effect remittance only on behalf of the original applicant for whom the form
has been approved and in favour of the beneficiary whose name appears in the approval.
They must in no case accept instructions from third parties. In those cases where
Authorised Dealers are empowered under the instructions laid down in this Manual to
approve applications on behalf of the State Bank, they should ensure while approving the
form that the applications are complete in all respects and that all the necessary
documentary or other evidence as required has been submitted to and examined by them and
that they have satisfied themselves as to the genuinness of the transaction.
10. Permits for Recurring Remittances.
(i) Permits (Appendix V-9) issued by the State Bank are of three types. In the
first type of permits, the State Bank authorises remittances upto a stated amount within a
stated period which an Authorised Dealer may make on behalf of the permit holder.
Remittances under such permits may be made during the period of validity of the permit in
amounts as required by the applicant provided that the total of such remittances under the
permit does not exceed the overall limit laid down in the permit.
(ii) The second type of permits covers remittances on a periodical (monthly) basis but the
periodical (monthly) limits are not cumulative and remittances in all during any one
period (month) must not exceed the prescribed rate laid down in the permit. If remittances
are not made upto the full extent of the limit in any period (month), it is not
permissible to carry forward unutilised balance in order to make larger remittances in
subsequent periods.
(iii) The third type of permits allows remittances on a periodical (monthly) basis but the
periodical (monthly) amount is sanctioned on a cumulative basis so that unutilised amounts
for earlier periods (months) can be remitted in subsequent periods (months). Unutilised
amounts may, however, be accumulated only within the validity of the permit and the entire
unutilised balance of such permits will lapse after the last day of the validity of the
permit. In such cases it is not permissible to make remittances in advance of the
entitlements of the subsequent periods (months).
(iv) Requests for utilisation of lapsed quotas should be forwarded by Authorised Dealers
to the State Bank giving full reasons for non-utilisation on due dates supported by
suitable documentary evidence, wherever available.
11. Effecting Remittances against Permits.
In all cases where permits are issued by the State Bank, it will be in order for
the Authorised Dealers to effect remittances against the permits subject to report on form
'M'. Authorised Dealers must state on form 'M' the number of the permit against which the
remittance has been made and also certify that the remittance has been endorsed on the
permit. The remittance must be endorsed on the reverse of the permit giving the amount and
date of remittance under their stamp and signature. When the permit is exhausted, it
should be returned to the State Bank by the Authorised Dealers alongwith the form 'M' on
which the last remittance is reported. In all cases where the purpose for which the permit
was granted ceases to exist and no further remittances are required or are permissible,
the unutilised permit should be returned to the State Bank with an advice that the permit
should be cancelled.
12. Period of validity of approval by the State Bank.
All Authorisations given by the State Bank are valid for a period not exceeding
30 days from the date of approval unless they are expressly approved as valid for a
specified longer period or unless they have been revalidated for a further period.
Similarly, permits issued by the State Bank are also valid for specified periods as stated
on the permit. Authorised Dealers should not effect any remittance against approved forms,
permits etc., which have been lapsed unless they have been duly revalidated.
13. Release of Foreign Exchange for Travel Abroad.
Foreign exchange is issued to the travellers against specific or general approval
given by the State Bank. It may be drawn in any foreign currency equivalent to the
sanctioned amount exclusively in the forms specified in paragraph 44 of Chapter XVII. In
cases where a traveller desires to draw foreign exchange partly in foreign currency
instruments and partly in foreign currency notes, Authorised Dealers will prepare two
separate 'T-1' forms. In the portion meant for their certificate, the Authorised Dealers
will give on both the 'T-1' forms a suitable indication as to the amounts of foreign
exchange released in foreign currency instruments and notes. The 'T-1' forms will be
attached with Schedules E-3 annexed to Summary Statements S-1 and S-6. In the case of sale
of foreign exchange partly in foreign currency instruments and partly in foreign currency
notes against specific approval issued by the State Bank, a photocopy of the State Bank's
sanction will also be made. Authorised Dealers will give a suitable indication to this
effect, both on the original sanction as well as its photocopy which will be attached with
the relative 'T-1' forms and surrendered to the State Bank alongwith the monthly returns
of foreign exchange transactions.
14. Processing of Approvals given on one Authorised Dealer’s Form by
another Authorised Dealer.
There may be instances where a traveller or a remitter might approach an
Authorised Dealer for issue/remittance of foreign exchange against approved form 'T-1' or
'M' bearing the identifying prefix and serial number of another Authorised Dealer. While
releasing/remitting foreign exchange against such form 'T-1' or 'M', Authorised Dealers
should insert their own identifying prefix and serial number borne on one of the blank
'T-1' or 'M' forms in their possession, and score out the prefix and serial number already
appearing on approved form 'T-1' or 'M' under proper authentication. The Authorised
Dealers should, however, destroy that blank form 'T-1' or 'M' whose serial number is so
inserted by them.
15. Reporting of Remittances.
Authorised Dealers should submit to the State Bank alongwith the appropriate
returns as laid down in Chapter XXII, forms ‘M’, ‘T’-1 and 'I' as the
case may be, in cover of each remittance effected by them. Where remittances are approved
by the State Bank, the approved forms should be submitted in original. Where approval is
given by the State Bank by letter or through issue of permit, particulars of the letter or
of the permit should be given on the appropriate form before submitting it to the State
Bank with the returns.
16. Cancellation of Outward Remittances.
In the event of any outward remittance which has already been reported to the
State Bank being subsequently cancelled, either in full or in part, Authorised Dealers
must report the cancellation of the outward remittance as an inward remittance. The return
in which the reversal of the transaction is reported should be supported by a letter
giving the following particulars:
(a) The date of the return in which the outward remittance was reported.
(b) The name and address of the applicant.
(c) The amount of the sale as effected originally.
(d) The amount cancelled.
(e) Reasons for cancellation.
17. Cancellation of Inward Remittances.
In the event of any inward remittance which has already been reported to the
State Bank, being subsequently cancelled either in full or in part, because of
non-availability of the beneficiary, Authorised Dealers must report the cancellation of
the inward remittance as an outward remittance on form 'M'. The return in which the
reversal of the transaction is reported should be supported by a letter giving the
following particulars:
(a) The date of the return in which the inward remittance was reported.
(b) The name and address of the beneficiary.
(c) The amount of the purchase as effected originally.
(d) The amount cancelled.
(e) Reasons for cancellation.
18. Utilisation of Exchange for the purpose it is obtained.
Where any foreign exchange is acquired by any person other than an Authorised
Dealer for any particular purpose or where any person has been permitted conditionally to
acquire foreign exchange, the said person will not use the foreign exchange so acquired
otherwise than for that purpose or fail to comply with the prescribed conditions. In cases
where the foreign exchange so acquired cannot be used in full or in part for the purpose
for which it was acquired or any of the conditions subject to which the foreign exchange
was released cannot be complied with, the foreign exchange should immediately be
surrendered to an Authorised Dealer.
