For Internal Use Only TRADE FINANCE

Customer request letter along with the copy of the PO /PI /Contract /endorsed LC and
other documents to be retained at branch & sent to record management vendor on
periodic basis and the PO/ PI / contract/ original endorsed LC to be returned to the client. X
, if the same is required by the client and balance is available. PO / PI need not be
endorsed while allowing loan dispursal.
Follow up with client for deferral closure for receiving Contract / PO/ LC in case of
Running accounts. X X
A report for outstanding bills / PSFC to be shared on montly basis. X X
Details of the Export Bill Discounted / negotiated / crystallized to be forwarded to the
RBI reporting desk under R return. X
If Payment of Bill Received On or After Due Date but before Crystallisation Date:
Nostro to be Monitored for Export Payments received X
Inform the branches regarding the payment received against export bills. X
The customer's account to be debited with the following at the effective exchange rate X X
and the same to be authorized in the system.
i. Correspondent Bank charges
ii. Interest charges for any delayed payment received
Regulatory reporting: X

Payment received are reported to RBI via EDPMS

If Payment of Bill/PCFC is not received then Crystallisation process to be followed
NOC to generate a report showing the details of Export Bills/PCFC due for X
Crystallization.
Nostro to be Monitored for Export Payments received. In case nostro credit matches X X
with Bill details then Export Bill Liquidation process as mentioned above will be
followed. For Export Bills where the payment has not been received, Checker will
follow the Crystallization process as detailed below.
On the 30th day after the expiry of the Normal Transit period in case of unpaid X X
demand bills and on 30th day after maturity date in case of unpaid usance bills and
30th day after maturity date of unpaid PCFC loan, bill/FCY loan should be
crystallized.
In case the 30th day happens to be a holiday or Saturday, the export bill shall be
crystallized on the next working day.
In case crystallization has to be extended, an approval from business, product and
risk (SVP and above) has to be taken. •
PCFC overdue has to be recovered from Rupee resource in case where shipment has not
happended up to a maximum period of 360 days / as and when request received for
rupee recovery.
In case if there is insufficient balance in the customer's account for recovery, branch to X
be intimated for arranging funds from the client.
Intimate customer and business for requirement of funds for crystallization X
In case payment toward the export bill/PCFC is expected in a few days and the same is
confirmed by the client and business. Approval to be sought from Business and Product X
and risk (SVP and above) for not crystallizing the bill.
In case client requests for extension of due date, the same can be done only on basis of
conditions mention in DN and pricing approval to be sought. X
Share point to be up dated by maker with 'Sale' reporting for the entire Bill amount X
purchased earlier.
The Foreign Currency liability to be converted into Rupee liability at the effective X X
exchange rate by booking an Overdue Rupee Export Bill / PCFC and the same
should be checked and authorized.
i. Apply rate of Exchange confirmed by dealer.
For Internal Use Only TRADE FINANCE

ii. Charge interest from maturity date to date of crystallisation.

iii. Charge crystallisation commission as per FEDAI
iv. GST if any on the Commission amount to be collected from the
customer. This will be parked in the GST Payable account. Finance on a
monthly basis will have this arranged to be paid to the Tax Authority.
v. On executing the crystallization event, the maturity date of T+1
is to be mentioned in FCC for tracking the NPA / asset
classification.
vi. Export bill / PCFC which is crystallized and has turned NPA, the
accounting entry for write off/OTS shall be as follows;
D GL Write 5170500 D GL OTS 5170500 D GL ARC 51705
r off 07 r 23 r 00 24
C Export 2090200 C Export 2090200 C Export Bill 20902
r Bill 05 Bill 05 Crystalliz 00 05
Crystalliz r Crystalliz r ation GL
ation GL ation GL
C Interest 4130102 C Interest 4130102 C Interest 413010
r on Export 02 r on Export 02 on Export 2 02
Bill Bill r Bill
Purchase Purchase Purchase
If Payment Received After the Bill has been Crystallized
Nostro to be Monitored for Export Payments received X

Report a purchase transaction to the Treasury X

The proceeds to be first used to adjust the rupee liability and difference if X X
any to be recovered / paid to the customer
Interest for the period from the date of crystallization to the date of X X
realization of the Bill to be recovered from the customer at the appropriate
rate of interest for overdue export bills
Branch Maker will print the Debit/Credit advice for the customer and dispatch
X
it to the customer.
In the Event of Non -Acceptance of Documents by the Importer
Check for the SWIFT message received by YBL regarding the documents
X
being discrepant and that the importer is unwilling to accept them.
Check the discrepancies mentioned by the Issuing Bank against
copies of the documents filed.
(Checks whether the discrepancies are same as advised to issuing bank at the
time of negotiation or different ones. Check whether they are genuine X
discrepancies as per UCPDC and ISBP guidelines in case not protest with issuing
bank. - Thisonly
applicable checkforisCONFIRMED LCs.)
Intimate the Branch to inform the customer (exporter) that the documents
X
are discrepant.
Branch to inform the customer and take Corrected documents /
X X
clarifications from the customer and scan to NOC
Corrected documents received from branch to be checked X X
Due follow-up and monitoring for the acceptance to be done with the overseas X
bank
11.2 Regulatory Requirement/ RBI Extract (Bill Discounting/Purchase/Negotiation)

FEDAI guidelines - Crystallization of Export Bills Purchased/ Discounted/ Negotiated

i. Exporters are liable for repatriation of proceeds of export bills negotiated / purchased /
discounted or sent for collection by the Authorized Dealers.

For Internal Use only

For Internal Use Only TRADE FINANCE
ii. Authorized Dealers should take into account the exchange risk inherent in an
unpaid export bill negotiated / purchased / discounted and transfer the exchange risk to the
exporter by crystallizing the foreign currency liability into rupee liability.
iii. Considering that authorized dealers are required to manage various risks, they are given
freedom to decide on the period for crystallization which may be linked to risk factors like
credit perception of different types of exporter clients, operational aspects etc.
iv. Such norms devised by the banks in this regard should be transparent and should be advised to
their customers well in advance.
v. For crystallization into Rupee liability the Authorized Dealer shall apply the ready TT selling rate
of exchange ruling on the date of crystallization.
vi. Exchange difference arising out of crystallization to be recovered from or passed on to the
customer, as the case may be.
vii.Interest shall be recovered on the date of crystallization for the period from the date of expiry of
the normal transit period / notional due date to the date of crystallization at the appropriate
rate of interest as per the guidelines issued by RBI from time to time.
viii. Export bills payable in countries with externalization problems shall also be crystallized into
rupee liability like any other unpaid export bill notwithstanding receipt of advice of payment
in local currency.
ix. The unpaid export bills will be treated as outstanding under the sanctioned limit of the customer and
exchange risk will be to the account of exporter.
Follow-up of overdue bills:
i. Authorized dealers should closely watch realization of bills through Bills Register and, in cases
where bills remain outstanding beyond the due date for payment; they should up the matter
promptly with exporter concerned. If the exporter fails to arrange for delivery of the proceeds on
the due date, the matter should be reported to Reserve Bank by letter stating, where possible,
the reason for the delay in realization of proceeds of the exports unless exporter has sought
permission for extension of time. The duplicate copies of EDF/PP forms should, however,
continue to be held by authorized dealer until full proceeds are realised except in case of
undrawn balances covered by Note under Paragraph 6.c.7. Authorized dealers should follow up
export outstanding with exporters systematically and vigorously so that action against defaulting
exporters does not get delayed. Any laxity noticed in the follow up of realization n of export
proceeds by authorised dealers will be viewed seriously by Reserve Bank.
ii. Follow-up letters have to be sent on monthly basis via courier or email to the clients advising
the status of the outstanding bills in relation to shipment beyond 6 months.
iii. To track the submission of SOFTEX form for Inward remittance received for the purpose of offsite
software exports, the correct purpose code as per RBI is P0807 which needs to be captured.
POST-SHIPMENT FINANCING - Currencies

 Can be availed in INR

 Can be availed in any freely convertible currency. However, the credit to exporter can be in INR
 Cannot be credited to EEFC account since these are not 'export realizations'
 Funds may be credited to EEFC account only if these are export realizations or otherwise
rediscounted overseas on a 'without recourse' basis.

POST-SHIPMENT FINANCING - Period of Advance

 Maximum tenor - up to the realization period allowed for exports, for a maximum of 270 days
(as per extant guidelines).
 Normal Transit
 Period for sight / demand bills:
n Average period normally involved from the date of financing to the date of receipt
of bill proceeds and NOT goods transit period
n 25 days as laid down by FEDAI for bills in foreign currency

POST-SHIPMENT FINANCING - Pricing

 Pricing of post-shipment credit has been completely deregulated since May 2012
 Key Factors to be taken into account while pricing:
For Internal Use Only TRADE FINANCE

n Cost of Funds
n Customer rating
n Whether refinance available and for what tenor
n Margin requirements

POST-SHIPMENT FINANCING - Liquidation

 Through export proceeds from the same shipment
 Out of EEFC balances
 Proceeds of other unfinanced collection bills
 Out of Rupee resources of Exporter

POST-SHIPMENT and PRE-SHIPMENT FINANCING - Export Non-Realization/ Crystallization

Export Bills have to be "crystallized" in case of non-realization of PCFC loan/ export proceeds beyond 30
days from the due date.
Conversion to INR loan at TT selling rate / rate provided by treasury.
Overdue rate of interest to be charged for the overdue export loan up to the date of crystallization
Commercial rate of interest to be charged from the date of crystallization till date of recovery from client
account.
Crystallization period up to Bank's policy - As per current YBL policy, bill to be crystallized on 30th day
from the due date.

port: POST-SHIPMENT EXPORT CREDIT

POST-SHIPMENT EXPORT CREDIT - Period

 In the case of demand bills, the period of advance shall be the Normal Transit Period (NTP) as specified
by FEDAI.
 In case of usance bills, credit can be granted for a maximum duration of 270 days (as per extant
guidelines) from date of shipment inclusive of Normal Transit Period (NTP) and grace period, if any.
However, banks should closely monitor the need for extending post-shipment credit upto the
permissible period of 270 days (as per extant guidelines) and they should persuade the exporters to
realise the export proceeds within a shorter period.
 'Normal transit period' means the average period normally involved from the date of negotiation /
purchase / discount till the receipt of bill proceeds in the Nostro account of the bank concerned, as
prescribed by FEDAI from time to time. It is not to be confused with the time taken for the arrival of
goods at overseas destination.
An overdue bill:
a. In the case of a demand bill, is a bill which is not paid before the expiry of the normal transit period, plus
grace period.
b. In the case of a usance bill, is a bill which is not paid on the due date.

POST-SHIPMENT EXPORT CREDIT- Advances against Undrawn Balances on Export Bills

El In respect of export of certain commodities where exporters are required to draw the bills on the overseas
buyer upto 90 to 98 percent of the FOB value of the contract, the residuary amount being 'undrawn balance' is
payable by the overseas buyer after satisfying himself about the quality/ quantity of goods.
El Payment of undrawn balance is contingent in nature. Banks may consider granting advances against undrawn
balances at concessional rate of interest based on their commercial judgment and the track record of the
buyer. Such advances are, however, eligible for concessional rate of interest for a maximum period of 90
days only. For the period beyond 90 days, the rate of interest specified for the category Export
Credit Not Otherwise Specified (ECNOS) at post-shipment stage may be charged.

POST-SHIPMENT EXPORT CREDIT -Advances against Retention Money

 In the case of turnkey projects/construction contracts, progressive payments are made by the overseas
employer in respect of services segment of the contract, retaining a small percentage of the
progressive
For Internal Use Only TRADE FINANCE

Further, all claim reimbursement has been made online through DGFT site, bank
is now required to claim the reimbursement of benefit passed to all eligible
exporters online by registering on DGFT portal and RBI post approving the claim
online will submit the same to DGFT for disbursal ( refer to DGFT FAQs for
detailed guidelines-https://www.dgft.gov.in/CP/?opt=application-help )

RBI vide attached circular RBI/2022-23/60 DOR.STR.REC.39/04.02.001/2022-23 dated

May 31, 2022 , has further clarified that the extended Interest equalization Scheme on
Pre and Post Shipment Rupee Export Credit which was not available to those
beneficiaries who were availing of the benefit under any Production Linked
Incentive (PLI) scheme of the Government, can now avail extended IES benefit for
segments other than for which they have availed of PLI benefits. Further, banks have
been advised to obtain a Self-Declaration under the IES from the exporters as per the
format given in the Annex of RBI circular ( Refer to Subvention Docs for the
declaration format to be taken from customer).These provisions is deemed effective
from October 1, 2021)

Accounting Entries
Entries to be passed at the time of booking EPC/Post-shipment loan:
Further, PGFT vide Trade Notice 38/2021-22 dated March 15, 2022 has
mandated eligible exporters to register for Interest Equalization Scheme
through DGFT online module on or before April 1, 2022. Accordingly, all
exporters seeking benefit under the Interest Equalization Scheme need to apply
online to the DGFT website and a Unique IES Identification Number (UIN) will get
generated automatically which is required to be submitted to the bank when
availing Interest Equalization against their pre and post shipment rupee export
credit applications.

In this regard, from April 01, 2022 rupee export credit loan will be
provided to eligible exporters with equalization benefit basis below:

· Mandatory submission of UIN acknowledgement generated by

eligible exporter online (DGFT manual for exporters hosted on DGFT
website)
· One-time client declaration covering the following (refer to format-
Annexure A)
· Category of Exporter (MSME manufacturer exporter, Merchant
exporter and Non MSME manufacturer exporter)
· UIN no. (Unique IES Identification Number)
· PLI (Production Linked Incentive) declaration
For Internal Use Only TRADE FINANCE

· One-time Udyam registration certificate (applicable for only MSME

manufacturer exporter) (can be ignored in case already submitted to
bank)
· Export Credit Disbursement request letter along with underlying
transactional documents (refer to format- Annexure B & C)

vi. Indicative mail to customer for ROI being offered with subvention benefit and
net off rate (refer to format-Annexure D)

Brief on the DGFT Guidelines for UIN registration is given below:

a. All exporters seeking benefit under the Interest Equalisation Scheme

need to apply online by navigating to the DGFT website (https:/ I
dgft.gov.in) - Services - Interest Equalisation Scheme. A Unique IES
Identification Number (UIN) will get generated automatically which is
required to be submitted to the concerned bank when availing Interest
Equalisation against their pre and post shipment rupee export credit
applications.
i. For generating UIN the following steps need to be followed
by all concerned Exporters
ii. As a first step, any exporter seeking to apply under IES, need to
register on the DGFT Website (if not already registered). It may
be ensured that applicant's IEC is linked to its online account,
the IEC (ANF-2A) and the Exporter-Importer Profile(ANF-1) is
updated to reflect correct and up-to-date details.
iii. Thereafter, exporter need to login with its registered
credentials -navigate to Services 7 Interest Equalisation
Scheme — Apply for Interest Equalisation Scheme and fill in
the required details. Basic data about the applicant's IEC
would get auto populated.
iv. An acknowledgement containing Unique IES Identification
Number (UIN) would be auto generated when duly completed
application is submitted online.
v. An SMS and email intimation of the UIN generated will be
sent to the registered email account and mobile number of the
exporter.
vi. The user charge for generating a UIN shall be- 200 and is to be
paid online.
vii. After generation of the UIN no changes will be
allowed. In case of any correction/amendment
exporter may generate new UIN.
b. The UIN generated shall have a validity of 1 year from the date of
registration, during which an application for availing benefit of IES
can be submitted to the concerned bank. The auto generated
Acknowledgement containing UIN number need to be submitted to
the concerned bank along with the prescribed application by the
bank, if any, for availing benefit under IFS.
c. It will be mandatory for exporter to submit UIN acknowledgment to
concerned bank for all applications made on or after 01.04.2022.
d. Banks will continue to scrutinize and issue benefits as per their own
internal process. The guidelines for the bank for validation of
submission made by the exporter are being issued separately through
For Internal Use Only TRADE FINANCE
There could be rare instances of export obligation not being
fulfilled by the customers after availing
equalisation benefit on the underlying export credit loan. Such cases are to be
handled in the following manner:
vii. Equalisation benefit allowed to the exporter to be withdrawn ab initio.
, viii. Amount already claimed from RBI to be adjusted from the next claim sent
to RBI, under the same
sector under which it was originally claimed. This amount would be shown as refund.
ix. A short memo to be prepared showing the adjustment entries, providing the
details of the original
loan and equalisation claim, and adjustments made thereof in the
subsequent claim, for sign off by our concurrent auditor. This is to be
maintained in our records in case of any queries at a later date.

Note: Refer attached applicable documents for interest equalisation scheme

Notel: Interest equalisation scheme not applicable for shipment made to
Nepal in INR currency Note2: Supply from DTA to SEZ and Deemed
Export not covered in Interest equalisation scheme. Note3: Supply from
15.1 EXPORT CREDIT RUPEE INTEREST EQUALISATION-
COMMAN PROCESS FLOW

STAFF IN CHARGE Branch NOC

Scrutiniz
LIST OF TASKS

Checker

er
Follow the process of receipt and upload of documents as per X
Annexure
Check -I of the documents as per the Annexure -II Interest
receipt X
EQUALISATION
Perform basic scrutiny as per Annexure-III X X
Perform detailed scrutiny as per Annexure -IV X X X
Charge net off interest amount at the time of booking the EPC
loan in FCC. ( e.g. For a gross interest of 11% with 3%
EQUALISATION benefit, NOC to input 8% interest rate at the
time of booking) X
For equalisation amount (3%): Debit "Equalisation receivable
GL" & Credit Interest on Pre-Payment advance" GL, For
Liquidation prior to month end, equalisation entries to be
passed
Send at liquidation
equalisation stage
claim itself.
to RBI On reimbursement
monthly from -
by 15th of the month
Claim format Claim to be sent along with CA certificate from X
M/S Janaswamy& Assoc. Further post operationalization of IES
Send reminder to RBI for non receipt of equalisation claim of
previous quarter- Reminder Format X
Inform Trade Product and compliance in case of delay over two X
quarter
In case of non-fulfilled of export obligation by exporter,
equalisation benefits to be withdrawn db initio and RBI to
X X
notified in the next equalisation claim, memo .to be
prepared showing adjustment entries

Annexure II for Export credit Equalisation scheme

1 One-time Client declaration M
YBL Format
For Internal Use Only TRADE FINANCE

2 UIN acknowledgement generated by eligible exporter online

Export credit One time Udyam registration certificate (applicable for only MSME
Equalisation 3 manufacturer exporter) (can be ignored in case already submitted to bank) M
scheme
Indicative mail to customer for ROI being offered with subvention benefit and
4
net off rate
For Internal Use Only TRADE FINANCE
15.2. TAKEOVER OF EXPORT CREDIT LIMITS FROM OTHER BANKS
YES Bank regularly sanctions credit facilities to exporters in the form of pre-shipment finance and post-
shipment finance after due credit assessment as per approved internal process. There are many instances when
the client may be already availing such facilities from their existing bankers which YBL proposes to take over.

This note intends to streamline the operational process of takeover of export credit limits from other banks.
Takeover of limit, where interest equalization benefit has been passed on to customer
In case of takeover of limits from other banks, wherein customer has already taken the
benefit of interest equalization, YBL will give interest equalization benefit for the
remaining days only from the date of takeover of loan

Eg- Pre-shipment loan of 90 days which is taken over on 30th day, interest equalisation
benefit passed on to customer by YBL only for remaining 60 days

15.3 DISCOUNTING AND EXPORT LC CONFIRMATION UNDER IFC/ ADB/ EBRD LINE
YBL has entered into a confirming bank agreement with various multi lateral agencies including the International
finance corporation (IFC) / Asian Development Bank (ADB) / European Bank for Reconstruction and
Development (EBRD), under their respective trade facilitation programes. Under this agreement we may avail of
their confirmation services for covering the risk on foreign banks on whom we donot have the risk appetite as on
date.

For further detail and format please refer attached IOMs.

16. AGENCY COMMISSION ON EXPORTS

For Internal Use Only TRADE FINANCE
For Internal Use Only TRADE FINANCE
(i) AD Category - I banks may allow payment of commission, either by
remittance or by deduction from invoice value, on application submitted by the
exporter. The remittance on agency commission may be allowed subject to conditions
as under:
(a) Amount of commission has been declared on EDF/Shipping bill/SOFTEX form
and accepted by the Customs authorities or Ministry of Information Technology,
Government of India / EPZ authorities as the case may be.
(b) In cases where the commission has not been declared on EDF/Shipping
bill/SOFTEX form, remittance
may be allowed after satisfying the reasons adduced by the exporter for not
declaring commission on Export Declaration Form, provided a valid
For Internal Use Only TRADE FINANCE

7) The sanction and renewal of the limits under the Scheme will be based on a simplified procedure decided by
the bank. Taking into account the anticipated export turnover and track record of the exporter the banks may
determine need-based finance with a liberal approach.
8) 'In-principle' limits will be sanctioned for a period of 3 years with a provision for automatic renewal subject
to fulfillment of the terms and conditions of sanction.
9) A stand-by limit of not less than 20 per cent of the assessed limit may be additionally made available to
facilitate urgent credit needs for executing sudden orders. In the case of exporters of seasonal commodities, the
peak and off-peak levels may be appropriately specified.
10) In case of unanticipated export orders, norms for inventory may be relaxed, taking into account the size and
nature of the export order.
11) Requests from card holders would be processed quickly within 25 days / 15 days and 7 days for fresh
applications / renewal of limits and ad hoc limits, respectively.
12) Gold Card holders would be given preference in the matter of granting of packing credit in foreign currency.
13) Banks would consider waiver of collaterals and exemption from ECGC guarantee schemes on the basis of card
holder's creditworthiness and track record.
14) The facility of further value addition to their cards through supplementary services like ATM, Internet
banking, International debit / credit cards may be decided by the issuing banks.
15) The applicable rate of interest to be charged under the Gold Card Scheme will not be more than the general
rate for export credit in the respective bank and within the ceiling prescribed by RBI. In keeping with the spirit of
the Scheme, banks will Endeavour to provide the best rates possible to Gold Card holders on the basis of their
rating and past performance.
16) In respect of the Gold Card holders, the prescribed rate of interest on post-shipment rupee export credit may
be extended for a maximum period up to 365 days.
17) Gold Card holders, on the basis of their track record of timely realization of export bills, will be considered for
issuance of foreign currency credit cards for meeting urgent payment obligations, etc.
18) Banks may ensure that the PCFC requirements of the Gold Card holders are met by giving them priority over
non-export borrowers with regard to granting loans out of their FCNR (B) funds, etc.
19) Banks will consider granting term loans in foreign currency in deserving cases out of their FCNR (B), RFC, etc.
funds. (Banks may not grant such loans from their overseas borrowings under the 25 per cent window of
overseas borrowings.)
20) For detailed process on the issuance and pricing for exporters eligible under the 'Gold Card Scheme' by YBL ,
please refer to the below document.

19. CONSIGNMENT EXPORTS

Economic liberalization and gradual removal of international barriers for trade and commerce re-opening up various
new avenues of export opportunities to Indian exporters of quality goods. One of the methods being increasingly
adopted by Indian exporters is consignment exports where the goods are shipped and held in stock overseas ready
for sale to overseas buyers as and when orders are received.
To protect the Indian Exporters from possible losses when selling goods to ultimate buyers, it was decided to
introduce Consignment Policy Cover.
There are two policies available for covering consignment export viz;
Consignment Exports (Stock-holding Agent)
Consignment Exports (Global Entity Policy)
Process Flow:
1. If required by Customs, YBL will provide a letter authorizing exporter to undertake the consignment export
For Internal Use Only TRADE FINANCE
2. A covering letter from Exporter advising YBL that the documents are under
Consignment exports as per format EXP CONSIGNMENT 1
3. Documents will be dispatched by YBL in the normal course of collections. Note that freight and marine
insurance must be arranged for in India.
4. Documents will be released by the bank abroad as per our covering schedule.
5. Client to submit final invoices as and when they are raised. YBL will knock off an equivalent value from the
provisional invoice / EDF submitted earlier.
6. At the end of the permitted export realization period, either the provisional invoice should have been fully
knocked off, or the balance goods shipped to India and Bill of Entry provided to YBL. YBL to be advised and
approval sought in case the goods would not be shipped back to India.
7. In case of any deductions by the agent (towards receipt, storage, sale etc.) - original bills would need to be
provided to YBL to account for the shortage in export proceeds received
8. In case of any fluctuation in price resulting in lesser proceeds being received - client needs to follow the
requirements for invoice reduction as allowed under section C 17 of the exports circular.
9. In case of any shipments getting mixed at the point of final sale, client to provide us with a clear list of final
invoices to be tallied against the provisional ones provided to us earlier.
10. BRCs will be issued only as per the final realized values.

For documentation required refer ANNEXURE II

20. FEDAI CIRCULAR ON SUPPLY OF GOODS FROM DTA TO SEZ:

FEDAI circular dated 11 Nov 2014 on captioned subject states - Supply of goods and services from DTA to SEZ
unit, is treated as an export by the DTA unit to SEZ unit. It was therefore represented that trade credit by
means of LCDA, Packing Credit, PCFC buyer's credit should be available to such DTA units. RBI vide its letter no.
FED C.O. Trade (EXD)/5628/05.31.078/ 2014-15 Dated 29th September 2014 has clarified as follows.
Quote:
It is advised that the request for trade credit is for supply of goods and services from Domestic Tariff Area (DTA)
to SEZ whereas the Trade Credit Policy provides trade credit for import of capital/non-capital goods from
overseas supplier/buyer up to a certain period and with all-in-cost or permissible under the policy. Hence trade
credit is not permissible for the said transactions between DTA and SEZ units.
All instructions/guidelines on grant of export credit contained in our Master Circular DBOD
No.Dir.BC.19/ 04.02.002/2014-15 dated July 1, 2014 on Rupee/Foreign Currency Export Credit and Customer
Service to Exporter' would be applicable for sale of goods and services by DTA to SEZ.
Unquote:
Member banks are advised to take a note of the same and do the needful.

21a. EXPORT LC ADVISING PROCESS UNDER COURIER ARRANGEMENT

The Advising Bank of a Letter of Credit is the Issuing Bank's correspondent or agent or branch usually located in
the seller's (Beneficiary's) country. An advising bank acts an agent of the issuing bank without assuming any credit
risk on its part.
The primary responsibilities of the advising bank are:
- To verify the authenticity of the LC to ensure that the LC comes from a genuine source. Authentication can be
either in the form of signature verification (for hardcopy LC) or via SWIFT authentication (for LC received through
SWIFT)
For Internal Use Only TRADE FINANCE
- To accurately advise the terms and conditions of the LC to the beneficiary
In case signature is not done for hard copy LC, the same can be advised to the beneficiary unauthenticated.
YBL receives LCs from its correspondent banks worldwide for advising to beneficiaries in India.
The beneficiary of the LC may or may not be YBL customer. In some cases YBL is required to advise the LC
through other banks (second advising bank) as per instructions in the LC.

YBL directly advise LCs to end beneficiaries disregarding instructions in the LC, if any, for routing through second
advising bank. This direct advising would be done through a courier company which will deliver the
LC to beneficiary only upon receipt of payment for charges

PROCESS GUIDELINES:
A. Process for Booking LC in the system and dispatch trough courier

Sr Activity Step Activity

. Owner
N
1.2. Receive the export LC from Issuing Bank for advising. If LC Trade NOC
is received from a second or subsequent bank (i.e.not
directly from LC issuing bank) than check with IBD before
advising such LC.
3.4. Check that SWIFT is received via authenticated SWIFT Trade NOC
message, scrutinize LC clauses/OFAC/Sanction clauses or
any other ambiguous clauses
5.6. Ensure that LC is an operative instrument Trade NOC
7.8. In case of any discrepancy with respect to LC clauses, NOC to Trade NOC
intimate IBD team and send SWIFT message to Issuing Bank
for rectification/clarification of discrepancies
9.10. IBD team to contact Issuing Bank, if required, and arrange IBD team
for suitable SWIFT clarification/ amendment from Issuing
Bank.
11.
12. Book the LC in core banking application. Use the cust ID of Trade NOC
LC issuing bank in issuing bank details for effective
tracking/mapping. In case the issuing bank Cust ID is not
available, then the cust id of other bank in the same country
to be used.
a) In case beneficiary is YBL customer, Trade NOC to book
the LC in the system using cust ID of YBL customer in
the beneficiary details and debit charges to the
customer account and print covering letter* (as per
annexure A)
b) In case beneficiary is non-customer, Trade NOC to book
the LC in the system and debit receivables account for
YBL LC advising charges and print covering letter* (as
per annexure B)
YBL charges for LC advising to be as per annexure C. This
schedule for charges will be hosted on W3 and will be
updated by IBD from time to time.
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*Automation for generating covering letter from core baking

application is being taken up with TSG.
Accounting Entries
a) In case beneficiary is YBL customer :
Dr Customer Account (YBL LC advising Commission plus
GST)
Cr LC Commission- Export Account 414010302
Cr GST Account
b) In case beneficiary is not YBL customer
Dr Proposed LC Advising Receivable Account (YBL
LC advising Commission plus GST)
Cr LC Commission- Export Account 414010302

7. Affix stamp on each envelope (containing LC and covering Trade NOC

letter) indicating LC ref number and charges to be collected.
(In case of beneficiary being YBL customer, charges to be
collected through courier company would be NIL)
8. Send sealed envelope containing LC and covering letter Trade NOC
to mail room for dispatch through courier
9. Hand over the sealed envelope to authorized Mail Room
representative of the courier company
B Process for reconciliation of YBL LC
.
S Activity Step Activity
r. Owner
N
1. Maintain record of LCs advised and dispatched through Trade NOC
courier along with charges expected for the same.
2. Receive consolidated cheque from the courier company on Trade NOC
10th and 25th of every month. Follow up with courier
company for cheque in case the same is not received as per
above timelines.
3. On receiving the cheque, send the cheque for clearing to Trade NOC
credit the funds to trade suspense a/c no. 105051718. Once
credit is received in suspense a/c, mark off entries
outstanding in the receivables account against credit received
in suspense account.
Accounting Entries :
Dr Trade Suspense 105051718
Cr Proposed LC Advising Receivable Account (by
picking up the corresponding outstanding entries)
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4. Identify entries outstanding in the receivables account for Trade NOC

period for which charges have been received from courier
company and follow up with courier company for the short
receipt, if any.
5. Highlight to IBD immediately in case LC is returned by Trade NOC
courier due to non- delivery (incorrect address) or refusal
of beneficiary to pay charges
6. In case of LC being returned, contact issuing bank and advise IBD
NOC with revised instructions in case there is change/revision
in beni address.
If LC is returned due to any other reason (like refusal from
beneficiary to pay charges) IBD to take up with issuing bank
for remitting YBL LC advising charges.
7. LC to be sent through courier again for delivery post Trade NOC
receipt of charges from issuing bank.
8. In case charges for LC advising are not forthcoming from IBD
issuing bank, IBD team to provide necessary approvals on a
case to case basis for writing off/ waiving charges so as to
ensure that these receivables do not remain in overdue status
for more than 30 days.
C Process for Settlement of Monthly Bill raised by
. Courier Company
S Activity Step Activity
r. Owner
N
1. Maintain record of consignments sent through courier Mail Room
along with proper acknowledgment of consignments
picked up by courier
2. Send monthly bill by 7th of every month for consignments Courier
delivered in the previous month Company
3. Receive bill from the courier company and tally the details Mail
with schedule of charges Roorrt/INM
team
In case of any discrepancy in billing, take up with
courier company for rectification
4. Pay the courier company by way of bank transfer within 30 Mail
working days of the bill date Room/INM
team

EXCEPTION HANDLING
Exceptional scenarios would be handled by trade NOC in below
manner.
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Activity Step Action To Follow

Transmitted SWIFT message is Refer SWIFT error codes and rectify error
Not Acknowledgement
Waiver/Reduction of charges Waiver/reduction of YBL LC advising charges at
the time of booking the transaction where
beneficiary is YBL customer would need
approval from IBD team (SVP and above),
relationship team (SVP and above) and TBG
team (SVP and above)
If YES Bank not in the position In some exceptional cases if YES Bank is not
to advise LC willing to advise the LC to beneficiary, Trade
NOC to immediately highlight to IBD team and
obtain their consent for the same. SWIFT to be
sent out to issuing bank stating that YBL is not
advising the LC and reasons for the same
LC advising charges NOC to intimate IBD team and dispatch the LC
are to the account of on free of cost basis to beneficiary, send SWIFT
LC applicant message to issuing bank for claiming advising
charges and follow up for charges, if required to
be done by IBD team. NOC team to keep IBD
informed regarding status of reply on SWIFT
from issuing bank. In case charges are not
recovered within 30 days of advising the LC,
IBD team to take requisite approvals for
Pre-advice to Letter of Credit In cases where trade NOC receive pre-advice to
an LC (MT705),Trade NOC will book the LC in
system and forward the same to beneficiary
under bank's cover schedule stating that "We
have received the attached pre-advice favouring
yourselves, we shall send the original
instrument as and when we receive the same
Cancellation of LC On receipt of SWIFT message/letter from issuing
bank for cancellation of an LC advised by us,
NOC will send the same to beneficiary for
obtaining their consent, once branch receives
beneficiary consent and original LC as well as
amendments if any send to NOC for intimating
issuing bank through SWIFT/letter.
COVERING LETTER FORMATS

For formats: updated on DAS separately

ADVICE OF LETTER OF CREDIT(LC)- Covering Letter in case of beneficiary is YBL customer

ADVICE OF LETTER OF CREDIT(LC)- Covering Letter in case of beneficiary not being YBL customer
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GRID OF YBL CHARGES FOR LC ADVISING

Currently, YBL standard charges for LC advising would be INR 2300/-for YBL customer (1500 (commission)+ INR
500 (Courier) + Taxes) for YBL customers and for non - YBL customers it is INR 3450/- (INR 2500 (commission) +
INR 500 (Courier) + Taxes).
** Any deviation to above process need to be approved by Business (SVP & Above).

UCP GUIDELINES ON LC ADVISING

UCP 600 - Article 9

Advising of Credits and Amendments

a. A credit and any amendment may be advised to a beneficiary through an advising bank. An advising bank
that is not a confirming bank advises the credit and any amendment without any undertaking to honour or
negotiate.

b. By advising the credit or amendment, the advising bank signifies that it has satisfied itself as to the apparent
authenticity of the credit or amendment and that the advice accurately reflects the terms and conditions of the
credit or amendment received.

c. An advising bank may utilize the services of another bank ("second advising bank") to advise the credit and
any amendment to the beneficiary. By advising the credit or amendment, the second advising bank signifies
that it has satisfied itself as to the apparent authenticity of the advice it has received and that the advice
accurately reflects the terms and conditions of the credit or amendment received.

d. A bank utilizing the services of an advising bank or second advising bank to advise a credit must use the same
bank to advise any amendment thereto.

e. If a bank is requested to advise a credit or amendment but elects not to do so, it must so inform, delay, the
bank from which the credit, amendment or advice has been received.

f. If a bank is requested to advise a credit or amendment but cannot satisfy itself as to the apparent
authenticity of the credit, the amendment or the advice, it must so inform, without delay, the bank from which
the instructions appear to have been received. If the advising bank or second advising bank elects nonetheless
to advise the credit or amendment, it must inform the beneficiary or second advising bank that it has not been
able to satisfy itself as to the apparent authenticity of the credit, the amendment or the advice

21b. IOD/TOD PROCESS AND FORMAT

Technical TOD in export credit limits can be processed straight through without any approval in accordance with
IOM on Delegation of Authorities dated June 26, 2015. Examples of such scenarious are given below
1. PSFC transaction is booked and the proceeds are used to liquidate an existing PCFC outstanding
2. PCFC/PSFC to be disbursed to the extent of export proceeds sighted in the NOSTRO pending liquidation of
existing PCFC/PSFC.
As per the credit policy on IOD / TOD (Mail from Mr. Manmohan Singh (RM) on the 14th of February'14), the TOD
limits for Commercial Business Banking (CBB) and Emerging Business Banking (EBB) segment customers have
been reduced to INR 5 MM and INR 2.5 MM respectively.
Further, going forward, TODs will not be allowed in the RB segment.
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