All
Authorised Dealers
in Foreign Exchange,
Dear
Sirs,
EXPORTS
– APPLICATION OF EXCHANGE RATES
Under
the existing rules Authorized Dealers are required to convert
inward remittances on account of exports at the T.T. Clean
buying rate where documents are sent on collection basis
or where advance payment is received. In cases where the
documents are drawn under a letter of credit, conversion
is required to be made at the OD buying rate. The rationale
is that under letters of credit, negotiating banks are required
to make immediate payment upon negotiation of documents
while the payments from the opening / reimbursing banks
are received subsequently. The exporters have, however,
complained that the Authorized Dealers are making payment
even in the case of documents presented against the letters
of credit after receipt of funds from the opening/reimbursing
banks at the OD buying rate instead of making up-front payments.
It is, therefore, advised that in cases where documents
presented under letters of credit are not negotiated for
any valid reason but payment is made to the exporter after
receipt of funds from the opening / reimbursing bank, conversion
will invariably be made at the T.T. clean buying rate instead
of OD buying rate. The Authorized Dealers will, however,
be free to recover from the customers their service charges
and postage’s.