(i) Exporters may receive advance payments (with our without interest) from their overseas buyers provided

(a) the shipments are made within one year from the date of receipt of advance payment,

(b) the rate of interest payable does not exceed LIBOR + 100 basis points and

(c) the shipments made against the advance payments are monitored by the authorised dealer through whom the advance payment is received. The appropriations made against every shipment must be endorsed on the original copy of the inward remittance certificate issued for advance remittance.
(ii) In cases where exporters are unable to make shipments against advance payments received by them for exports, authorised dealers may allow remittances towards refund thereof (partly or fully), provided the unutilised portion of the advance is refunded within a period of one year of its receipt on production of

(a) a Chartered Accountants certificate that the amount is still outstanding in the books of the exporter and has not been adjusted in any manner and

(b) a declaration that the advance was not against exports to be made in pursuance of any undertaking given to Import Trade Control authorities in regard to fulfilment of export obligation. If, however, the advance payment was received in fulfilment of export obligation, the refund may be allowed on production of a "No Objection Certificate" from Import Trade Control authorities for refund of the amount. The inward remittance certificate issued at the time of receipt of advance payment should be called for and cancelled/suitably endorsed.
NOTE: If a portion of advance payment against exports credited to EEFC account is to be refunded, the refund should be allowed by debit to the EEFC account in proportion to the amount originally credited to the account. Where the balance in the EEFC account is insufficient to cover the proportionate amount originally credited to EEFC account, exporters should be advised to arrange replenishment of funds from EEFC accounts maintained with other branches/authorised dealers. Purchase of foreign exchange from the market may be allowed only after utilising balances held in exporters all EEFC accounts. For this purpose, a suitable declaration may be obtained from the exporter concerned.

(iii) Authorised dealers freely grant pre-shipment advances against `Red clause letters of credit in favour of their exporter-constituents. Advances made by the letter of credit opening bank will, however, be treated as advance remittances against exports.