RESERVE BANK OF INDIA
EXCHANGE CONTROL DEPARTMENT
CENTRAL OFFICE
MUMBAI 400 001
A.D.(M.A. Series) Circular No.44 November 21, 1998To
All Authorised Dealers in Foreign Exchange
Dear Sirs,
Counter-trade Arrangements
Attention of authorised dealers is drawn to paragraph 6A.13(i) of the Exchange Control Manual (1993 Edition), in terms of which banks have been permitted to pay interest at the applicable rate on the balances held in U.S.$ Escrow account which are temporarily rendered surplus and held in a short-term deposit, upto a total period of one month (in a period of 6 months). On a review, it has been decided that authorised dealers may allow the U.S.$ Escrow account funds temporarily rendered surplus to be held in a short-term deposit upto a total period of three months in a year (i.e. in a block of 12 months) and pay interest thereon at the applicable rate.
2. The existing paragraph 6A.13(i) of the ECM may be substituted by appended slip.
3. Authorised dealers may bring the contents of this circular to the notice of their concerned constituents.
4. The directions contained in this circular have been issued under Section 73(3) of the Foreign Exchange Regulation Act, 1973 (46 of 1973) and any contravention or non-observance thereof is subject to the penalties prescribed under the Act.
Yours faithfully,
B. MAHESHWARAN
Chief General Manager
Slip[AD/MA 44/1998]
Counter-trade Arrangements
6A.13 (i) Counter-trade proposals involving adjustment of value of goods imported into India against value of goods exported from India in terms of an arrangement voluntarily entered into between the Indian party and the overseas party through an Escrow Account opened in India in U.S. dollar will be considered by the Reserve Bank. All imports and exports under the arrangement should be at international prices and all transactions routed through the account should be in conformity with the Indian trade and Exchange Control regulations. No interest will be payable on balances standing to the credit of the Escrow Account but the funds temporarily rendered surplus may be held in a short-term deposit up to a total period of three months in a year (i.e. in a block of 12 months) and the banks may pay interest at the applicable rate. No overdraft will be permitted in the Escrow Account nor any loans will be permitted to be granted against funds in the account.
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