The Reserve Bank of India has extended the period of realisation of the value of exports to 15 months from the date of export.
In an extension of relief measures amid the coronavirus pandemic, RBI has given a big relief to exporters today. The Reserve Bank of India has extended the period of realisation of the value of exports to 15 months from the date of export. At present, the value of the goods or software exports made by the exporters is required to be realised fully and repatriated to the country within a period of 9 months from the date of exports, RBI said in a statement. The move is aimed at enabling the exporters to realise their receipts, especially from COVID-19 affected countries within the extended period and also provide greater flexibility to the exporters to negotiate future export contracts with buyers in foreign countries.
Due to widespread coronavirus scare around the globe, trade across nations has come to a standstill as demand has plummeted dramatically. While complete lockdown is exercised by many countries, the near-future of trade looks grim. In this unfortunate time, RBI’s decision to extend the timeline of realisation of the cost of exports may fill some optimism among Indian traders.
In another major announcement, the RBI has said that it is not necessary to activate countercyclical capital buffer (CCyB) – an instrument to protect the banking sector from periods of excess aggregate credit growth – for a period of one year or earlier. CCyB is activated when the uncertain circumstances arise, and the decision is normally be pre-announced.
The central bank has also constituted an advisory committee to review the Ways and Means limits for the state governments and Union Territories (UTs). It has been decided to increase the WMA limit by 30 per cent from the existing limit for all states/UTs to help them tide over the current situation. WMA is a mechanism used by the RBI to help the states to tide over temporary mismatches in the cash flow of their receipts and payments. The revised limits will come into effect from today and will be valid till 30 September 2020.