Direct Dispatch of Documents in Exports

Direct dispatch of documents by the exporter refers to a practice where shipping documents are sent directly to the consignee or their agent in the destination country, rather than through the exporter’s bank or an intermediary. This process is outlined in the Reserve Bank of India’s (RBI) Master Directions on the export of goods and services. The guidelines provide specific conditions under which direct dispatch is permitted, ensuring secure and prompt realization of export proceeds.

Key Conditions for Direct Dispatch

1. Advance Payment or Irrevocable Letter of Credit:
   • The exporter may dispatch shipping documents directly if the full value of the export shipment is secured through advance payment or an irrevocable letter of credit. The sales contract or letter of credit must explicitly allow for direct dispatch of documents to the consignee.
2. Regular Customers:
   • Banks can accede to requests from regular customers to dispatch documents directly, provided the bank is satisfied with the exporter’s standing and track record. Adequate arrangements for the realization of export proceeds must also be in place.
3. Status Holder Exporters and SEZ Units:
   • Status Holder Exporters, as defined in the Foreign Trade Policy, and units within Special Economic Zones (SEZ) are allowed to dispatch documents directly. However, the export proceeds must be repatriated through the authorized dealer (AD) banks named in the Export Declaration Form (EDF). Additionally, exporters must submit a duplicate copy of the EDF to the AD bank for monitoring within 21 days of shipment.
4. Regularization by AD Banks:
   • AD Category-I banks can regularize cases of direct dispatch irrespective of the shipment’s value if certain conditions are met:
     • Full realization of export proceeds, barring amounts written off as per existing provisions.
     • The exporter has been a customer of the AD bank for at least six months.
     • Compliance with the Reserve Bank’s Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines.
     • Satisfaction of the AD bank with the bonafides of the transaction. If there are doubts, the bank may consider filing a Suspicious Transaction Report (STR) with the Financial Intelligence Unit-India (FIU-IND).

These measures aim to facilitate trade while ensuring the security and proper documentation of export transactions, thereby balancing efficiency with regulatory compliance ​​.