Hello All !!
Can anybody telll me -
What does the term " Rupees State Credit Route" mean in the context of Rule 3 read with Schedule I of the Foreign Exchange Management (Current Accountant Transactions) Rules, 2000 ????
2 Replies
CA. Anuj Gupta
(Practices in NRI Int.Tax FEMA TP FDI/FIPB & FCRA)
(7024 Points)
Replied 18 April 2011
Gauri,
For understanding the "Rupee State Credit Route" you have to go back to end of 90's and early 2000 where the Indian government was obliged to export goods and services worth 4,000 crore every year to Russia to discharge India's outstanding loan. But since the exports from India were in excess of the demand in Russia, the Russian government auctioned Indian rupees at an average 15 per cent discount through the Vneshconombank, or the Bank of Foreign Economic Affairs of the Russian Federation (BFEA) to Russian importers.
The Russian government helped the importer in that country, who had bid collectively with others, to establish letters of credit at this discounted rate. The Indian exporter was not paid in cash, but only through letters of credit, to be honoured by the negotiating (Indian) banks.
For the Indian exporter to encash them here through the RBI as advising bank, the `export' had to be shown.
So in nutshell the Indian Govt. or RBI paid the exporters who exported the goods to Russia in Rupees and hence the name Rupee State Credit Route.
Recent Topics
- Issue with refund for person who has filed for rel
- How to take ITC for October 2024 GST Payment in PM
- How to refund a wrong transaction Phone Pe?
- Avoiding tax audit in case of intraday equity loss
- Form 3CEAB
- Form 3CEAA and Form 3CEAB
- DIR 3 Web KYC
- Can i declare LTCG income as business income if I
- Stock entry in new software
- I have an EMI collection shop, what is its SAC cod
Related Threads
CAclubindia
