Banks must ensure validity of the applicant bank and issuing bank in obtaining the loan through a third bank at the time of export
Banks will now have to cross check details meticulously during export, to protect exporters and prevent money laundering.
A central bank circular issued on Tuesday stated that authorized dealer (AD) banks must ensure validity of the applicant bank and issuing bank in obtaining the loan through a third bank at the time of export.
At the same time export documents should be sent directly to the applicant bank and issuing bank or through the bank having relationship with that bank.
In case of receipt of a transferred loan, it has been asked to confirm about the first beneficiary and the transferring bank including the bank or issuing bank applying for the loan.
Besides, the banks have also been asked to abide by the foreign exchange transaction rules in issuing export documents and collecting prices.
BB has also asked ADs to conduct due diligence on importers’ banks that have been selected for the transactions under sales contracts and ensure the release of export documents by designated banks to importers and procedural arrangement of payment, as per the Guidelines for Foreign Exchange Transactions-2018.
The BB instruction also said the ADs have to take necessary measures to ensure fairness of contract between the importer's banks in conducting exports.
Such instructions have been given sporadically from time to time and the new circular was issued to remind the banks of all the previous instructions so that they follow them properly, the circular added.