Further easing of forex norms round the bend

More relaxations in foreign exchange regulations are on the anvil. Following the easing of various caps in foreign exchange transactions, importers and exporters can expect significant procedural liberalisation too. They will no longer be required to submit endless declaration forms for transactions.

At present, importers are required to file mandatory declarations under Form A1 for import payments and under Form A2 for non-import payments.

Exporters have to furnish mandatory declarations in the GR form to the Customs department. While one copy of this is sent to the Reserve Bank of India, the other goes to the bank concerned.

However, the RBI is understood to be considering cutting the paperwork. Sources said exporters and importers might not have to file declarations at all.

If the new rules come by, only the dealing banks will have to furnish declarations to the RBI, but in a much simpler form.

The central bank is also framing the rules for monitoring violations under the Foreign Exchange Management Act following the amendment of the Foreign Exchange Compounding Rules to empower it with compound offences under FEMA.

However, along with hawala transactions, offences related to money laundering will be kept under the supervision of the Enforcement Directorate.

According to the proposed rules, the offences to be tracked under FEMA will be categorised under two heads "" technical offences and serious offences.

Sources said while offences arising from lack of conceptual and procedural clarity would be classified as technical offences and penalised with warnings, the serious offences required proper guidelines for investigation.

Less red tape

• Exporters and importers may not have to file declarations at all
• If the new rules come by, only the dealing banks will have to furnish declarations to the RBI, but in a much simpler form