Settlement System under ACU Mechanism for Export invoice receipts in India
RBI directions to Exporter's bank on procedures of Asian Clearing Union (ACU) in Banking for Export Import trade
Instead of US dollars, can the settlement of export proceeds in ACU Dollars possible? Can an exporter in India receive their payment of export sales in ACU Euro or ACU Yen?
How does ACU (Asian Clearing Union) work in Banking for Exporters and Importers?
Any relaxation on export import payment banking process for the transactions between India and Myanmar?
With effect from March 06,2020, participants in the Asian Clearing Union will have the option to settle their transactions either in ACU Dollar or in ACU Euro or in ACU Japanese Yen. The corresponding bank at foreign country of exporter also can maintain by opening an ACU account, as Authorized Dealer Bank of exporters are allowed by RBI as per FEMA regulations. However, the operation of ACU Euro has been suspended with effect from 01st July, 2016.
According to FEMA Regulations, RBI guides on Asia Clearing Union (ACU) banking operations as below:
(iv) Settlement System under ACU Mechanism
a) In order to facilitate transactions / settlements, effective March 06, 2020, participants in the Asian Clearing Union will have the option to settle their transactions either in ACU Dollar or in ACU Euro or in ACU Japanese Yen. Accordingly, the Asian Monetary Unit (AMU) shall be denominated as ‘ACU Dollar’, ‘ACU Euro’ and ‘ACU Yen’ which shall be equivalent in value to one US Dollar, one Euro and one Japanese Yen, respectively.
b) Further, AD Category – I banks are allowed to open and maintain ACU Dollar, ACU Euro and ACU Japanese Yen accounts with their correspondent banks in other participating countries. All eligible payments are required to be settled by the concerned banks through these accounts.
c) Relaxation from ACU Mechanism- Indo-Myanmar Trade - Trade transactions with Myanmar can be settled in any freely convertible currency in addition to the ACU mechanism.
d) In view of the difficulties being experienced by importers/exporters in payments to / receipts from Iran, it has been decided that with effect from December 27, 2010, all eligible current account transactions including trade transactions with Iran should be settled in any permitted currency outside the ACU mechanism, until further notice.
e) In view of the understanding reached among the members of the ACU during the 44th Meeting of the ACU Board in June, 2015, use of the Nostro accounts of the commercial banks of the ACU member countries, i.e., the ACU Dollar, ACU Euro and ACU Japanese Yen accounts, for settling the payments of both exports and imports of goods and services among the ACU countries is permitted.
f) Notwithstanding the above, it may be noted that operations in ‘ACU Euro’ have been temporarily suspended with effect from July 01, 2016.
The above details explains about export payment in ACU dollars, ACU Yen etc. under exported goods. Also explained about the ACU payment mechanism for importers and exporters in India. The relaxation for Indo Myanmar trade agreement under payment of Export invoice to exporters also mentioned.
Hope, you the above details helps exporters and importers all over world helps to understand about ACU (Asia Clearing Union) and its involvement in Indian Trade as per FEMA rules and regulations.
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