Facts for Prelims (FFP)
Source: TH
Context: The Reserve Bank of India (RBI) is set to issue a standard operating procedure (SOP) to banks in order to expedite the issuance of proofs of inward remittances for exporters.
Aim: This move aims to address the challenges faced by exporters in the rupee-based trading mechanism for foreign trade.
Issues with FIRC (Foreign Inward Remittance Certificate)?
The issue with Foreign Inward Remittance Certificates (FIRC) arises when the certificate from one bank is not being sent to another, which hampers the generation of electronic bank realisation certificates (e-BRCs). This creates a problem for exporters as e-BRCs serve as proof of payment for their exports and make them eligible for benefits under the Foreign Trade Policy.
For example, if an exporter in India receives a payment for their exports from a foreign buyer through a bank, they require a FIRC from that bank as evidence of the inward remittance. However, if the FIRC is not transmitted to the exporter’s bank, the exporter cannot obtain the necessary e-BRC, which may prevent them from accessing benefits or incentives provided by the government for export transactions.
What is FIRC (Foreign Inward Remittance Certificate)?
FIRC is a document that acts as a testimonial for all the inward remittances entering India.
What is an Electronic Bank Realization Certificate(e-BRC)?
An Electronic Bank Realization Certificate(e-BRC) is a vital digital certificate for export businesses. A bank issues the e-BRC to confirm that the buyer made payment to the exporter against the export of services or goods. The BRC is the proof of realization of payment against exports.
