Executive Summary:
This circular outlines guidelines for Authorised Dealer (AD) banks regarding gold imports by Qualified Jewellers (QJs) through the India International Bullion Exchange (IIBX) or any other exchange approved by the International Financial Services Centers Authority (IFSCA). It permits advance payments for gold imports under specific conditions and mandates due diligence and reporting requirements for AD banks. These instructions take immediate effect.
Key Points / Main Content:
* **Eligibility and Scope:**
* Qualified Jewellers (QJs), as notified by IFSCA, can import gold through IIBX or any exchange approved by IFSCA and DGFT.
* The guidelines are issued under the Foreign Exchange Management Act (FEMA) to facilitate physical gold imports.
* **Advance Remittance:**
* AD banks can allow QJs to remit advance payments for up to eleven days for gold imports through IIBX.
* Advance remittances must comply with the Foreign Trade Policy and IFSC Act regulations, based on a sale contract or irrevocable purchase order.
* AD banks must perform due diligence to ensure bona fide import transactions.
* Advance remittances cannot be leveraged to import gold exceeding the value of the remittance.
* Unutilised advance remittances must be returned to the AD bank within eleven days.
* **Import Documentation and Payment:**
* QJs must submit the Bill of Entry (BoE) or equivalent document to the AD bank as proof of import.
* Payments for gold imports through IIBX must be made through an exchange mechanism approved by IFSCA.
* Deviations from guidelines require advance approval from IFSCA and other relevant authorities.
* **IFSCA's Role:**
* IFSCA will conduct due diligence on IIBX and related entities involved in gold imports by QJs.
* IFSCA will ensure advance remittances are solely for gold imports through IIBX.
* **AD Bank Responsibilities:**
* Ensure complete documentation, customs procedures, and filing of the Bill of Entry.
* Create and match Outward Remittance Messages (ORMs) with Bills of Entry in IDPMS.
* Ensure QJs comply with FEMA, FTDR Act, Foreign Trade Policy, and IFSCA regulations.
* AD banks can create internal guidelines approved by their Board of Directors.
* **Reporting Requirements:**
* AD banks must create ORMs in IDPMS for all outward remittances.
* Transactions must be reported in FETERS.
* Gold imports through QJs must be reported in XBRL as per the Master Direction on Import of Goods and Services.
Impact Analysis
* **Authorised Dealer (AD) Banks**
* *Impact:* AD banks are responsible for implementing the guidelines, conducting due diligence, facilitating remittances, ensuring compliance, and fulfilling reporting requirements.
* *Action Required:* Update internal policies and procedures, train staff on new requirements, and ensure compliance with reporting standards.
* **Qualified Jewellers (QJs)**
* *Impact:* QJs are now permitted to import gold through IIBX and other IFSCA-approved exchanges with specific guidelines for advance payments and documentation.
* *Action Required:* Comply with regulations for advance remittances, provide necessary documentation to AD banks, and ensure payments are made through approved exchange mechanisms.
* **International Financial Services Centers Authority (IFSCA)**
* *Impact:* IFSCA is responsible for conducting due diligence on IIBX and related entities, as well as ensuring the advance remittance is used solely for importing gold.
* *Action Required:* Establish a system for overseeing and monitoring gold import activities through IIBX and for ensuring compliance with its regulations.
Key Entities Referenced
International Financial Services Centers Authority: A regulatory authority in India responsible for the development and regulation of financial services in International Financial Services Centres (IFSCs).
Directorate General of Foreign Trade: An agency of the Government of India responsible for implementing the Foreign Trade Policy with the main objective of promoting Indian exports.
Foreign Trade Development and Regulation Act, 1992: An act of the Parliament of India to provide for the development and regulation of foreign trade by facilitating imports and increasing exports.
Foreign Trade Policy, 2015-2020: A set of guidelines and instructions established by the Directorate General of Foreign Trade in regards to import and export in India, valid from 2015 to 2020.
ITC HS, 2017: Indian Trade Clarification based on Harmonized System of Coding. It is used for coding commodities for import and export.
India International Bullion Exchange IFSC Ltd: A bullion exchange established in the International Financial Services Centre (IFSC) in India, designed to facilitate transparent trading in gold and other precious metals.
Foreign Exchange Management Act, 1999: An Act of the Parliament of India enacted to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
Qualified Jewellers: Resident jewellers who are authorized to import gold through India International Bullion Exchange IFSC Ltd.
RBI/2022-2023/57
A.P. (DIR Series) Circular No.04 May 25, 2022
To
All Category-I Authorised Dealer Banks
Madam/Sir,
Guidelines on import of gold by Qualified Jewellers as notified by – The
International Financial Services Centers Authority (IFSCA)
Directorate General of Foreign Trade (DGFT) formulate and implement the Foreign Trade
Policy and Procedures in terms of Foreign Trade (Development and Regulation) Act,
1992, (FTDR Act 1992, hereinafter) as amended from time to time. In exercise of powers
conferred by Section 3 read with Section 5 of FTDR Act 1992, read with paragraph 1.02
and 2.01 of the Foreign Trade Policy, 2015-2020, as amended from time to time, the
Central Government has amended the import policy conditions for gold in any form, other
than monetary gold and silver in any form under Chapter 71 of ITC (HS), 2017, Schedule-
I (Import Policy) vide Notification No. 49/2015-2020 dated January 5, 2022.
2. Attention of Authorised Dealer Category - I (AD) bank is invited to (a) Notification No.
49/2015-2020 dated January 5, 2022, in terms of which, in addition to nominated
agencies as notified by RBI (in case of banks) and nominated agencies as notified by
DGFT, Qualified Jewellers (QJ) as notified by International Financial Services Centers
Authority (IFSCA) will be permitted to import gold under specific ITC(HS) Codes through
India International Bullion Exchange IFSC Ltd. (IIBX); (b) Master Direction – Import of
Goods and Services and the AP Dir Series Circulars issued for import of Gold by Reserve
Bank of India under FEMA, 1999; (c) regulations issued by the International Financial
Services Centers Authority (IFSCA) under International Financial Services Centers
Authority Act, 2019.3. In order to enable resident Qualified Jewellers to import gold through IIBX or any other
exchange approved by IFSCA and the DGFT, Government of India the following
directions under FEMA are being issued.
i. AD banks may allow Qualified Jewellers to remit advance payments for eleven
days for import of Gold through IIBX in compliance to the extant Foreign Trade
Policy and regulations issued under IFSC Act. AD banks shall ensure that
advance remittance for such import through exchange/s authorised by IFSCA shall
be as per the terms of the sale contract or other document in the nature of an
irrevocable purchase order in terms of IFSC Act and regulations made thereunder
by IFSCA. AD bank shall carry out all the due diligence and ensure the remittances
sent are only for the bona fide import transactions through exchange/s authorised
by IFSCA.
ii. The advance remittance for import of Gold should not be leveraged in what-so-
ever form for importing Gold worth more than the advance remittance made.
iii. In case the import of Gold through IFSCA authorised exchange, for which advance
remittance has been made, does not materialize, or the advance remittance made
for the purpose is more than the amount required, the unutilised advance
remittance shall be remitted back to the same AD bank within the specified time
limit of eleven days.
iv. For gold imported through IIBX, QJ shall submit the Bill of Entry (or any other such
applicable document issued/approved by Customs Department for evidence of
import), issued by Customs Authorities to the AD bank from where advance
payment has been remitted.
v. All payments by qualified jewellers for imports of gold through IIBX, shall be made
through exchange mechanism as approved by IFSCA in terms of IFSC Act and
regulations. Any deviation from the extant guidelines for import of Gold through
IIBX need to be approved in advance by IFSCA and other applicable and
appropriate authority/ies.
4. IFSC Authority (IFSCA) will conduct all required due diligence on the exchange - IIBX
including all other entities involved in enabling import of Gold by QJs in terms of the IFSCA
regulations. IFSCA shall also put in place necessary system to ensure that the advance
remittance received from QJs are solely for the purpose for the import of gold through
IIBX.5. AD bank shall ensure that:
a. all required documentation, custom duty related procedures and filing Bill of Entry
as evidence of import, etc. is complete for the import of Gold by QJ within the
specified applicable period.
b. single/multiple ORMs created and matched with corresponding BoEs (Bill of Entry)
and closed appropriately in IDPMS.
c. the importer - that is QJs comply with the related extant instructions relating to
imports under FEMA, 1999, FTDR Act 1992, Foreign Trade Policy and regulations
of IFSCA.
AD banks may frame their own internal guidelines to deal with such cases, with the
approval of their Board of Directors.
6. Reporting requirement by AD banks:
i. AD bank shall create Outward Remittance Message (ORM) for all such outward
remittances in IDPMS in terms of extant guidelines.
ii. All these transactions need to be reported in FETERS in terms of extant guidelines.
iii. AD bank shall report the import of gold through QJ in XBRL as prescribed in para
C.11.1 of Master Direction – Import of Goods and Services.
7. The abovementioned arrangement is for the sole purpose of facilitating physical import
of gold through IIBX or any similar exchange authorised by IFSCA, by Qualified Jewellers
in India.
8. The above instructions shall come into force with immediate effect. AD banks may bring
the contents of this Circular to the notice of their constituents and customers concerned.
9. The directions contained in this Circular have been issued under Section 10(4) and
Section 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and
are without prejudice to permissions/approvals, if any, required under any other law.
Yours faithfully,
(Vivek Srivastava)
Chief General Manager