Exporting is one of the most profitable ways to expand a business globally, but timely export proceeds realization is crucial to maintaining financial stability and fulfilling regulatory requirements. When an exporter ships goods outside India, the Reserve Bank of India (RBI) mandates that payment must be received within a specific period and properly reported.
However, due to market risks, international trade disputes, buyer defaults, or documentation issues, exporters sometimes face non-realisation of export proceeds. In such cases, understanding the correct process, RBI guidelines, and reporting mechanisms becomes essential to avoid penalties, compliance issues, and litigation.
This article explains the complete procedure on how to handle non-realisation, available options, RBI reporting norms, extension requests, write-off rules, and the role of professional assistance such as a DGFT Consultant.
Understanding Export Proceeds Realization
When goods or services are exported from India, the exporter must receive payment within the timeline prescribed by the RBI. This process is called Export Proceeds Realisation.
Current RBI Time Limit
The exporter must realize and repatriate export proceeds to India within 9 months from the date of export (for most cases).
However, RBI may modify this timeline depending on global economic conditions, and exporters must remain updated.
Why is timely realisation necessary?
- Ensures healthy foreign exchange inflow
- Maintains the exporter’s financial stability
- Supports compliance with FEMA guidelines
- Prevents penalties and compliance flags in EDPMS
- Builds trust with banks and regulatory bodies
Common Reasons for Non-Realisation of Export Proceeds
Exporters may face delays or failure to receive payments due to:
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Buyer Default / Insolvency
Some buyers fail to pay after receiving the goods due to financial issues or intentional fraud.
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Quality or Shipment Disputes
Buyers may refuse payment due to quality specifications, packaging damage, shipping delays, or wrong documentation.
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Political or Economic Instability in Buyer’s Country
Sudden currency restrictions, war, trade bans, import restrictions, or banking system failures can halt payments.
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Technical Documentation Issues
Mismatch in invoice, Bill of Lading, packaging list, or LC terms may delay bank clearance.
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Delay in Shipping Lines / Customs
Sometimes goods do not reach the buyer on time, causing payment delays.
What Happens if RBI Reporting Is Not Done with Export Proceeds Realization?
Failing to report non-realisation may lead to:
- Exporter being tagged as a “risky exporter”
- Delay in customs clearance
- Suspension of export incentives
- Delay in bank financing
- FEMA inquiry and penalties
- Blocking of EDPMS shipping bills
How a DGFT Consultant Can Help (Anchor Text Included)
Handling non-realisation, write-offs, and RBI reporting can be challenging for exporters. This is where a DGFT Consultant becomes highly valuable.
Professional consultants assist in:
- Extension of realization period
- EDPMS regularization
- Drafting applications for write-off
- RBI reporting and documentation
- Reconciliation of shipping bills
- Assistance in BRC/e-BRC issues
- Communication with AD banks
- Handling queries from DGFT & RBI
Preventive Measures to Avoid Non-Realisation in Future
- Using advance payment or secured payment terms
- Opting for confirmed Letters of Credit (LC)
- Taking ECGC credit insurance
- Verifying buyer credibility
- Using secure shipping and documentation
- Keeping professional oversight from consultants
- Monitoring high-risk markets regularly
Steps to Handle Non-Realisation of Export Proceeds
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Communicate With the Buyer Immediately
First, the exporter should contact the foreign buyer through email, phone, or official communication channels to understand the reason behind the delay.
Maintain all written communication as evidence—this will be required in case of extension or write-off applications.
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Inform the Authorised Dealer (AD) Bank
The AD Bank (your export handling bank) must be informed if:
- Payment is expected to delay
- Buyer has requested time extension
- Dispute has arisen
- Goods were returned
Documents to submit may include:
- Copy of Invoice
- Shipping bills
- Bill of Entry (if goods returned
- Communication with buyer
- Agreement copies
Check Eligibility for Extension of Export Proceeds Realization Period
RBI allows AD banks to grant extensions for realization in many cases:
- Extension allowed by AD Bank
Banks can extend the realization period up to 6 months beyond the original 9-month period, subject to conditions such as:
- Genuine delay
- Documentary evidence
- Satisfactory past compliance
- No FEMA violations
When do you need RBI approval?
Large write-offs, high-value exports, or repeated delays may require approval directly from the Reserve Bank of India.
Handling Export Proceeds Realization Issues: Write-Off Options
If the payment cannot be realized even after follow-up, disputes, or legal notices, exporters may opt for a write-off under FEMA.
RBI allows the following types of write-offs:
Self Write-Off by Exporter
- Exporters can write off up to 5% of their last financial year’s export proceeds if:
- Buyer is bankrupt
- Payment is unrecoverable
- Goods are destroyed, lost, or returned
Documents needed:
- Buyer insolvency proof
- Communication trail
- Chartered Accountant certificate
- Bank statement
- Export invoices
Write-Off by AD Bank
- The AD bank can write off unrecoverable export bills up to 10% of the exporter’s average export proceeds.
- This is useful when the exporter has strong relationships and clean compliance history.
Write-Off by RBI
When the write-off amount exceeds the limit of AD Bank or exporter’s self write-off:
- High-value shipments
- Politically sensitive markets
- Cases involving fraud
- Proceeds pending for long duration
Conclusion
Timely export proceeds realization is essential for every exporter to maintain financial health and fulfill RBI/FEMA compliance. Non-realisation can occur for several reasons—but understanding the correct process for extensions, write-offs, and reporting makes the situation manageable.
With proper communication, documentation, and guidance—especially from experts like a DGFT Consultant—exporters can resolve pending realizations smoothly and ensure a compliant export operation.
