RBI Updates Guidelines for Merchanting Trade Transactions and Export/Import Data Reconciliation

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Dated: 03.10.2025

RBI Updates Guidelines for Merchanting Trade Transactions and Export/Import Data Reconciliation

The Reserve Bank of India (RBI) has issued two significant circulars on October 1, 2025, aimed at streamlining foreign exchange transactions and reducing compliance burdens for businesses engaged in merchanting trade and export/import activities. These updates reflect RBI’s commitment to facilitating ease of doing business while ensuring regulatory compliance under the Foreign Exchange Management Act (FEMA), 1999. Below, we delve into the key highlights of these circulars and their implications for businesses.

1. Merchanting Trade Transactions (MTT) – Extended Time Period for Foreign Exchange Outlay

In Circular No. 11 (RBI/2025-26/88), the RBI has revised the guidelines for Merchanting Trade Transactions (MTT). Merchanting trade involves transactions where goods are shipped from one foreign country to another without entering India, and the Indian entity acts as an intermediary.

Key Updates:

Extended Time Period: The time period for the outlay of foreign exchange has been increased from four months to six months. This change aims to provide merchanting traders with greater flexibility in managing their transactions efficiently.
Completion Timeline: The overall period for completing MTT remains unchanged at nine months. The commencement date is defined as the date of shipment/export leg receipt or import leg payment, whichever occurs first, while the completion date is the date of shipment/export leg receipt or import leg payment, whichever is the last.
Immediate Implementation: The revised guidelines are effective immediately, and Authorised Dealer Category-I Banks (AD banks) are required to inform their constituents and customers about these changes.

Implications:

This extension is expected to benefit merchanting traders by providing them with additional time to manage foreign exchange outlays, thereby reducing operational pressures and enhancing trade efficiency.

2. Export and Import Data Reconciliation – Simplified Guidelines for Small Transactions

In Circular No. 12 (RBI/2025-26/89), the RBI has introduced relaxed procedures for reconciling export and import entries in the Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS). These changes are particularly aimed at reducing the compliance burden for small exporters and importers.

Key Updates:

Simplified Reconciliation for Small Transactions: For entries of value equivalent to ₹10 lakh or less, AD banks can reconcile and close entries based on:
- A declaration from the exporter confirming the amount has been realised.
- A declaration from the importer confirming the amount has been paid.
Acceptance of Reduced Values: Any reduction in declared or invoice value of shipping bills/bills of entry can be accepted based on the exporter/importer’s declaration.
Quarterly Consolidated Declarations: Exporters and importers can submit consolidated declarations on a quarterly basis for bulk reconciliation and closure of entries.
No Penal Charges: AD banks are prohibited from levying penal charges for delays in adhering to regulatory guidelines related to these small-value transactions.
Review of Charges: AD banks are required to review the charges levied for handling small-value export/import transactions to ensure they are commensurate with the services provided.

Implications:

These changes are expected to significantly ease the compliance burden for small exporters and importers, enabling faster reconciliation of entries and reducing operational costs. The prohibition of penal charges further ensures a business-friendly environment.

3. Regulatory Framework and Compliance

Both circulars have been issued under sections 10(4) and 11(1) of FEMA, 1999, and are without prejudice to permissions or approvals required under other laws. AD banks are instructed to update their constituents and customers about these changes and ensure compliance with the revised guidelines.

Conclusion

The RBI’s updates to Merchanting Trade Transactions and Export/Import Data Reconciliation guidelines reflect its proactive approach to addressing the needs of businesses while maintaining regulatory oversight. By extending the time period for foreign exchange outlay in MTT and simplifying reconciliation procedures for small transactions, the RBI has taken significant steps to enhance operational efficiency and reduce compliance burdens.

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Source: RBI

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