Question

Under the "Running Account" facility for Rupee Pre-Shipment Credit, established exporters are allowed to draw funds without producing a firm export order or Letter of Credit (L

Q: Answer-Under the 'Running Account' facility for Rupee Pre-Shipment Credit, established exporters are allowe...

For a Running Account facility, the rigid linkage between a specific order and a specific disbursement is relaxed. To maintain control, banks must mark off individual export bills against the earliest outstanding pre-shipment credit on a First-In, First-Out FIFO basis. Additionally, firm ordersLCs must typically be produced within 30 days, and the RBI strictly states that the running account facility should not be granted to sub-suppliers.

C upfront. Which of the following conditions is mandatory for monitoring a Running Account facility?

A The exporter need not to submit the firm export order or LC at all.

B Sub-suppliers are also fully eligible to avail of the Running Account facility to ensure smooth supply-chain tracking.

C The bank must mark off individual export bills against the earliest outstanding pre-shipment credit on a First-In, First-Out (FIFO) basis.

D The overall operating cycle allowed for a Running Account can stretch up to 540 days without any penalty.

E The exporter can utilize 100% of the funds for domestic market distribution if the international order gets delayed.

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Under the "Running Account" facility for Rupee Pre-Shipment Credit, established exporters are allowed to draw funds without producing a firm export order or Letter of Credit (L

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