Why does the RBI need a BRC and FIRC from Indian exporters

As a business owner with international clients, you know how important conducting secure and efficient money transfers across borders is. Let’s explore two essential certificates that can benefit your business: Bank Realization Certificate (BRC) and Foreign Inward Remittance Certificate (FIRC). Discover how BRC and FIRC can help you with international transactions.

What is a BRC?

Want benefits for your business under the Foreign Trade Policy? You need a crucial document – the Bank Realisation Certificate or BRC. This certificate proves that you received payment for your exports (goods and services). With the BRC, you can enjoy benefits like import duty exemptions, customs rebates, or even financial help from the government or other agencies.

In India, different organizations monitor exports, such as DGFT, FEMA, Customs and Excise, and RBI. They make sure every international payment is tracked. So as a business owner, you must give the RBI a certificate through your authorized bank. This shows that you followed all the rules and received payment for your exports.

What is a FIRC?

A Foreign Inward Remittance Certificate (FIRC) is issued when a bank receives money from foreign countries. The bank gives a FIRC for payments on export processes, freight charges, consultancy fees, wages, or other valid reasons. The issuing bank uses a FIRC to verify that businesses received funds from a legitimate source.

Why does the RBI need a BRC and FIRC?

1. The RBI ensures compliance with regulations related to international money transfers. BRCs and FIRCs allow the RBI to track the nature and volume of imports and exports in the country.

2. The RBI requires these certificates to ensure businesses align with tax and trade formalities. By being aware of the inflow of money from abroad, the RBI can facilitate proper taxation and regulatory procedures. It enables the governing body to maintain transparency and accountability in financial transactions.

3. Another reason why the RBI uses a BRC and FIRC is to help detect illicit or unlawful activities associated with imports and exports. The RBI looks at the BRC and FIRC to stop smuggling, money laundering, black markets, and other illegal activities. The RBI ensures that the money transferred is fair and reliable by checking these certificates. This keeps the economy safe from risks and creates a good trading environment for everyone.

How can you get a BRC and FIRC?

Both are certificates issued by authorized dealer banks to the customers for receiving amounts from foreign countries.

You can get a Foreign Inward Remittance Certificate (FIRC) from the bank when you receive payments from international clients for exporting goods or services. This document, along with an invoice for goods or services and a bill for shipped goods, allows you to get a Bank Realization Certificate (BRC) from the bank.

Note: You have a time limit of six months from when you get the remittance to get the FIRC and BRC to avoid penalties or complications.

If you’re using a payment platform to receive your international payments, they will provide you with an e-FIRA (Foreign Inward Remittance Advice). You may either receive your FIRA for free or have to pay a small fee for it. Once you submit your e-FIRA to the bank, you’ll get your FIRC.

Winvesta is a platform that allows you to collect your foreign funds and bring them to India. Through Winvesta, you can receive your e-FIRAs for free directly in your email once your transaction is complete.

With Winvesta’s global collections account, you can receive payments from 180 countries in 30+ currencies. Convert your international payments to INR at transparent FX rates and withdraw them in as little as 1 day, with charges starting at $3 + 0.99%!

Conclusion

The RBI requires the BRC and FIRC to ensure international money transfers follow the rules and monitor imports and exports. These certificates help businesses follow tax and trade rules. They also help catch illegal activities, protect the economy and promote fair trade. Winvesta offers an easy solution. They send e-FIRAs to your email and provide virtual accounts for international payments. With Winvesta, you can access your funds quickly and enjoy competitive rates, making cross-border transactions simple and efficient.

Open your Winvesta account today!