RBI Guidelines on Merchant Trade Transaction

For the prosperous economy of a country, all types of transactions play a vital role. These days high seas sales and Merchant Trading Transactions have become quite common wherein goods move neither out of India nor it enters into India. Rather, shipment moves from one country outside India to another country outside India and any person from India acts as an intermediary in such a transaction.

Due to the increasing online platforms, these transactions are becoming very common. Even though these transactions neither involve the movement of goods in India nor outside India but these transactions involve the inflow and outflow of foreign exchange in India. Therefore, these transactions are closely regulated by the Reserve Bank of India (“RBI”). 

For the purpose of monitoring Merchant Trading Transactions, RBI has issued guidelines for Merchant Trade Transactions (“MTT”). These guidelines have been amended various times over the period of time based on changes in the market and transactions. The latest guidelines were issued vide circular No. RBI/2019-20/152 A.P. (DIR Series) Circular No.20 dated 23rd January, 2020.

In this article a detailed discussion has been carried out on Guidelines issued by RBI on Merchant Trading Transactions: