What Are the RBI Rules on Advance Payment Against Exports?

An advance payment against exports is money an Indian exporter receives from a buyer outside India before the goods are shipped or the services are delivered. FEMA treats it as an export receipt that must later be matched to an actual export, or closed with the AD bank if the export does not happen.

• Same AD bank: The advance and any later realisation of export proceeds must be routed through the same Authorised Dealer bank (Regulation 10(1)).
• Changing banks: You may route the transactions through another AD bank if you have informed both AD banks of the change (Regulation 10(1)).
• Interest cap: Any interest payable on the advance must not exceed the all-in-cost ceiling for trade credit under the Borrowing and Lending Regulations, 2018 (Regulation 10(4)).
• EDPMS tracking: Your AD bank records inward remittances for all exports, including advances, in EDPMS (Regulation 18(1)(e)).
• Bank policy: Every AD bank must have a written internal policy and SOP that covers advance receipts for exports, and must publish the policy and main features of the SOP on its website (Regulation 19(1)(d) and 19(4)).
• Not a loan: Schedule I of the Borrowing and Lending Regulations, 2018 says an export advance received under those regulations and the 2015 export regulations is not treated as external commercial borrowing (Schedule I, paragraph 4(3)(b)). Ask your AD bank how it applies this to advances under the 2026 regulations.

The 2026 regulations replaced the older Regulation 15 regime, which fixed a shipment deadline and an interest benchmark. The page below explains both, because advances received before 1 October 2026 were taken under the older rules.

The RBI rules on advance payment against exports apply to every exporter of goods, software and services from India who receives money from abroad before the export. RBI's 2026 regulations treat software as a service, so freelancers, IT firms and goods exporters follow the same Regulation 10.

An exporter receives the advance into an account with an AD bank, ships the goods or delivers the services, and then matches the advance to the export in EDPMS. The AD bank checks genuineness before crediting the money and closes the entry once the export is matched.

1. Agree the advance in the contract or proforma invoice with the foreign buyer, including any interest and what happens if the export is cancelled.
2. Receive the advance into your account with an AD bank. The bank credits it only after it is satisfied the transaction is genuine (Regulation 4(2)).
3. The AD bank enters the inward remittance in EDPMS (Regulation 18(1)(e)). See what is EDPMS and how to close outstanding shipping bills.
4. Ship the goods (the EDF is part of the shipping bill at EDI ports) or deliver the services (Regulation 3(1)).
5. For services, file the EDF within 30 days from the end of the month in which the invoice is raised; exporters of services other than software may file it on or before the date the payment is received (Regulation 3(2)). See EDF form for exports.
6. Route all later payments for the same export through the same AD bank, or inform both banks if you switch (Regulation 10(1)).
7. The AD bank marks off the EDPMS entry once the export value has been realised (Regulation 18(1)(g)).

An AD bank needs evidence that the advance is genuine and linked to a real export. RBI does not publish a single checklist; each bank lists its documents, timelines and charges in its own internal policy (Regulation 19(1)(a)). The table shows what the regulations tie to each stage.

Breaking a FEMA regulation, such as routing an advance through a different AD bank without telling both banks, is a contravention. Under FEMA section 13(1), the penalty can be up to three times the sum involved where it can be quantified (Master Circular on Compounding, para 1.1).

• Penalty: Up to three times the sum involved, or up to ₹2 lakh where the amount cannot be quantified, plus up to ₹5,000 a day for a continuing contravention (Master Circular on Compounding, para 1.1).
• Open entries: An advance that is never matched to an export stays open in EDPMS, and the AD bank must follow up (Regulation 18(1)(f)).
• Advance-only exports: If export proceeds stay unrealised for more than one year after the due date or extended date, further exports are allowed only against full advance or an irrevocable letter of credit (Regulation 13).
• Bank charges: An AD bank may not levy charges or penalties on you for a regulatory delay or violation by you (Regulation 19(3)).

If an advance is open and the export will not happen, write to your AD bank with reasons and either refund the buyer or ask for closure under Regulation 18(1)(i). If you disagree with the bank's decision, use its grievance and appeal process, which Regulation 19(2) requires every AD bank to have. For a past contravention, compounding under FEMA is a voluntary process.

Regulation 10 of the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026 governs advance payment against exports from 1 October 2026. It replaced Regulation 15 of the 2015 regulations and paragraph C.2 of the Master Direction, which set the earlier shipment deadline and interest cap.

• Split banks: Taking the advance in one AD bank and the balance in another without informing both banks, which breaks Regulation 10(1).
• Old deadline: Assuming the one-year or three-year shipment window still applies to new advances. The 2026 regulations do not set one, so check your AD bank's policy.
• Unmatched advances: Leaving an advance open in EDPMS after the order is cancelled, when the bank could close it on request under Regulation 18(1)(i).
• Interest terms: Agreeing to pay the buyer interest above the trade credit ceiling referred to in Regulation 10(4).
• Missing paperwork: Taking a deposit with no contract or proforma invoice, which makes it harder for the bank to confirm the receipt is a genuine export advance under Regulation 4(2).
• Late EDF: Forgetting the services EDF because the money arrived before the invoice. The EDF is due within 30 days from the end of the invoice month under Regulation 3(2).

Every rule, deadline and form on this page is linked to its official source, checked on the dates below.

1. Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB dated 13 January 2026, amended up to 22 September 2026, Regulations 1(2), 2(1) Explanation, 3(1), 3(2), 4(2), 10(1), 10(4), 13, 18(1)(e), (f), (g), (i), 19(1)(a), 19(1)(d), 19(2), 19(3), 19(4), 20 (checked 8 Oct 2026)
2. RBI A.P. (DIR Series) Circular No. 20, RBI/2025-26/194: Export and Import of Goods and Services, 16 January 2026, Para 4 (supersession of Master Directions and circulars), para 7 (effective 1 October 2026) (checked 8 Oct 2026)
3. RBI Master Direction: Export of Goods and Services (FED Master Direction No. 16/2015-16, updated as on July 17, 2026), superseded from 1 October 2026, Para C.2(1) and (2) and footnote 28: receipt of advance against exports, three-year (earlier one-year) shipment window, interest at reference rate plus 100 bps, long-term export advance up to 10 years at reference rate plus 200 bps (checked 8 Oct 2026)
4. Foreign Exchange Management (Export of Goods and Services) (Second Amendment) Regulations, 2025, FEMA 23(R)/(7)/2025-RB, 13 November 2025, Para 3: Regulation 15 of the 2015 regulations, one year replaced by three years (checked 8 Oct 2026)
5. Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, Notification FEMA 3(R)/2018-RB, amended up to 16 February 2026, Regulation 2(1)(e) (benchmark rate); Schedule I para 4(3)(b) (export advance not ECB); Schedule II para 6 (trade credit cost) (checked 8 Oct 2026)
6. RBI Master Circular on Compounding of Contraventions under FEMA, 1999 (updated on 16 October 2014), Para 1.1, restating FEMA section 13(1) penalties (checked 8 Oct 2026)