How Do Local Collection Accounts (ACH, SEPA, FPS) Work for Indian Exporters?

Author:: Manoj Sharma
Verified by:: Editorial team
Published:: 8 Oct 2026
Last modified:: 8 Oct 2026

Short answer

A local collection account gives an Indian exporter bank details in the buyer's country, so the buyer pays by a domestic transfer such as ACH, SEPA or Faster Payments. The money is then brought to India through an authorised channel. FEMA rules on the export declaration, realisation within nine months and EDPMS closure still apply.

Key facts
Applies to	Governed by	Deadline	Penalty	Last verified
Indian exporters of goods and services, including freelancers, who receive payments through overseas bank details in USD, EUR, GBP or other currencies	FEMA (Export and Import of Goods and Services) Regulations, 2026; RBI Master Direction on Regulation of Payment Aggregators, 15 September 2025 (paragraphs 11 and 16, Table 1); Regulation 5(CA) of the FEMA Foreign Currency Accounts Regulations, 2015 for accounts the exporter holds abroad	EDF for services within 30 days from the end of the invoice month; full export value realised within nine months of the invoice (twelve if invoiced or settled in rupees); money in the exporter's own account abroad used for imports or repatriated by the end of the next month	FEMA section 13: up to three times the sum involved, or up to Rs 2 lakh where not quantifiable, plus up to Rs 5,000 a day if continuing. Exports unrealised for over one year past the due date can continue only against full advance or an irrevocable letter of credit	8 Oct 2026

What is a local collection account for Indian exporters?

A local collection account is a set of bank details in a foreign country that an Indian exporter shares with a buyer, so the buyer can pay through that country's own payment system. RBI rules do not use the term local collection account. Legally, the arrangement is either a payment aggregator collection or a foreign currency account the exporter holds abroad.

ACH: The US Automated Clearing House network carries batched electronic debit and credit transactions between US financial institutions, and same-day ACH runs under the Nacha Operating Rules (Federal Reserve Financial Services, FedACH Services). US details usually consist of a routing number and an account number.
SEPA: The Single Euro Payments Area harmonises non-cash euro payments across 41 European countries, including some outside the EU, and offers credit transfers, instant credit transfers that reach the payee within ten seconds, and direct debits (European Central Bank, SEPA). SEPA details are an IBAN.
FPS: The UK Faster Payment System, operated by Pay.UK, runs day and night, 365 days a year, and supports real-time sterling payments of up to £1 million, though individual banks may set lower limits (Pay.UK, Faster Payment System). UK details are a sort code and account number.
Provider route: Most exporters get such details through a payment aggregator cross border (PA-CB). RBI defines a PA-CB as an entity that aggregates cross-border payments for current account transactions for its onboarded merchants through e-commerce mode (RBI Master Direction on Payment Aggregators, paragraph 4(i)(ii)).
Own account: An exporter may also open a foreign currency account with a bank outside India to receive full export value and advance remittances (FEMA 10(R)(7)/2025-RB, Regulation 5(CA)).

The buyer sees a domestic payment, but for Indian law the money is still export proceeds. Read the definitions in what is an ACH transfer, what is a SEPA transfer and what is Faster Payments (UK).

Who can use local collection accounts to receive export payments in India?

Any Indian exporter of goods or services can be paid through local collection details, as long as the money reaches India through an Authorised Bank or Authorised Person. FEMA's Manner of Receipt and Payment Regulations require that route for receipts from persons resident outside India (FEMA 14(R)/2023-RB, Regulation 3(2)).

Who can use local collection accounts to receive export payments in India?
Exporter type	Can use local collection details	Why	Best for
Freelancer or individual service exporter	Yes, through a PA-CB that onboards the person as a merchant	RBI's definition of merchant includes exporters (PA Master Direction, paragraph 4(f)); KYC of the exporter is done by the PA	Designers, developers and consultants with clients in the US, UK or Europe
Company, LLP or partnership exporting services	Yes, through a PA-CB or a foreign currency account held abroad	Regulation 5(CA) lets a resident exporter hold a foreign currency account outside India for export proceeds (FEMA 10(R)(7)/2025-RB)	Firms with steady receipts from one currency area
Goods exporter selling online	Yes, through a PA-CB, subject to the per-transaction cap	A PA-CB transaction is capped at ₹25 lakh (PA Master Direction, paragraph 11(d))	Small e-commerce sellers shipping abroad
Exporter receiving one large payment	Only if the payment is ₹25 lakh or less per PA-CB transaction	Payments above the cap need another route, such as a wire to the AD bank (PA Master Direction, paragraph 11(d))	Project or annual contracts paid in one sum
Exporter selling to Nepal or Bhutan	Usually not relevant	Trade receipts from Nepal and Bhutan are generally in rupees, with an exception for Nepal importers allowed to pay in foreign currency (FEMA 14(R)/2023-RB, Regulation 3(2)(I))	Exporters with regional buyers

How does money move from a local collection account to an Indian exporter?

Money moves in three legs: the buyer pays the local details by a domestic transfer, the funds are sent to India, and they are credited to the exporter's account. Under a PA-CB, the Indian leg runs through an Inward Collection Account (InCA) at an AD Category-I bank before settlement to the exporter.

Open the arrangement. Choose a bank or an RBI-authorised PA-CB, or open your own foreign currency account abroad. A bank does not need separate authorisation to run payment aggregator business, but a non-bank entity does (PA Master Direction, paragraph 5). See how to check if a payment platform is RBI authorised.
Complete KYC. The PA carries out customer due diligence on you and, with your consent, retrieves your KYC record from CKYCR (PA Master Direction, paragraph 13(a)).
Raise your invoice and share the local details (routing and account number, IBAN, or sort code and account number) with the buyer.
File the EDF for services with your AD bank within 30 days from the end of the month in which you raised the invoice. One EDF can cover all service exports of a month (FEMA Regulations 2026, Regulation 3(2)). See EDF form for exports.
The buyer pays by ACH, SEPA or Faster Payments in the local currency.
The funds reach India. In the PA-CB route they land in an InCA at an AD Category-I bank, held as a separate account for rupees and for each non-INR currency (PA Master Direction, Table 1).
Settlement to you. The PA credits your bank account on the timeline in your agreement, which must state settlement timelines transparently (PA Master Direction, Table 1). Settlement in foreign currency is allowed only for exporters directly onboarded by the PA-CB (paragraph 11(i)).
Close the EDPMS entry. The PA-CB gives your AD bank the documents needed to close the entry (PA Master Direction, paragraph 11(h)), and your AD bank closes it when it credits the export receipt (FEMA Regulations 2026, Regulation 4(2)).

How does a foreign currency account held abroad differ from a PA-CB collection?

With your own foreign currency account abroad, the money sits in your name outside India, and you must use it for imports into India or bring it to India by the end of the next month after receipt. For an account with a bank in an International Financial Services Centre, the limit is the end of three months (FEMA 10(R)(7)/2025-RB, Regulation 5(CA); Master Direction on Deposits and Accounts, Part on accounts abroad, para 4.10).

A PA-CB collection is settled to your Indian bank account by the PA.
An own account abroad puts the repatriation duty on you.
Both routes still need full export value realised within the realisation period.

Can export proceeds from a local collection account go into an EEFC account?

Yes, where the funds arrive in foreign currency. An Exchange Earner's Foreign Currency (EEFC) account with an AD bank in India can be credited with 100 percent of foreign exchange earnings received by inward remittance through normal banking channels (Master Direction on Deposits and Accounts, para 3.1). Ask your PA-CB whether it settles in foreign currency, since only directly onboarded exporters can receive non-INR settlement. See what is an EEFC account.

Who pays the buyer's money to the Indian exporter if the payer is a third party?

Under the 2026 regulations, an AD bank may permit receipts from a third party (other than the parties to the export) if it is satisfied with the bona fides of the transaction (FEMA Regulations 2026, Regulation 8). Tell your provider and AD bank in advance when a group company or agent of the buyer will pay. See third-party payments for exports.

What documents and limits apply to export receipts through local collection accounts?

The key documents are your invoice, the EDF for services and the inward remittance record from your AD bank. The key limits are the ₹25 lakh cap per PA-CB transaction and the nine month realisation period. The table sets out each one with its source.

What documents and limits apply to export receipts through local collection accounts?
Item	Rule	Source	Best for
Per-transaction cap	₹25 lakh for each inward or outward transaction processed by a PA-CB	PA Master Direction, paragraph 11(d)	Exporters with large single invoices; see PA-CB transaction limits
Currency of InCA	Separate account for INR and for each non-INR currency; no pre-funding; no interest	PA Master Direction, Table 1	Understanding how your money is held in India
KYC for small exporters	Where CKYCR data is unavailable, an exporter with annual export turnover up to ₹5 lakh can be onboarded with PAN or Form 60, contact point verification and one officially valid document	PA Master Direction, paragraph 13(b)	New freelancers with low volumes
Export declaration	EDF for services within 30 days from the end of the invoice month; AD bank may extend	FEMA Regulations 2026, Regulation 3(2)	All service exporters from 1 October 2026
EDPMS closure	Invoices up to ₹10 lakh can be closed on the exporter's declaration, also in quarterly bulk	FEMA Regulations 2026, Regulation 4(2)	Exporters with many small invoices; see EDPMS closure
Realisation period	Nine months from the invoice date for services; twelve months if invoiced or settled in rupees; AD bank may extend	FEMA Regulations 2026, Regulation 5(1)	Planning payment terms; see export realisation period
Own account abroad	Use for imports or repatriate by the end of the next month (three months for an IFSC bank)	FEMA 10(R)(7)/2025-RB, Regulation 5(CA)	Exporters holding their own foreign bank account

What happens if export money in a local collection account is not brought to India on time?

Money that is not realised and repatriated on time breaches FEMA. Under section 13, a contravention can draw a penalty of up to three times the sum involved, or up to Rs 2 lakh where the amount cannot be quantified, plus up to Rs 5,000 for each day it continues (RBI Master Direction on Compounding, para 1.1).

Open EDPMS: Your AD bank must monitor outstanding entries and follow up with you until the export value is realised (FEMA Regulations 2026, Regulations 5(2) and 18(1)(f)).
Advance only: If proceeds stay unrealised for more than one year from the due date or extended date, further exports can be made only against full advance or an irrevocable letter of credit (FEMA Regulations 2026, Regulation 13).
Idle balance: Money left in your own account abroad past the end of the next month breaks the condition in Regulation 5(CA) (FEMA 10(R)(7)/2025-RB).
Over the cap: A payment above ₹25 lakh cannot be processed as a single PA-CB transaction (PA Master Direction, paragraph 11(d)).

If you cannot realise in time, ask your AD bank for an extension before the deadline, citing reasons; the AD bank may allow it if satisfied (FEMA Regulations 2026, Regulation 5(1)). For short realisation, the AD bank may allow a reduction, and for invoices up to ₹10 lakh it can act on your declaration (Regulation 6).

What is the timeline for export receipts through local collection accounts?

The timeline starts at the invoice date. The EDF for services is due within 30 days from the end of that month, and the full value must be realised within nine months. These dates come from the 2026 regulations, which replaced the old Master Direction on exports from 1 October 2026 (A.P. (DIR Series) Circular No. 20, para 4).

What is the timeline for export receipts through local collection accounts?
Trigger event	Due date	Filed where	Best for
Invoice raised for a service export	EDF within 30 days from the end of the invoice month	AD bank (specified authority for services)	Freelancers and service firms
Advance received before the invoice	Route the advance and later realisation through the same AD bank, or tell both banks if you change	AD bank (Regulation 10(1))	Exporters paid upfront
Funds received in your own foreign currency account abroad	Use for imports or repatriate by the end of the next month (three months for IFSC)	Bank abroad, then your AD bank in India	Exporters with their own foreign account
Nine months from the invoice date	Full export value realised and repatriated	AD bank tracks it in EDPMS	Every service exporter
Invoice up to ₹10 lakh realised	Declaration for EDPMS closure, per invoice or quarterly in bulk	AD bank	Exporters with many small invoices
One year past the due or extended date	Further exports only against full advance or irrevocable letter of credit	Applies through your AD bank	Exporters with long overdue entries

What mistakes do Indian exporters make with local collection accounts?

Domestic thinking: Treating a payment to US or European local details as a domestic payment. For Indian law it remains an export receipt with EDF, realisation and EDPMS duties.
Unchecked provider: Using a non-bank collector without checking that it holds RBI authorisation or has a pending application on RBI's list. See RBI PA-CB guidelines.
Missing EDF: Forgetting the EDF for services, which from 1 October 2026 is due within 30 days from the end of the invoice month.
Large invoices: Billing a single amount above ₹25 lakh and expecting it to clear through a PA-CB.
Parked funds: Leaving money in an own account abroad beyond the end of the next month.
Wrong payer: Accepting payment from someone other than the buyer without telling the AD bank, which must be satisfied with third-party receipts.
No records: Not keeping the inward remittance record. See what is FIRA and FIRA for freelancers.

How did we verify this?

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

Master Direction on Regulation of Payment Aggregator (PA), RBI/DPSS/2025-26/141 (Reserve Bank of India (Regulation of Payment Aggregators) Directions, 2025), 15 September 2025, Paragraphs 4(f), 4(i)(ii), 5(a)-(b), 11(d), 11(h), 11(i), 13(a)-(b), 16(a), Table 1 (checked 8 Oct 2026)
Foreign Exchange Management (Foreign Currency Accounts by a person resident in India) (Seventh Amendment) Regulations, 2025, Notification FEMA 10(R)(7)/2025-RB, 6 October 2025, Paragraph 3 (Regulation 5(CA) substituted) and paragraph 4 (Explanation on IFSC) (checked 8 Oct 2026)
Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB, amended up to 22 September 2026, Regulations 3(2), 4, 5, 6, 8, 10(1), 13, 18(1)(f), 18(2) (checked 8 Oct 2026)
A.P. (DIR Series) Circular No. 20, RBI/2025-26/194: Export and Import of Goods and Services, 16 January 2026, Paragraphs 4 and 7 (checked 8 Oct 2026)
RBI Master Direction: Deposits and Accounts (FED Master Direction No. 14/2015-16), Para 3.1 (EEFC credits) and para 4.10 under foreign currency accounts abroad (checked 8 Oct 2026)
Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, Notification FEMA 14(R)/2023-RB, as amended, Regulation 3(1) and 3(2)(I) (checked 8 Oct 2026)
RBI Master Direction: Compounding of Contraventions under FEMA, 1999, Para 1.1 (penalty under section 13(1)) (checked 8 Oct 2026)
European Central Bank: Single Euro Payments Area (SEPA), SEPA payment instruments; SEPA countries (status 22 May 2025) (checked 8 Oct 2026)
Federal Reserve Financial Services: FedACH Services, Service description; FedACH SameDay Service; FAQ on eligible institutions (checked 8 Oct 2026)
Pay.UK: Faster Payment System, Overview: 24/7 availability, real-time payments up to £1m (checked 8 Oct 2026)

Frequently asked questions

Is a US ACH account number from a provider a bank account in my name?

Usually it is a set of receiving details arranged by the provider, and the money is collected on your behalf. RBI's rules govern the Indian side, where a PA-CB holds funds in an Inward Collection Account at an AD Category-I bank. Read your provider's terms to see whose name the overseas account is held in.

Do SEPA payments to an IBAN still need an EDF for services?

Yes. The payment rail does not change the FEMA duty. A service exporter must file the EDF with the AD bank within 30 days from the end of the month in which the invoice was raised, and one EDF can cover all service exports in that month. The AD bank may extend the period on request.

How long can money stay in a PA-CB Inward Collection Account before reaching me?

RBI does not fix a number of days for settlement to the merchant. The Master Direction says credit to the merchant is as per the agreement, which must be fair and must clearly mention settlement timelines. Your own nine month realisation deadline from the invoice date still applies. See PA-CB settlement timelines.

Can a freelancer open a Faster Payments account in the UK directly?

Regulation 5(CA) lets a resident exporter hold a foreign currency account with a bank outside India for export proceeds, with funds used for imports or repatriated by the end of the next month. Whether a UK bank will open an account for a non-UK resident is the bank's decision. Check its eligibility rules first.

Is the ₹25 lakh PA-CB limit per invoice or per year?

The RBI Master Direction sets a maximum value of ₹25 lakh per transaction for inward or outward transactions processed by a PA-CB. It does not set an annual cap in that paragraph. A single payment above ₹25 lakh needs another route, such as a direct wire transfer to your AD bank in India.

Does ACH or SEPA collection change the purpose code I report?

No. The purpose code describes the service you sold, such as software or consultancy, and the collection rail does not change it. Your AD bank reports foreign trade transactions in FETERS under FEMA Regulation 18(2). Confirm the code with your provider or AD bank before settlement.

Can export money collected through SEPA be settled in euro into an EEFC account?

Yes, if you were directly onboarded by the PA-CB, because RBI allows non-INR settlement only for such merchants. An EEFC account can take 100 percent of foreign exchange earnings received through normal banking channels. If the provider settles only in rupees, the conversion happens before the money reaches you.