Banks have requested Reserve Bank of India's permission to use new regulations for closing unsettled cross-border trade deals that have accumulated to nearly ₹1 lakh crore over time. According to reports from The Economic Times, these transactions include millions of unreconciled exports and imports where payments are overdue for goods that were shipped, and funds were remitted but goods never landed. The new rules, effective October 1, 2026, will empower banks to resolve these cases through client declarations explaining reasons for delays. As a senior banker told The Economic Times, "Banks are unwilling to apply new regulations to close old matters (pending till September 30) unless RBI gives a go-ahead. To avoid being questioned later, banks are reluctant to use discretionary powers (under new regulations) without an RBI clearance."
Under existing regulations, banks must seek RBI approval to close unresolved trade deals, creating a time-consuming process. As reported by The Economic Times, banks are unwilling to apply new regulations to close old matters pending until September 30 unless RBI provides clearance. The current framework requires banks to use discretionary powers under new regulations without official clearance, which institutions are reluctant to do to avoid future scrutiny. According to The Economic Times, "Under the old, time-consuming regulations, banks must seek RBI's approval in closing unresolved deals."
The primary concern driving this regulatory request is the caution-listing practice that exporters face for past unsettled trades. According to The Economic Times, existing rules allow caution-listed exporters to undertake future exports only against advance payments or letters of credit from overseas buyers' banks. Under the new framework, caution-listing would end from October 1, but banks want to resolve as many cases as possible by month-end to prevent exporters from being caution-listed for past unsettled trades. As the trade finance head of another bank told The Economic Times, "If such cases are handled under old (i.e., existing) regulations, exporters could still be caution-listed."
RBI deputy governor Rohit Jain has called a meeting with select bank CEOs this week to discuss the matter, as reported by The Economic Times. The meeting aims to address banks' concerns about applying new regulations to close old transactions and prevent exporters from facing caution listing for past unsettled trades. According to The Economic Times, "It's learnt that RBI deputy governor Rohit Jain has called a meeting with select bank CEOs this week to discuss the matter." Banks are seeking regulatory clarity to use the new framework's powers to resolve legacy trade mismatches efficiently.
Despite the new framework's liberalization, several challenges remain in closing old trade mismatches. According to The Economic Times, banks can independently close outstanding trade payment entries up to ₹10 lakh per shipping bill or bill of entry without supporting documents. However, outstandings are often higher, and many cases involve companies that have shut down with officials unavailable for declarations. Additionally, there are instances of fly-by-night operators who remitted funds for non-existent cargo, payments from multiple banks, and mismatches due to address changes. As Moin Ladha, partner at law firm Khaitan & Co, told The Economic Times, "The revised framework places greater responsibility on banks in monitoring and regularising export transactions. But, while this discretion may allow genuine delays and legacy issues to be addressed more efficiently, existing instances of noncompliance are not automatically regularised or extinguished."
