What Is P0102 Purpose Code?
The P0102 purpose code is used by the Reserve Bank of India (RBI) for the realisation of export bills sent on collection. When an Indian exporter sends goods abroad and the payment for those goods is collected by a bank (usually through a documentary collection), P0102 is used to report the foreign exchange inflows once the payment is received in full.
In simple terms, if you ship goods to another country and the payment for those goods is collected through your bank (not through advance payment), P0102 is the purpose code used to report this transaction to the RBI. This ensures that the transaction is correctly documented, complies with the RBI's foreign exchange regulations, and allows you to repatriate the funds received from the export of goods.
When Should You Use P0102 (and When Not)?
Use P0102 When:
- You’ve Exported Goods:
The P0102 code applies only to the realisation of export bills for physical goods. If the payment is being collected for goods that have been exported on a collection basis, this code is used. - Payment is Collected via Bank:
This code is used when the payment for the exported goods is received via documentary collection, meaning the buyer’s bank sends payment to your bank after verifying the required documents (such as the bill of lading, invoices, etc.). - You’ve Received Full Invoice Payment:
P0102 applies when the full invoice value of the exported goods is realised. If partial payment is received, you would need to report the payment differently.
Do Not Use P0102 When:
- Advance Payments Were Made:
If you received an advance payment for the goods before they were shipped, P0102 is not the correct purpose code. In that case, you would use a different code to report the payment. - You’re Exporting Services:
P0102 is strictly for the realisation of export bills for goods. If you are exporting services, you should use a different service-specific purpose code. - Payment is Not Collected by Bank:
If the payment for your export is not processed through a bank (e.g., if it’s made directly to you or through another channel), P0102 is not applicable.
Example Of P0102 Purpose Code
- Contracts: Supplier (India) → You (Exporter) → Buyer (USA): Invoice for USD 50,000 for 200 units of electronics.
- Legs & Codes: Payment Realisation: Payment of USD 50,000 is received via documentary collection from the Buyer and reported under P0102.
- Profit: Profit = USD 50,000 minus export costs (shipping, customs, etc.).
Step-by-Step: How to Structure a Compliant P0102 Deal
1. Pre-Deal:
- Finalize Contract Terms:
Secure the terms of your deal with the buyer, including pricing, delivery schedules, Incoterms, and other essential conditions. The export contract should be clear about payment terms, especially if documentary collection is involved.
- Confirm Goods’ Export Compliance:
Ensure that the goods being exported comply with the Foreign Trade Policy (FTP) and that they are allowed for export without restrictions.
2. Export Documentation:
- Invoices and Shipping Documents:
When goods are shipped, make sure to provide all the necessary documents to the buyer’s bank, such as invoices, packing lists, and the Bill of Lading (BL) or Air Waybill (AWB). These documents should accurately reflect the value and nature of the goods.
- Documentary Collection Process:
If using a documentary collection method, ensure that all the required documents are sent to your bank, which will then forward them to the buyer’s bank. The buyer’s bank will release the payment once they verify that the buyer has the right documents.
3. Payment Process:
- Payment in Full:
Once the payment for the goods is collected by the bank and the full invoice value is realised, P0102 should be used to report the transaction to the RBI.
- Remittance to India:
Ensure the payment is remitted back to India through the same Authorized Dealer (AD) Bank that is handling the export transaction. The funds should be deposited in your EEFC (Exchange Earners Foreign Currency) or INR account.
4. Reporting:
The AD Bank will report the inward remittance under P0102 once the export bill payment is received in full and the documents are cleared.
5. Close-Out:
- Transaction Completion:
Ensure that the transaction is completed as per the agreed terms and that the full payment has been received and reported within the required timeline.
What Banks Ask for To Prove P0102 (and Why)
- Export Contract:
Banks may request the export contract to verify that you’re an actual exporter and not just a financial intermediary. This contract ensures that the transaction involves physical goods and not services.
- Invoices and Transport Documents:
The bank will require the commercial invoice, packing list, and Bill of Lading or Air Waybill to confirm that the goods have been shipped and the buyer is receiving the correct goods.
- Proof of Realisation:
The bank will need to see that the full invoice value has been received as payment. This ensures that the transaction is correctly reported under P0102.
- Customs Documents:
If required, banks may ask for customs export declarations to verify that the goods have legally exited India.
Common Mistakes to Avoid In P0102 Purpose Code
- Using the Wrong Purpose Code:
Ensure you are using P0102 for realisation of export bills for goods. If the payment was made in advance or for services, this code is not applicable.
- Missing or Incorrect Documentation:
Missing shipping documents, invoices, or customs declarations can delay the reporting of your transaction. Always ensure you have the correct paperwork in order.
- Partial Payment:
P0102 is only used when the full invoice value is realised. If only partial payment is received, a different code should be used.
- Delayed Reporting:
Timely reporting is crucial to ensure the smooth processing of foreign currency remittances. Any delays in reporting can cause issues with the remittance process.
FAQs
Is P0102 used for services exports?
No, P0102 is only for the realisation of export bills for physical goods. Services exports are reported under a different purpose code.
What happens if I report partial payment under P0102?
P0102 is strictly for full payment. If partial payment is received, you must use the appropriate code and report the transaction accordingly.
Can I use P0102 for advance payments?
No, P0102 is for full invoice value realisation through documentary collection. If advance payments are made, they should be reported under a different purpose code.
