Purpose Code P0107 - Realisation of overdue export bills

Understand RBI FEMA regulations for receiving inward remittance on realised NPD export bills. Check eligibility, required documentation, charges, and how to apply this purpose code for inward remittance.

Purpose Code P0107 is used by Indian exporters or businesses receiving inward remittances for the full realisation value of Non-Physical Delivery (NPD) export bills. This applies to software exports, services, or other non-physical goods where export proceeds are credited back to India after realisation abroad. Using P0107 ensures RBI compliance and prevents delays in fund crediting and supporting balance of payments data.

This Purpose Code should be used only where the transaction fits its defined regulatory scope. Here's when you should and shouldn't use this code:

You should use this code when:

• Full realisation of NPD export bills - Includes software, IT services, or digital exports settled abroad and remitted to India.
• Export proceeds from non-physical deliveries - Includes invoiced services or intangibles where payment is now inward.
• Realised value post-collection abroad - Banks or agents abroad realise the bill, then remit 100% to the Indian exporter.

Do not use this code when:

• Receiving advance payments for exports.
• Inward remittances for imports or other purposes.
• Sending money abroad to purchase shares or make investments.

RBI purpose codes are mandatory under FEMA to classify the nature of cross-border transactions entering or leaving India. They allow banks and regulators to accurately track foreign exchange flows and apply the correct regulatory, tax, and reporting treatment.

For individuals, businesses and institutions, correct purpose code usage:

• Ensures transactions are classified correctly under FEMA.
• Enables accurate reporting to the RBI and other regulators.
• Reduces delays caused by compliance checks or misclassification.
• Supports clean audit trails and tax reconciliation.

Bottom-line:

Using the correct purpose code helps ensure smooth processing, regulatory compliance, and faster credit of funds.

1. Select P0107 – Realisation of NPD export bills (full value of bill to be reported) when initiating the inward remittance
2. Provide export invoice, bill of exchange, or realisation certificate from foreign bank.
3. Submit FEMA declaration confirming NPD export nature and full value.
4. Complete exporter KYC and IEC verification.
5. Bank verifies documents and processes the transaction
6. Transaction is reported to the RBI under applicable FEMA norms

Additional Notes:

• IEC (Importer Exporter Code) is mandatory for businesses/exporters.
• Documentation must specify full realised amount, invoice details, and NPD nature

• Using a generic or incorrect purpose code instead of the exact RBI-prescribed purpose code can lead to misclassification of the transaction under FEMA and trigger additional compliance checks by the bank.
• Mismatch between purpose code, invoice, and remittance narration may place the transaction on hold until clarification is provided.
• Submitting unclear or incomplete supporting documents that do not clearly describe the nature of the transaction often result in delays, as banks rely on documentation to validate FEMA compliance.
• Missing mandatory PAN or incomplete KYC documentation can prevent banks from releasing funds until verification is completed.
• Using service-related purpose codes for non-service transactions like capital receipts, investments, gifts, or refunds can result in incorrect regulatory treatment and potential reporting issues.
• Assuming small or recurring transactions do not require accuracy and repeated misclassification can attract regulatory scrutiny over time.

Cross-border payments require accurate purpose code selection and complete compliance documentation. Xflow helps businesses and individuals receive international payments while staying aligned with RBI and FEMA requirements.

With Xflow, you can:

• Select the correct purpose code with clarity
• Organize and maintain supporting documents
• Reduce compliance back-and-forth with banks
• Support FEMA compliant inward remittances