The Reserve Bank has asked banks to tighten monitoring of export finance in the wake the over-invoicing scam recently detected by the Enforcement Directorate.

It has also directed banks to ensure that exports are carried out within the stipulated timeframe for which loans have been given.

“It is further reiterated that banks should exercise proper due diligence and ensure compliance with KYC (know your customer) and AML (anti-money laundering) guidelines so that only bona-fide export advances flow into India,” RBI said in a notification.

“Doubtful cases as also instances of chronic defaulters may be referred to the Directorate of Enforcement (DoE) for further investigation,” it said.

It is understood that this direction has come in the light of a probe initiated by the ED in cases of over-invoicing in some of the accounts of UCO Bank.

In this connection, the exchanges also sought clarification from UCO Bank. However, a reply is still awaited.

Direction has been issued based on its assessment that there is substantial increase in the number and amount of advances received for exports outstanding beyond the stipulated period on account of non-performance of such exports (shipments in case of export of goods).

“...banks are advised to efficiently follow up with the concerned exporters in order to ensure that the export performance (shipments in case of export of goods) is completed within the stipulated time period,” RBI said in a statement.

A quarterly statement indicating details of such cases may be forwarded to the concerned Regional Offices of RBI within 21 days from the end of each quarter, it added.