Indian Banking System Issues AD Code Registration

Documentation irregularities, misdeclaration of goods, or exporting prohibited items are the reasons for which customs authorities reject shipments. Even not having valid documents, such as the AD code and IEC code, leads to delays in shipments. Meanwhile, mainly for the exporters, the AD code is the primary document for the export code. The banks that are authorized by the RBI are responsible for issuing the Authorized Dealer (AD) code. However, the AD code registration process is a bit complex for the new export houses. Suffering from registration complexity raises various challenges. In this blog, we will explore those challenges faced by exporters and how they can overcome them.

1. The Indian Banks’ Provide AD Code Registration 

All those banks that are authorized by the Reserve Bank of India act as authorized dealers. These banks provide the AD code bank account registration service to those who are active in international trade. To obtain it, the business account holders formally request the bank to issue the AD code. Upon document submission and other formalities, banks issue the AD code letter on their letterhead. Generally, the code contains the 14-digit character that links the business holder’s bank account with import-export activities. To facilitate customs clearance, the code is registered on the ICEGATE by the exporter. 

2. What are the Challenges that Arise During AD Code Registration?

In India, banks issue the AD code to exporters to enable foreign currency transactions. But, there are various issues arising with the Indian banking system regarding AD code registration online. These challenges are around accurate documentation, maintenance of compliance, and application processing by the banks. Here is more in-depth about the context:

a.) Choosing the Wrong Bank

Before applying for the AD code, the exporters must understand that not all banks in India are authorized banks. Those banks that are authorized by the RBI to deal in foreign exchange can only issue the AD code letter.

b.) Inaccurate Documentation

Submitting inaccurate and incomplete documents is the primary reason for application rejection or delay. A minor mistake or missing a single document can cause a form delay. 

c.) Application Delay

Your application form and documents will be submitted, and when it comes into the typical process, an authorized bank reviews it for completeness. If banks find inaccuracy, the processing timeline further increases.

d.) Failed to link on the ICEGATE portal.

For customs clearance, the exporters are required to link their code to the ICEGATE portal. However, not registering the code on the portal leads to being unable to generate the shipping bill. The exporters cannot create the shipping bill on the portal, leading to failure in customs clearance approval.

3. Guide Steps: Dealing with AD Code Registration Problems 

You can follow the common steps below to help you with the Indian banking AD code registration problems:

Step 1) Know Your Authorized Banks 

Since the AD code is only issued by RBI-authorized banks, you need to know whether the bank you use presently is a dealer in foreign exchange or not.  For example, SBI is a dealer in foreign exchange and is authorized by the Reserve Bank of India.

Step 2) Draft a formal Request

Write a formal letter to your current bank account manager. Through the letter, request the manager to issue the AD code letter for your export/import activities. 

Step 3) Prepare Necessary Documents

Gather all the necessary documents required for registration. Before document submission, ensure their completeness and accuracy. The major required documents are the IEC number, GST certificate, and PAN card. 

Step 4) Submit the Application to the bank.

For the review and verification, submit the application form with the supporting documents. Re-check the details of the company and personal information before application submission. 

Step 5) Code Registration on ICEGATE

Obtaining the AD code letter on the bank’s letterhead is not the last procedure to adhere to the RBI’s regulations. For the shipping bill filing, exporters must link the 14-digit AD code on the ICEGATE portal. 

4. What are the Key Functions of the Banking System?

• The role of banks in AD code approval is to serve as the intermediary between the customs authority and the exporter/importer. 
• For issuing the AD code letter, banks identify the applicant’s details and ensure that they adhere to trade compliance. For international trade, the AD code is a prerequisite.
• Linking the exporter’s current bank account to all foreign exchange transactions allows them to receive the foreign currency. The code offers a financial hub for international trade.
• By issuing the AD code, banks ensure that businesses that deal with export-import must adhere to the Foreign Exchange Management Act (FEMA). 

5. New Update for AD (Authorized Dealer) Code

Exporters no longer need to register their AD code multiple times at each separate port. As per the new updates, the multiple AD code registrations on ICEGATE turned into a single registration. It demonstrates that the AD code in India has moved to a single AD code registration on the ICEGATE portal. Once the exporter registers the code at a single port, it will automatically be reflected and usable at all customs locations. However, it is crucial to note that the IFSC code still must be registered separately for duty refunds. It remains separate, port-wise. On the other hand, for the change in management, the exporters are required to visit the same port where the AD code was initially registered.

6. Conclusion | AD Code Registration through an authorized bank

The banks in India that are authorized by the RBI are spread across the nation-states. These banks serve the crucial role of issuing the AD code. The AD code registration process contains a few inaccuracies that lead to application rejection or delay in shipments. An accurate registration includes compliance adherence, application completeness, and timely processing by the banks. Not using the designated Authorized banks, the applicant will be unable to provide the complete documents or will not be able to link their AD code to the ICEGATE portal. Avoid the complex registration challenges with LegalRaasta experts. 

7. Check out our FAQs to quickly find Answers and Save Time on Support

1. Why do the banks issue AD code?

Ans. Banks issue the AD code only to those banks that hold their current account with the same bank. The code allows exporters to deal in foreign exchange, is approved for customs clearance, and provides access to the RBI for monitoring.

2. How to obtain the AD code letter online?

Ans. As of now, there is no facility designed to issue the AD code letter online. The exporters need to physically visit their current bank account and request a branch manager to issue the code.

3. Which DSC is required for the AD code registration?

Ans. The exporters must obtain the Class 3 DSC for registration for the AD code. It allows signing the application digitally.

4. Can I use the same AD code after changing my bank account?

Ans. No, you cannot use the same bank account after switching banks. You are required to obtain the AD code from the new bank.

5. How does LegalRaasta help with the AD code registration?

Ans. At LegalRaasta, the experts are actively helping those who are seeking the AD code. The professional guides during registration provide valuable assistance and ensure compliance with trade policies.