An Authorised Dealer (AD) code is a 14-digit identifier provided by banks authorised by the Reserve Bank of India (RBI) to facilitate foreign exchange transactions. It is a crucial element for businesses engaged in export and import activities, ensuring seamless customs clearance, monitoring of foreign exchange inflows, and access to export incentives. The AD code is registered with the Directorate General of Foreign Trade (DGFT) and linked to shipping bills for validation. Understanding its role and proper registration is vital for smooth operations in the import-export business framework.
What is an AD code?
An AD code is a unique 14-digit numerical identifier issued by banks authorised by the RBI to conduct foreign exchange transactions. This code is essential for businesses engaged in export and import activities, as it is linked to their shipping bills and helps monitor foreign currency transactions. The AD code is issued by a bank where the exporter holds a current account and must be registered with the Directorate General of Foreign Trade or DGFT for export-related benefits.
Key features of an AD code
- Bank issuance: The AD code is issued by an authorised bank upon request by the exporter
- Mandatory for exports: It is essential for filing shipping bills and conducting export transactions through the customs portal
- DGFT linkage: The code must be registered with the DGFT to claim export incentives
- Customs verification: Helps customs track and validate export transactions
The AD code ensures compliance with regulatory requirements and facilitates smooth transactions within the import-export framework.
Example of AD code
An AD code is required for various export processes, including generating shipping bills and accessing the Indian Customs Electronic Gateway (ICEGATE) platform. For example, when an exporter files a shipping bill, the AD code is linked to verify the bank details and track foreign exchange inflows.
Practical example:
- An exporter registers the AD code issued by their bank with the ICEGATE portal
- While submitting a shipping bill, the AD code ensures the payment from the foreign buyer is credited to the correct bank account
- The customs department uses the AD code to validate the transaction and monitor compliance
This code ensures streamlined financial operations for export businesses and is mandatory for customs clearance. For more information, refer to our articles on ICEGATE and shipping bill.
The role of the AD code in export and import
Customs clearance: The AD code is required when submitting shipping bills to customs authorities. It helps customs officials verify the legitimacy of the transaction and ensures compliance with export and import regulations.
Foreign exchange tracking: The AD code allows for the tracking of foreign exchange transactions related to exports and imports. This helps the Reserve Bank of India (RBI) monitor the flow of foreign currency and ensures adherence to exchange control regulations.
Regulatory compliance: The AD code ensures that businesses follow the legal requirements for international trade, helping to prevent illegal activities like money laundering and tax evasion.
Importance of AD code in import-export business
The AD code plays a crucial role in facilitating seamless financial transactions and regulatory compliance in the import-export sector. Below are the key benefits of having an AD code:
Why is the AD code important?
- Customs clearance: It is mandatory to link the AD code with customs authorities to process export shipments
- Foreign exchange monitoring: Tracks and validates foreign currency inflows from international buyers
- Eligibility for incentives: Registration of the AD code with DGFT ensures access to export-related benefits and government schemes
- Facilitates banking transactions: Ensures the payment received from exports is credited to the exporter’s bank account seamlessly
The AD code is indispensable for any business aiming to succeed in the competitive international trade environment.
Validity of AD code
The validity of an AD code is not subject to expiration as long as the exporter continues to use the same bank account for their export transactions. However, if there are any changes in the bank account or branch, the exporter must update the AD code details accordingly.
Important considerations:
- Permanent code: Once issued, the AD code remains valid indefinitely unless the bank account or authorised dealer is changed
- Updates required: Exporters must re-register the code with DGFT and customs if there is a change in the issuing bank or account details
- Continuity in transactions: Ensures uninterrupted processing of export benefits and customs compliance
Understanding the validity and updating requirements of the AD code helps businesses manage future export transactions efficiently.
Format of AD code
The AD code follows a standard 14-digit numerical format issued by the authorised bank. This code uniquely identifies the bank branch and exporter’s account for seamless transaction monitoring and compliance. The following is the structure of the AD code:
- Bank identifier: The first few digits represent the authorised bank
- Branch code: The next set of digits identifies the bank branch where the account is held
- Exporter-specific: The remaining digits correspond to the exporter’s account, ensuring uniqueness
Example:
Suppose an exporter receives an AD code like 12345678901234.
- ‘123456’ denotes the bank
- ‘78901’ represents the specific branch
- ‘1234’ corresponds to the exporter’s details
This format ensures traceability and smooth transaction processing at all times.
How to apply for an AD code?
To get an AD code for each port through which your shipments will pass, follow these simple steps:
Step 1: Visit your business bank
Go to the bank where your business’s current account is held. This bank will issue the AD code for you.
Step 2: Submit an application
Submit a request to the branch manager for an AD code. Make sure to provide all the required details and supporting documents as asked by the bank.
Step 3: Receive the AD code letter
Once your application is processed and approved, the bank will provide you with an AD code letter. This letter will be in the format specified by the Directorate General of Foreign Trade (DGFT) and will be printed on the bank’s letterhead. The AD code letter acts as proof of your registration.
Step 4: Register the AD code at each exporting port
Using the AD code letter, you can register the AD code at each port where you will be exporting. Present the AD code letter to the customs authorities at the respective port to complete the registration process.
Important note: No online application facility
Please note, there is no online facility to obtain an AD code. The process must be done in person at your business bank and by visiting the customs authorities at each exporting port.
Proper AD code registration is vital for customs clearance and accessing government incentives.
Conclusion
The AD code is an integral part of India’s import-export framework, facilitating customs clearance, foreign exchange monitoring, and access to export incentives. Businesses must ensure accurate registration and compliance to streamline their international trade operations.
For exporters facing financial challenges, securing a business loan can help maintain cash flow and manage operations effectively.
