An AD (Authorized Dealer) Code in export is a 14-digit alphanumeric code issued by a bank authorized to handle foreign exchange transactions under the Reserve Bank of India (RBI). It serves as a unique identifier that links an exporter's current account to their international transactions, ensuring that foreign currency proceeds for exports are channeled through the correct banking system for customs clearance and monitoring purposes.
Key Functions of an AD Code:
Customs Clearance:
It enables international shipments to be cleared by customs authorities.
Foreign Exchange Monitoring:
It facilitates the tracking of foreign currency inflows related to export and import activities.
Legitimate Transactions:
It confirms that an exporter's account is authorized for legal foreign exchange dealings.
Seamless Operations:
By linking the exporter's bank account to their export activities, it ensures a smooth and efficient process for receiving payments.
How it works:
The exporter applies to their bank to obtain an AD Code.
The bank, which must be authorized to deal in foreign currency, issues the code in a format prescribed by the Directorate General of Foreign Trade (DGFT).
The exporter then registers this AD Code with the DGFT and the Customs authorities to process their export-related transactions.
When an export occurs, the AD Code ensures that the payment in foreign currency is routed to the exporter's designated bank account.
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