India's Commerce Ministry says it has asked the Central Bureau of Investigation (CBI) to look into the matter of "inappropriate" usage of letters of credit (L/Cs), which are apparently being used to circumvent an export ban.

India's parliament banned the export of pulses with effect from 22 June 2006 but modified the ban by saying that the prohibition did not apply to deals covered by irrevocable L/Cs opened on or before 22 June 2006.

Channel Islands

The authorities now say they are aware that many L/Cs "against unlimited quantity and period" were opened for the purpose of exporting pulses by some exporters in the British-dependent Channel Islands on or around 21 June 2006.

Indian politicians and officials consider deals transacted under such L/Cs constitute illegal exports, because they are facilitated under cover of manipulated documents, purely in order to bypass the export ban.

Detailed scrutiny

One probe ordered by the Commerce Ministry has reportedly found suspected foul play by three exporters. Inspectors conducting the probe say they found two "abnormalities" in the documents, including "prima-facie manipulation of the expiry date and abnormal...price[s]".

The inspectors are now conducting detailed scrutiny of the documents of other exporters.

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