(i) All eligible payments, except those indicated in sub-paragraph (ii) below should be compulsorily settled through the ACU mechanism. While there is no bar on any contract, letter of credit, invoice etc. being denominated in U.S. dollar or in any other permitted currency, it should invariably stipulate a condition that the actual payment shall be made in ACU dollar.

(ii) The following types of payments are to be settled outside the ACU mechanism:

(a) All payments between India and Nepal.

(b) Payments relating to travel between India and all other countries in ACU.

(c) Export/Import transactions financed out of loans from international financial institutions like World Bank, Asian Development Bank and under bilateral lines of credit

(d) Import of sugar, fertilisers and pulses.

This was allowed up to 31st December 1995.