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Imports into India � Short-term Credit
A.P.
(DIR Series) Circular No. 25 dated 27th September 2002
Attention
of authorised dealers is invited to the directions contained in paragraphs A.12
and A.13 of the A.P. (DIR Series) Circular No. 9 dated August 24, 2000, and the
provisions contained in paragraph 4(i) of Schedule to the Reserve Bank
Notification No. FEMA 3/ 2000 - RB dated May 3, 2000. Accordingly, in terms of
the existing instructions, Suppliers' Credit, viz. short-term loans where the
credit for imports into India is extended by the overseas supplier for a period
of more than six months requires prior approval of the Reserve Bank. Similarly,
Buyers' Credit, viz., where short term loans for payment of imports into India
is arranged by the importer from a bank or financial institution outside India
for maturity of less than three years also requires prior approval of the
Reserve Bank.
2.
With a view to simplifying the procedure for imports into India, it has
now been decided that uniform Regulations and procedures be made applicable to
both categories of the short term credit, that is Suppliers' Credit as well as
Buyers' Credit, with immediate effect till further notice.
3.
Accordingly, the Authorised Dealers may approve proposals received in
Form ECB for short-term credit for financing, by way of either Supplier�s
Credit or Buyers� Credit, of import of goods into India, provided:
(a)
The credit is being extended for a period of less than three years,
(b)
The amount of credit does not exceed USD 20 million, per import
transaction
(c)
The `all-in-cost' per annum, payable for the credit does not exceed LIBOR
+50 basis points for credit upto one year and LIBOR + 125 basis points for
credits for periods beyond one year but less than three years, for the currency
of credit.
4.
Authorised dealers may issue approval by way of a letter on the lines of
Annexure I to this circular and ensure submission of ECB-5 statement as
hitherto.
5.
International Banking Division of the authorised dealer may furnish the
details of approvals granted by all its branches, during the month, in the Form
ECB-ST (format enclosed) to the Chief General Manager, Exchange Control
Department, Reserve Bank of India, Central Office, External commercial Borrowing
(ECB) Division, Mumbai � 400 001, so as to reach not later than 5th
of the following month. Each credit
may be given a unique Identification number by the authorised dealers. The loan
Identification number allotted to the loan/credit should invariably be quoted in
all the reference made to this office.
6.
All applications, in form ECB, for availing of short term credit for
amount exceeding USD 20 million for any import transaction may be forwarded to
the Chief General Manager, Exchange Control Department, Reserve Bank of India,
Central Office, External commercial Borrowing (ECB) Division, Mumbai-400 001.
7.
Accordingly, the directions contained in the paragraph A.12 and A.13 of
the A.P. (DIR Series) Circular No. 9 dated August 24, 2000, may be treated as
amended. Notification for amending the provisions of paragraph 4(i) of Schedule
to the Notification No. FEMA 3/ 2000 - RB dated May 3, 2000, is being issued
separately.
8.
Authorised Dealers may bring the contents of this circular to the notice
of their constituents concerned.
9.
The directions contained in this circular have been issued under Section
10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of
1999).
Annexure
I
Addressee:
Loan
identification No.:
STC/
(Name of the Bank/ Branch)/ (Identification No.)
Proposal
for Short Term Foreign Currency Loan/ Credit for US$ (or any other currency from
M/s ______________________
Please
refer to your application dated _________________ in form ECB for the captioned
short-term credit. We advise that you have our approval to raise the short-term
credit for the purpose of imports.
2.
Details of the loan
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i)
Name of the Lender
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ii)
Category of Borrower
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iii)
Country of Lender
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iv)
Commodity imported/ proposed to be imported
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v)
Type of goods of import
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vi)
Type of Credit
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vii)
Currency & Amount of Loan
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viii)
Period of Loan
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ix)
Rate of interest
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x)
Other Charges, if any
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xi)
Repayment Terms
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xii)
Security for loan (if any)
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xiii)
Expected date of draw down
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3.
The Loan Identification number allotted to this loan/ credit should
invariably be quoted in all the reference to this office pertaining to this
loan/ credit.
4.
The approval is subject to following conditions.
i)
The approval is valid for a period of 3 months from the dated of issue.
ii)
The loan should be drawn and repaid in the currency approved. No multi
currency option is available.
iii)
The loan/ credit should be utilised strictly for the purpose for which it
is approved.
iv)
The Short Term Credit to be availed of under this approval should be
repaid on the due date. (The roll-over of the credit, if any, can however be
permitted by authorised dealer up to less than 3 year and beyond 3 year by RBI).
vi)
In case the import is made on �collection basis� the Authorised
Dealer shall ensure strict compliance with the instructions
contained in A.P. (Dir Series) No. 9 dated 24th August 2000.
vii)
You shall ensure the import of goods, for which the loan is raised, and
shall submit the documentary evidence to us in due
course.
5.
The borrower should prepare in duplicate a statement of outstandings in
respect of the loan in form ECB-5. A copy of the statement should be submitted
to CGM, ECD, RBI, C.O., on a monthly basis by the 10th of the
following month to which it relates, till the loan is fully repaid.
6.
Please not that interest (and other fees etc,) payable under the above
loan/ credit are liable to income tax, and hence subject to withholding tax as
per the Income Tax Act, 1961.
Note:
This communication is issued from the foreign exchange angle under the
provisions of FEMA and should not be construed to convey the approval by any
other statutory authority or Government under any other laws/ regulations. If
further approval or permission is required from any other regulatory authority
or Government under the relevant laws/ regulations, the applicant should take
the approval of the concerned agency before effecting the transaction.
Further, it should not be construed as regularising or validating any
irregularities, contravention or other lapses, if any, under the provisions of
any other laws/ regulations.
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