| Date: |
10-09-2015
|
| Notification No: |
RBI/2015-16/175 A.P. (DIR Series) Circular No.13
|
| Issuing Authority: |
RBI
|
| Type: |
A.P.D.(Series) Circulars
|
| File No: |
RBI/2015-16/175 |
| Subject: |
Trade Credit Policy - Rupee (INR) Denominated trade credit
|
RBI/2015-16/175
A.P. (DIR Series) Circular No.13
September 10, 2015
To,
All Authorised Dealer Category – I Banks
Madam/ Sir
Trade Credit Policy - Rupee (INR) Denominated trade credit
Attention of Authorized Dealer Category - I (AD Category - I) banks is invited
to Schedule III to the Foreign Exchange Management (Borrowing or Lending in
Foreign Exchange) Regulations, 2000 notified vide
Notification No. FEMA
3/2000-RB dated May 03, 2000 read with Regulation 6(3) of the said Regulations
regarding raising of trade credit (buyers' credit / suppliers' credit) from
overseas supplier, bank and financial institution for import of capital and
non-capital goods into India.
- With a view to providing greater flexibility for structuring of trade credit
arrangements, it has been decided that the resident importer can raise trade
credit in Rupees (INR) within the following framework after entering into a loan
agreement with the overseas lender:
- Trade credit can be raised for import of all items (except gold) permissible
under the extant Foreign Trade Policy
- Trade credit period for import of non-capital goods can be upto one year from
the date of shipment or upto the operating cycle whichever is lower
- Trade credit period for import of capital goods can be upto five years from the
date of shipment
- No roll-over / extension can be permitted by the AD Category - I bank beyond the
permissible period
- AD Category - I banks can permit trade credit upto USD 20 mn equivalent per
import transaction
- AD Category - I banks are permitted to give guarantee, Letter of Undertaking or
Letter of Comfort in respect of trade credit for a maximum period of three years
from the date of shipment
- The all-in-cost of such Rupee (INR) denominated trade credit should be
commensurate with prevailing market conditions
- All other guidelines for trade credit will be applicable for such Rupee (INR)
denominated trade credits
- Overseas lenders of Rupee (INR) denominated trade credits will be eligible to
hedge their exposure in Rupees through permitted derivative products in the
on-shore market with an AD Category - I bank in India. Necessary guidelines for
hedging will be issued separately.
- AD Category – I banks may bring the contents of this Circular to the notice
of their constituents and customers.
- The directions contained in this circular have been issued under Section
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and
are without prejudice to permissions / approvals required, if any, under any
other law.
Yours faithfully
(B. P. Kanungo)
Principal Chief General Manager
|
|
|