RBI/2013-14/290
A.P. (DIR Series) Circular No. 53
September 24, 2013
To,
All Category - I Authorised Dealer Banks
Madam / Sir,
Trade Credits for Import into India
Attention of Authorized Dealer Category - I (AD Category - I) banks is invited
to
A.P. (DIR Series) Circular No. 87 dated April 17, 2004,
A.P. (DIR Series)
Circular No. 24 dated November 01, 2004,
A.P. (DIR Series) Circular No. 28 dated
September 11, 2012 and
A.P. (DIR Series) Circular No. 59 dated December 14, 2012
regarding Trade Credits for import into India.
- As per the extant guidelines, AD Category - I banks may approve availing of
trade credit not exceeding USD 20 million up to a maximum period of five years
(from the date of shipment) for companies in the infrastructure sector, subject
to certain terms and conditions stipulated therein. It is also stipulated that
AD Category - I banks are not permitted to issue Letters of
Credit/guarantees/Letter of Undertaking (LoU) /Letter of Comfort (LoC) in favour
of overseas supplier, bank and financial institution for the extended period
beyond three years. No roll-over/extension is permitted beyond the permissible
period.
- On a review, it has been decided to allow companies in all sectors to avail
of trade credit not exceeding USD 20 million up to a maximum period of five
years for import of capital goods as classified by Director General of Foreign
Trade (DGFT). It has also been decided to relax the ab-initio contract period of
15 (fifteen) months for all trade credits to 6 (six) months.
- AD Category - I banks are, however, not permitted to issue Letters of
Credit/guarantees/Letter of Undertaking (LoU) /Letter of Comfort (LoC) in favour
of overseas supplier, bank and financial institution for the extended period
beyond three years.
- All other aspects of Trade Credit policy will remain unchanged and should be
complied with. The amended Trade Credit policy will come into force with
immediate effect and is subject to review based on the experience gained in this
regard.
- The directions contained in this circular have been issued under Sections
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
(Rudra Narayan Kar)
Chief General Manager-in-Charge