RBI Cuts Trade Credit Tenor for Platinum, Palladium, Rhodium, Silver Imports to 90 Days
Current · Source: Reserve Bank of India · RBI/2008-09/147 · issued 28 Aug 2008 · ~2 min read
Quick answerRBI has slashed the maximum maturity for suppliers' and buyers' credit (including LC usance) for importing platinum, palladium, rhodium, and silver to 90 days from shipment, effective immediately. Earlier, such credit could go up to one year. Banks must enforce KYC/AML checks and watch for abnormal volume spikes.
The rule, in the simplest words
For importing platinum, palladium, rhodium, or silver, the time to pay back the loan (called trade credit) is now cut to 90 days from when the goods are shipped.
Banks must check who they are dealing with (KYC) and watch for money laundering (AML), and look out for any sudden big jumps in how much is being imported.
This new 90-day rule starts right away, and banks have to update their systems and tell their customers about it.
How it plays out — a real example
A KYC & compliance officer in Mumbai is processing a letter of credit for a customer importing silver. She remembers the new RBI rule and sets the payment due date to 90 days from the shipment date, instead of the old one-year limit. She also double-checks the customer's identity and flags a recent spike in their import volume for review.
What changed
Previously, AD Category-I banks could approve trade credit up to USD 20 million per import transaction with a maturity of up to one year (three years for capital goods) for imports under DGFT policy. Now, for imports of platinum, palladium, rhodium, and silver specifically, the maximum credit period (including LC usance) is capped at 90 days from the date of shipment. This revision takes effect immediately.
What it means for you
Importers of these precious metals will face tighter working capital cycles, as they can no longer stretch payment beyond 90 days. Banks must recalibrate their trade finance products for these commodities and strengthen due diligence to prevent misuse for interest or currency arbitrage. The move signals RBI's intent to curb speculative imports and manage forex outflows.
What you must do
Update internal trade credit policies to cap suppliers' and buyers' credit for platinum, palladium, rhodium, and silver imports at 90 days from shipment.
Ensure all LC usance periods for these metals comply with the new 90-day limit; revise system parameters accordingly.
Strengthen KYC/AML checks and transaction monitoring for these imports, flagging any large or sudden volume increases.
Communicate the revised tenor to all constituents, including SEZ units and export-oriented units, advising them to adjust procurement plans.
Review existing credit approvals for these metals and align them with the circular immediately.
Who it affects
AD Category-I banks handling trade credit for precious metal imports, Importers of platinum, palladium, rhodium, and silver, Units in SEZs and export-oriented units dealing with these metals, Trade finance and compliance teams at banks
❓ Common questions
Does this 90-day cap apply to all imports of these metals, or only those under trade credit?
The circular specifically restricts suppliers' and buyers' credit, including the usance period of Letters of Credit, for importing platinum, palladium, rhodium, and silver to 90 days from shipment. Other import payment methods (e.g., advance remittance) are not directly covered, but banks must ensure overall compliance with FEMA.
What happens if a bank had already approved a trade credit with a tenor longer than 90 days before this circular?
The circular states the revised directions come into force with immediate effect. Banks should review existing approvals and, where possible, renegotiate or restructure them to comply. If not feasible, consult RBI or legal counsel, as the circular does not provide a grandfathering clause.
Are there any exceptions for capital goods imports of these metals?
No. The circular explicitly overrides the general capital goods exception (which allowed up to three years) for these four metals. All trade credit for platinum, palladium, rhodium, and silver is now capped at 90 days, regardless of the nature of the goods.
📜 Read the original circular — full text as issued by RBI
RBI/2008-09/147
A. P. (DIR Series) Circular No. 12
August 28, 2008
To,
All Authorised Dealer Category – I banks
Madam / Sir,
Foreign Exchange Management Act, 1999 –
Import of Platinum / Palladium / Rhodium / Silver
Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to the provisions contained in A. P. (DIR Series) Circular No. 87 dated April 17, 2004 in terms of which AD Category – I banks have been permitted to approve Suppliers’ and Buyers’ credit (trade credit) up to USD 20 million per import transaction for imports permissible under the Foreign Trade Policy of the DGFT with a maturity period up to one year from the date of shipment (three years in the case of capital goods).
2. The present instructions have been reviewed in the context of recent developments and it has been decided that Suppliers’ and Buyers’ credit, including the usance period of Letters of Credit opened for import of Platinum, Palladium, Rhodium and Silver should not exceed 90 days from the date of shipment. The revised directions will come into force with immediate effect.
3. AD Category – I banks should ensure that due diligence is undertaken and Know-Your-Customer (KYC) norms and Anti-Money Laundering (AML) guidelines, issued by the Reserve Bank are adhered to while undertaking import of these metals. Further, any large or abnormal increase in the volume of business should be closely examined to ensure that the transactions are bonafide and are not intended for interest / currency arbitrage. All other instructions relating to import of these metals shall continue.
4. The instructions issued for direct import of gold, vide A. P. (DIR Series) Circular No. 2 dated July 9, 2004 shall remain unchanged.
5. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned including units located in the Special Economic Zone (SEZ), Export Oriented Units, etc.
6. The directions contained in this circular have been issued under Section 10 (4) and Section 11 (1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(Salim Gangadharan)
Chief General Manager in Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/147 · issued 28 Aug 2008. The plain-English explanation above is BankPulse’s own independent summary.
Ensure all LC usance periods for these metals comply with the new 90-day limit; revise system parameters accordingly.
📜 Compliance
Update internal trade credit policies to cap suppliers' and buyers' credit for platinum, palladium, rhodium, and silver imports at 90 days from shipment.
Strengthen KYC/AML checks and transaction monitoring for these imports, flagging any large or sudden volume increases.
Communicate the revised tenor to all constituents, including SEZ units and export-oriented units, advising them to adjust procurement plans.
Review existing credit approvals for these metals and align them with the circular immediately.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (AD Category-I banks handling trade credit for precious metal imports, Importers of platinum, palladium, rhodium, and silver, Units in SEZs and export-oriented units dealing with these metals, Trade finance and compliance teams at banks), your first concrete step on “RBI Cuts Trade Credit Tenor for Platinum, Palladium, Rhodium, Silver Imports to 90 Days” is: “Update internal trade credit policies to cap suppliers' and buyers' credit for platinum, palladium, rhodium, and silver imports at 90 days from shipment.” (RBI issued this 28 Aug 2008).
Circular: RBI/2008-09/147 -- RBI Cuts Trade Credit Tenor for Platinum, Palladium, Rhodium, Silver Imports to 90 Days
Issued: 28 Aug 2008
Action required: Update internal trade credit policies to cap suppliers' and buyers' credit for platinum, palladium, rhodium, and silver imports at 90 days from shipment.
Action required: Ensure all LC usance periods for these metals comply with the new 90-day limit; revise system parameters accordingly.
Action required: Strengthen KYC/AML checks and transaction monitoring for these imports, flagging any large or sudden volume increases.
Action required: Communicate the revised tenor to all constituents, including SEZ units and export-oriented units, advising them to adjust procurement plans.
Action required: Review existing credit approvals for these metals and align them with the circular immediately.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4439&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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