Current · Source: Reserve Bank of India · RBI/2012-13/220 · issued 24 Sep 2012 · ~2 min read
Quick answerRBI has clarified that trade credit for importing gold in any form, including jewellery, cannot exceed 90 days from shipment. This aligns with existing rules for diamond imports and tightens financing timelines for gold imports.
The rule, in the simplest words
When a bank gives a loan to pay for gold imports (called 'trade credit'), the loan must be paid back within 90 days from when the gold is shipped.
This 90-day rule applies to all gold, including gold jewelry and jewelry with other precious stones or metals.
Banks must check that any letter of credit (a promise to pay) for gold imports also follows this 90-day limit.
How it plays out — a real example
A forex & trade-finance officer in Mumbai reviews a new letter of credit for a jewelry maker importing gold necklaces. She sees the payment term is set at 120 days, so she tells the customer the bank can only allow 90 days from the shipment date, and they must adjust the payment schedule to follow the RBI rule.
What changed
RBI clarified that Suppliers' and Buyers' credit, including LC usance periods, for importing gold in any form (including jewellery with precious metals or stones) must not exceed 90 days from shipment. Previously, this 90-day limit applied only to rough, cut, and polished diamonds; now it explicitly covers gold and related jewellery imports.
What it means for you
Banks must ensure that all trade credit facilities for gold imports are structured within a 90-day usance period. This tightens working capital cycles for gold importers and jewellery manufacturers, potentially increasing demand for alternative financing or faster inventory turnover. Existing instructions for direct gold imports, platinum/palladium, and diamond imports remain unchanged.
What you must do
Update internal trade credit policies to enforce a maximum 90-day usance for all gold import transactions, including jewellery.
Review existing Letters of Credit and trade credit approvals for gold imports to ensure compliance with the 90-day limit.
Communicate this clarification to all constituents involved in gold import financing.
Monitor shipment dates and usance periods to avoid inadvertent breaches of the 90-day cap.
Who it affects
AD Category-I banks handling gold import trade credit, Gold importers and jewellery manufacturers, Branches processing Letters of Credit for precious metals
❓ Common questions
Does this 90-day limit apply to all forms of gold imports?
Yes, the circular clarifies that the 90-day cap from shipment date applies to gold in any form, including jewellery made of gold or precious metals, and jewellery studded with diamonds or other stones.
Are there any exceptions to this rule?
No exceptions are mentioned in this circular. All existing instructions for direct gold import, platinum/palladium/rhodium/silver, and diamond imports remain unchanged and must be followed separately.
What happens if a bank approves trade credit beyond 90 days for gold imports?
Such approvals would violate FEMA provisions under Section 10(4) and 11(1). Banks must ensure strict adherence to avoid regulatory action, and should proactively review existing facilities to ensure compliance.
📜 Read the original circular — full text as issued by RBI
RBI/2012-13/220
A.P. (DIR Series) Circular No. 34
September 24, 2012
To
All Category - I Authorised Dealer Banks
Madam / Sir,
Foreign Exchange Management Act, 1999-Import of gold in
any form including jewellery made of gold/precious metals
or / and studded with diamonds / semi precious / precious
stones - clarification
Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to the provisions contained in A.P.(DIR Series) Circular No.59 dated May 6, 2011 , in terms of which, AD Category – I banks have been permitted to approve Suppliers’ and Buyers’ credit (trade credit) including the usance period of Letters of Credit for import of rough, cut and polished diamonds, for a period not exceeding 90 days, from the date of shipment.
2. It is clarified that Suppliers’ and Buyers’ credit (trade credit) including the usance period of Letters of Credit opened for import of gold in any form including jewellery made of gold / precious metals or/ and studded with diamonds/ semi precious / precious stones should not exceed 90 days, from the date of shipment.
3. All the instructions issued for direct import of gold, vide A.P. (DIR Series) Circular No.2 dated July 9, 2004 ; import of Platinum / Palladium/ Rhodium /Silver vide A.P. (DIR Series) Circular No.12 dated August 28, 2008 ; advance remittance for import of rough diamonds, vide A.P. (DIR Series) Circular No. 21 dated December 29, 2009 and import of rough, cut and polished diamonds, vide A.P.(DIR Series) Circular No.59 dated May 6, 2011, shall remain unchanged.
4. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.
5. 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,
(Rashmi Fauzdar)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2012-13/220 · issued 24 Sep 2012. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (AD Category-I banks handling gold import trade credit, Gold importers and jewellery manufacturers, Branches processing Letters of Credit for precious metals), your first concrete step on “Gold Import Trade Credit Capped at 90 Days” is: “Update internal trade credit policies to enforce a maximum 90-day usance for all gold import transactions, including jewellery.” (RBI issued this 24 Sep 2012).
Circular: RBI/2012-13/220 -- Gold Import Trade Credit Capped at 90 Days
Issued: 24 Sep 2012
Action required: Update internal trade credit policies to enforce a maximum 90-day usance for all gold import transactions, including jewellery.
Action required: Review existing Letters of Credit and trade credit approvals for gold imports to ensure compliance with the 90-day limit.
Action required: Communicate this clarification to all constituents involved in gold import financing.
Action required: Monitor shipment dates and usance periods to avoid inadvertent breaches of the 90-day cap.
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
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BankPulse Compliance Evidence Pack — generated 03 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=7582&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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