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
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.