What changed
The all-in-cost ceiling for trade credits into India, previously set via circulars from November 2011 and March 2012, will remain in force until March 31, 2013. The ceiling is subject to review after that date. All other trade credit policy terms stay unchanged.
What it means for you
Banks and importers can continue using the same cost limits for trade credits without any immediate revision. This provides short-term stability for import financing costs. Lenders should note that the ceiling may be reviewed after March 2013, so they must stay alert for future changes.
What you must do
- Inform all constituents and customers about the extended all-in-cost ceiling validity.
- Continue applying the existing all-in-cost ceiling as per earlier circulars until March 31, 2013.
- Monitor RBI announcements for any review or revision after the deadline.
- Ensure compliance with FEMA sections 10(4) and 11(1) for all trade credit transactions.
Who it affects
Category-I Authorised Dealer Banks, Importers using trade credits, Corporate customers involved in import financing
What is the new all-in-cost ceiling for trade credits?
The circular does not specify a new ceiling; it extends the existing ceiling from earlier circulars until March 31, 2013.
When will the ceiling be reviewed?
The ceiling will be reviewed after March 31, 2013, as per the circular.
Are there any other changes to trade credit policy?
No, all other aspects of trade credit policy remain unchanged.