Current · Source: Reserve Bank of India · RBI/2013-14/132 · issued 11 Jul 2013 · ~1 min read
Quick answerRBI confirms the existing all-in-cost ceiling for trade credits for imports continues to apply until September 30, 2013. AD banks should link the trade credit period to the operating cycle and trade transaction. No other policy changes.
The rule, in the simplest words
The cost limit (all-in-cost ceiling) for trade credits (loans for imports) stays the same until September 30, 2013.
Banks (AD banks) must match the loan period (trade credit period) to how long the importer's business takes to turn inventory into cash (operating cycle) and the specific trade deal.
No other rules changed—only the cost ceiling extension and the new guidance on linking loan period to business cycle.
How it plays out — a real example
A forex & trade-finance officer in Mumbai is approving a trade credit for an importer of gold jewelry. She checks that the loan's interest and fees stay within the existing cost ceiling, and she sets the repayment period to match the importer's typical 90-day operating cycle—from buying gold to selling finished jewelry—so the loan aligns with the actual trade transaction.
What changed
The all-in-cost ceiling for trade credits for imports, set in September 2012, remains unchanged and continues to apply through September 30, 2013. Additionally, RBI now advises that the trade credit period should be linked to the operating cycle and the specific trade transaction.
What it means for you
Banks can continue to apply the same cost ceiling for import trade credits without any immediate revision, providing stability for pricing. The new guidance means lenders should consider each borrower's operating cycle and transaction specifics when determining credit tenure.
What you must do
Ensure all trade credit approvals comply with the existing all-in-cost ceiling until September 30, 2013.
Link the trade credit period to the borrower's operating cycle and the underlying trade transaction as advised.
Communicate these instructions to your constituents and customers handling import trade credits.
Monitor RBI announcements for any review after September 30, 2013.
What is the all-in-cost ceiling for trade credits?
The circular does not specify the exact ceiling rate; it refers to the ceiling set in an earlier circular (A.P. DIR Series Circular No.28 dated September 11, 2012). Banks should refer to that circular for the specific rate.
Does this circular change any other trade credit rules?
No. The circular explicitly states that all other aspects of the trade credit policy remain unchanged.
What does 'operating cycle' mean in this context?
The circular does not define 'operating cycle'. Banks should interpret it based on standard accounting or trade finance practices, typically the time between acquiring inventory and receiving cash from sales.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/132
A.P. (DIR Series) Circular No.9
July 11, 2013
To
All Category - I Authorised Dealer Banks
Madam / Sir,
Trade Credits for Imports into India – Review of all-in-cost ceiling
Attention of Category-I Authorized Dealer banks is invited to the A.P. (DIR Series) Circular No. 98 dated April 09, 2013 relating to all-in-cost ceiling of Trade Credits for imports into India.
2. On a review it has been decided that the all-in-cost ceiling as specified under paragraph 4 of A.P. (DIR Series) Circular No.28 dated September 11, 2012 will continue to be applicable till September 30, 2013 and is subject to review thereafter.
3. It has also been decided that for availment of trade credit, the period of trade credit should be linked to the operating cycle and trade transaction. AD banks may ensure that these instructions are strictly complied with.
4. All other aspects of Trade Credit policy remain unchanged. Category-I AD banks may bring the contents of this circular to the notice of their constituents and customers.
5. 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, if any, required under any other law.
Yours faithfully
(Rudra Narayan Kar)
Chief General Manager-in-Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/132 · issued 11 Jul 2013. 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 (Category-I Authorised Dealer Banks, Importers availing trade credits, Trade finance departments), your first concrete step on “Trade Credit Cost Ceiling Extended Till Sep 2013” is: “Ensure all trade credit approvals comply with the existing all-in-cost ceiling until September 30, 2013.” (RBI issued this 11 Jul 2013).
Action required: Ensure all trade credit approvals comply with the existing all-in-cost ceiling until September 30, 2013.
Action required: Link the trade credit period to the borrower's operating cycle and the underlying trade transaction as advised.
Action required: Communicate these instructions to your constituents and customers handling import trade credits.
Action required: Monitor RBI announcements for any review after September 30, 2013.
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 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=8229&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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