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Trade Credit Cost Ceiling Extended Till March 2014

Current · Source: Reserve Bank of India · RBI/2013-14/301 · issued 30 Sep 2013 · ~1 min read
Quick answerRBI has extended the existing all-in-cost ceiling for trade credits for imports until March 31, 2014. No other changes to trade credit policy have been made. Banks must inform customers.
The rule, in the simplest words
How it plays out — a real example

A forex & trade-finance officer in Indore is processing a trade credit for a client importing machinery. She checks the RBI circular and sees the all-in-cost ceiling (maximum interest and fees) is unchanged until March 31, 2014. She informs the client that they can continue using the same cost limits for their import financing, providing stability for their business planning.

What changed

The all-in-cost ceiling for trade credits for imports, originally set in September 2012, will remain in force until March 31, 2014. This extends the previous deadline that was due for review. All other trade credit rules stay the same.

What it means for you

Banks and importers can continue using the same cost limits for trade credits without any immediate revision. This provides stability for financing imports, as the ceiling on interest and fees remains unchanged. Lenders should note that a review is scheduled after March 2014, so future adjustments are possible.

What you must do

Who it affects

All Authorised Dealer Category-I Banks, Importers using trade credits, Corporate customers of AD banks

❓ Common questions

What is the all-in-cost ceiling for trade credits?

It is the maximum total cost (interest plus fees) that can be charged on trade credits for imports into India, as specified in earlier RBI circulars.

Does this circular change any other trade credit rules?

No, all other aspects of trade credit policy remain unchanged as per the circular.

When will the ceiling be reviewed again?

The ceiling will be reviewed after March 31, 2014, as stated in the circular.

📜 Read the original circular — full text as issued by RBI
RBI/2013-14/301 A. P. (DIR Series) Circular No. 56 September 30, 2013 To, All Authorised Dealer Category - I Banks Madam / Sir Trade Credits for Imports into India – Review of all-in-cost ceiling Attention of Authorized Dealer Category-I (AD Category-I) banks is invited to the A.P. (DIR Series) Circular No. 9 dated July 11, 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 March 31, 2014 and is subject to review thereafter. 3. All other aspects of Trade Credit policy remain unchanged. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers. 4. 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 (C. D. Srinivasan) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/301 · issued 30 Sep 2013. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (All Authorised Dealer Category-I Banks, Importers using trade credits, Corporate customers of AD banks), your first concrete step on “Trade Credit Cost Ceiling Extended Till March 2014” is: “Inform your AD Category-I bank customers about the extended all-in-cost ceiling validity.” (RBI issued this 30 Sep 2013).

  1. Circular: RBI/2013-14/301 -- Trade Credit Cost Ceiling Extended Till March 2014
  2. Issued: 30 Sep 2013
  3. Action required: Inform your AD Category-I bank customers about the extended all-in-cost ceiling validity.
  4. Action required: Continue applying the existing all-in-cost ceiling as per the September 2012 circular until March 31, 2014.
  5. Action required: Monitor for any future RBI review after March 2014 that may change the ceiling.
  6. Owner: ____________ Target date: ____________
  7. Board/committee approval needed? Y / N
  8. 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.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8474&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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