Master Direction - External Commercial Borrowings, Trade Credits and Structured Obligations (Updated as on February 16, 2026)
UR
- Applies toAll regulated entities
- StatusIn force
- RBI text changedRBI updated this document on September 08, 2026. BankPulse is re-reading it. BankPulse checked all 28 points on this page against RBI's new text on 11 October 2026. Every quoted line is still in RBI's text.
- IssuedMar 26, 2019
- Amendmentsnone tracked
- Length28 points in 3 sections · 3 min read
The four dates on this rule
- PublishedMar 26, 2019The day RBI put this document out. This is the same day as the Issued date on this rule.
- Starts to applyNot statedNot stated separately in this document. Read the rule itself before you assume a start date.
- Time to get readyNot statedCannot be worked out until the day it starts to apply is known.
- Last date to actNot statedNo date to act by was found in this document. Other dates may sit inside single paragraphs.
This page explains part of this rulebook, not all of it. This page explains the Trade Credits rules only (paragraphs 13 to 18). RBI withdrew the External Commercial Borrowings and Structured Obligations parts of this document on 16 February 2026.
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What it says
How firm is each point
Stated by RBI — RBI’s own paragraph says this. We have only made it plainer.
Our reading — BankPulse read RBI’s paragraph and shortened it. The paragraph is the authority, not this line.
Needs judgement — RBI leaves this to the bank to settle, so nobody can give you a fixed number here.
Must know
1. Higher limit for some sectors
Oil, gas, airline and shipping firms can raise up to USD 150 million per import.
2. Standard limit is $50 million
Other importers can raise up to USD 50 million for each import.
3. Who can give suppliers credit
In suppliers' credit, the lender is the overseas supplier itself.
4. Who can give buyers credit
In buyers' credit, the lender can be a bank, financial institution or foreign equity holder abroad.
5. Three years for capital goods
Trade credit for capital goods can run up to three years from the shipment date.
6. One year for other goods
For non-capital goods, the period is one year or the operating cycle, if shorter.
7. Shipyards also get three years
Shipyards and shipbuilders get up to three years even for non-capital goods.
8. Hedging needs a board policy
An importer hedging its trade credit needs a board approved risk policy.
9. Rupee credit cannot turn foreign
A rupee trade credit cannot later be changed into a foreign currency.
10. SEZ units can raise credit
A unit or developer in an SEZ can raise trade credit for goods bought within or from another SEZ.
11. DTA buyers may use it
A buyer outside the SEZ may also raise trade credit to buy from an SEZ unit.
12. Guarantee capped at the credit
A guarantee for the trade credit cannot be more than the credit itself.
13. Guarantee period matches the credit
The guarantee cannot last longer than the trade credit's own permitted period.
14. Assets or guarantee as security
The importer may offer movable or immovable assets, or a guarantee, as security.
15. No objection needed from lenders
Where needed, a no objection certificate from existing lenders in India is required.
16. Invocation cannot exceed the dues
If invoked, total payments cannot exceed the amount owed on the trade credit.
17. 180 days must be reported
Supplier credit beyond 180 days must also be reported by the bank.
18. ADs must check double financing
ADs must check that SEZ trade credit is not double financed.
Do it
1. Monthly TC report to RBI
AD Category I banks must give RBI monthly details of TC drawal, use and repayment.
2. Monthly report due the 10th
The monthly trade credit report must reach RBI by the 10th of the next month.
3. ADs enforce the shorter period
ADs must ensure the non-capital goods period stays at one year, or three years for shipyards.
Background
1. What a trade credit is
Trade Credits are credit given by an overseas supplier, bank or approved lender for importing goods.
2. Two forms of trade credit
Trade credit comes as either suppliers' credit or buyers' credit.
3. SEZ credit has its date
For an SEZ trade credit, the date the goods change ownership counts as the TC date.
4. No import bill inside SEZ
Inside an SEZ, the NSDL inter-unit receipt can stand in for the import bill.
5. Foreign banks may guarantee too
Trade credit can also be secured by a foreign bank's guarantee or an Indian bank's overseas branch.
6. Guarantee rule waits on FEMA
The rule on corporate or personal guarantees starts only when RBI publishes the linked FEMA regulation.
7. ADs may accept any document
RBI sets no fixed format for TC papers, so ADs may accept any document.