RBI/2008-09/
251
A. P. (DIR Series) Circular No. 27 October 27 , 2008
To, All Authorised Dealer Category - I
Banks Madam / Sir, Trade
Credits for Imports into India – Review of all-in-cost ceiling Attention
of Authorised Dealer Category-I (AD Category-I) banks is invited to the A.
P. (DIR Series) Circular No. 42 dated May 28, 2008 relating to the all-in-cost
ceiling of Trade Credits for imports into India. 2. As the
domestic importers are experiencing difficulties in raising trade credits within
the existing all-in-cost ceiling in view of the tight liquidity conditions in
the international credit markets, an enhancement of the all-in-cost ceiling for
trade credits was announced in the Mid-term Review of Annual Policy
Statement for the Year 2008-09 (para-147). Accordingly, the revised all-in-cost
ceiling for Trade Credits will be as under:
| Maturity Period |
All-in cost ceiling over 6-month LIBOR* |
| | Existing |
Revised | |
Up to one year |
75 basis points |
200 basis points | |
More than one year up to three years |
125 basis points |
*
for the respective currency of credit or applicable benchmark The
all-in-cost ceiling will be reviewed from time to time depending on the conditions
in the international financial markets. 3. The change in the all-in-cost
ceiling will come into force immediately. All other aspects of Trade Credit policy
remain unchanged. 4. Necessary amendments to the Foreign Exchange Management
(Borrowing or Lending in Foreign Exchange) Regulations, 2000 dated May 3, 2000
are being issued separately. 5. AD Category-I banks may
bring the contents of this circular to the notice of their constituents and customers
concerned. 6. 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 is without prejudice to permissions/approvals, if any,
required under any other law. Yours faithfully,
(Salim Gangadharan)
Chief General Manager |
|