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RBI relaxes norms for trade credit

Press Trust of India  |  Mumbai 

The of India (RBI) Wednesday relaxed norms for imports of capital and non-capital goods by raising the trade credit limit to USD 150 million under the automatic route.

Announcing the modified revised framework for 'Trade Credit Policy', the RBI, however, reduced the all-inclusive cost (all-in-cost) for overseas loans to benchmark rate plus 250 basis points from the earlier 350 bps.

Trade credits (TCs) refer to the credits extended by the overseas supplier, bank, financial institution and other permitted recognised lenders for maturity for imports of capital and non-capital goods permissible.

According to the revised framework, up to USD 150 million or equivalent per transaction for & marketing, and shipping companies can be availed under the automatic route.

For others, the limit is up to USD 50 million or equivalent per transaction.

Earlier, under the automatic route, banks were permitted to approve trade credit up to USD 20 million. beyond USD 20 million were required approval from the RBI.

The RBI said the revised framework comes into force with immediate effect.

All-in-cost includes rate of interest, other fees, expenses, charges, and guarantee fees. Withholding tax payable in Indian currency is not part of all-in-cost.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, March 13 2019. 22:47 IST
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