Per Transaction Maximum Amount permissible will be USD 150 Million. (b) Trade Credit can be availed by oil/gas refining & marketing, airline, and shipping companies. (a) AD banks are permitted to approve trade credits up to USD 20 million per transaction for the imports permissible under the current Foreign Trade Policy of the DGFT with a maturity period of up to one year from the date of shipment. The amount and maturity allowed under trade credits (buyers’ credit/suppliers’ credit) under the current credit policy of India are as under. Buyers’ credit facilitates local importers to gain entry to cheaper foreign funds, compared to local sources of funding. The buyers’ credit may be extended, either from an overseas branch of the domestic bank or an international bank in a foreign country. The guarantee, so given by the importer’s bank, is called a letter of comfort. The bank or financial institution outside India finances the importer based on a guarantee given by the importer’s bank. To know more click on different types of standby Letters of Credit Under the revised regulation, banks can now issue guarantee / SBLC (Standby Letter of Credit) to any overseas banks/branches, FI, Foreign Equity holders, and IFSC Branches. The finance provided by the supplier (supplier credit) can be a DA Document or Usance LC for 180 days etc. Although both buyers’ credit and supplier credit are credit facilities to the importer, depending upon the sources of credit they are classified as Buyers’ credit or Suppliers’ credit.Īs per the regulatory RBI guidelines dated March 13, 2019, only that finance provided by the Supplier of goods located outside India can be termed as supplier’s credit. The suppliers’ credit means credits extended for imports directly by the overseas supplier instead of a bank or financial institution. Buyers’ credit finance means finance for payment of imports in India arranged by the importer (buyer) from a bank or financial institution outside India.
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