Trade Credits for Import into India
The Reserve Bank has decided to allow companies in all sectors to avail of trade credit not exceeding
USD 20 million up to a maximum period of five years for import of capital goods. It has also been
decided to relax the ab-initio contract period of 15 months for all trade credits to 6 months. Banks
are, however, not permitted to issue Letters of Credit/guarantees/Letter of Undertaking (LoU) /
Letter of Comfort (LoC) in favour of overseas supplier, bank and financial institution for the
extended period beyond three years.
USD 20 million up to a maximum period of five years for import of capital goods. It has also been
decided to relax the ab-initio contract period of 15 months for all trade credits to 6 months. Banks
are, however, not permitted to issue Letters of Credit/guarantees/Letter of Undertaking (LoU) /
Letter of Comfort (LoC) in favour of overseas supplier, bank and financial institution for the
extended period beyond three years.
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