Trade credit framework updated: rules on currency, tenors, cost ceilings and reporting for import financing clarified. The revised framework governs raising Trade Credits for imports under automatic and approval routes, permitting FCY or INR denominated suppliers' and buyers' credit to resident importers subject to eligibility of lenders, specified maturities by import type, an all in cost ceiling linked to a benchmark plus spread, currency conversion rules, hedging and risk management requirements, permitted security arrangements with safeguards, and mandatory monthly and quarterly reporting by AD Category I banks; ADs must ensure compliance and prevent double financing, with directions issued under FEMA provisions.
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Trade credit framework updated: rules on currency, tenors, cost ceilings and reporting for import financing clarified.
The revised framework governs raising Trade Credits for imports under automatic and approval routes, permitting FCY or INR denominated suppliers' and buyers' credit to resident importers subject to eligibility of lenders, specified maturities by import type, an all in cost ceiling linked to a benchmark plus spread, currency conversion rules, hedging and risk management requirements, permitted security arrangements with safeguards, and mandatory monthly and quarterly reporting by AD Category I banks; ADs must ensure compliance and prevent double financing, with directions issued under FEMA provisions.
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