Norms for trade credit relaxed by apex bank

Chennai: The Reserve Bank of India (RBI) has relaxed norms for imports of capital and non-capital goods by raising the trade credit limit to $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, TCs up to $150 million or equivalent per import transaction for oil and gas refining and marketing, airline and shipping companies can be availed under the automatic route. For others, the limit is up to $50 million or equivalent per import transaction.

Earlier, under the automatic route, banks were permitted to approve trade credit up to $20 million.

NT Bureau