Reserve Bank of India (RBI) issued a fresh circular on September 11, 2012 in relation to Trade Credit for Import into India. Please find below summary of changes made into existing policy:
- Maximum tenure under Buyers Credit for import of capital goods has been extended from 3 years to 5 years for company classified as Infrastructure as defined in guidelines on External Commercial Borrowings (ECB). Infrastructure sector is defined as under:
- Power
- Telecommunication
- Railways
- Roads including Bridges
- Sea Port and Airport
- Industrial Parks
- Urban Infrastructure (water supply, sanitation and sewage projects)
- Mining
- Exploration and Refining
- Cold storage or cold room facility, including for farm level pre-cooling, for preservation or storage of agricultural and allied produce, marine products and meat.
- Trade Credit must be availed for Minimum fifteen months at one go and should not be in the nature of short-term rollovers.
- For Existing Trade Credit transactions availed on or before 14th December 2012, abinitio (from beginning) buyers credit would be for min tenure of 6 months.
- Banks are 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.
- All-in-cost ceiling for upto 5 years is 6 Month Libor + 350 bps. The all-in-cost ceilings include arranger fee, upfront fee, management fee, handling/ processing charges, out of pocket and legal expenses, if any.
- All other policy of trade credit remains unchanged and needs to be complied with.
- Starts from : Immediately
- Ends on: Subject to review based on the experience gained in this regard by RBI
- RBI has allowed refinancing of such bridge finance (if in the nature of buyers’/suppliers’ credit) availed of, with an ECB under the automatic route subject to conditions.
Reference:
- Revised Guidelines: Trade Credit for Import into India: Dated: 11-09-2012
- Master Direction – External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers
- Recent Circular: External Commercial Borrowing (ECB) Policy – Bridge Finance for Infrastructure Sector: Dated: 11-09-2012
- Earlier Circular: External Commercial Borrowing (ECB) – Bridge Finance for Infrastructure Sector: Dated: 23-09-2011
Buyer's Credit & Supplier's Credit 
Whether Advance part-payment against import contract is possible?
Buyers Credit for any amount paid as advance either part or full is not allowed as RBI Caster Circular on External Commercial Borrowing and Trade Credit. Inference has to drawn the above circular. Circular says maximum tenure allowed for buyers credit from the date of shipment is (shipped on board date) upto 360 days in case of non capital goods (Raw Material, Consumables, Accessories, Spares, Components, Parts etc) and upto 3 years in case capital goods. Any Advance Payment always done before shipment of goods. And thus not allowed.
RBI Circular: Refer Section of Trade Credit
If compnay had lost Bill of Entry and AD Bank asked for BOE than how to arrange duplicate BOE or what is the way to handle missing BOE.
There are two solutions for the given issue.
1. From Reserve Bank if India
Master Circular Import of Goods and Services, provides below provision in case of non availability of Bill of Entry
2. From Custom’s Side:
Refer the link: Procedure for issuing certificate / duplicate copy of bill of entry, when the importer’s copy of EDI Bill of Entry is lost / misplaced / mutilated / destroyed