• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

RBI has simplified the procedure for imports into India by stipulating uniform regulations and procedures for suppliers' credit and buyers' credit - the two categories of short-term credit. In suppliers' credit, the overseas supplier extends the credit for imports into India for a period of more than six months. Buyers' credit involves loans for payment of imports into India arranged by the importer from a bank or financial institution outside India for maturity of less than three years. Both these require prior approval of the RBI.

Now, the RBI has issued directions under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999, stating that authorised dealers may approve proposals received (in Form ECB) for short-term credit for financing - by way of either Suppliers' Credit or Buyers' Credit - of import of goods into India, based on uniform criteria. Credit is to be extended for a period of less than three years; amount of credit should not exceed $20 million, per import transaction; the `all-in-cost' per annum, payable for the credit is not to exceed LIBOR + 50 basis points for credit up to one year, and LIBOR + 125 basis points for credits for periods beyond one year but less than three years, for the currency of credit.

All applications for short-term credit exceeding $20 million for any import transaction are to be forwarded to the Chief General Manager, Exchange Control Department, Reserve Bank of India, Central Office, External Commercial Borrowing (ECB) Division, Mumbai.

Each credit has to be given `a unique identification number' by authorised dealers and the number so allotted should be quoted in all references. The International Banking Division of the authorised dealer is required to furnish the details of approvals granted by all its branches, during the month, in Form ECB-ST to the RBI, so as to reach not later than 5th of the following month. (Circular AP (DIR Series) No 24 dated September 27, 2002)

Hassle-free forex

A communiqué from the RBI highlights the simplification of documentation and procedures for forex release, aimed at ensuring that resident individuals are able to obtain foreign exchange with minimum formalities. In mid- September, this year, the RBI advised authorised dealers that for release of forex up to $500 to resident individuals, no document need be called for at all. To make the service hassle-free, there is a further direction that so long as necessary details - namely, name and address of the applicant, name and address of the beneficiary, amount to be remitted and purpose of remittance - are indicated, the applicants are not required to even to fill up the prescribed application in Form A-2.

Bonafide applicants wishing to obtain foreign exchange need not produce any documents for the following categories of transactions: For tourism up to $5,000, in one calendar year; for business travel up to $25,000 per trip; for studies up to $30,000 per academic year; for medical treatment up to $50,000; and gift/donations up to $5,000 in a year.

However, for remittance or purchase of foreign exchange for all these eligible purposes, payment has to be made by a cheque drawn on the applicant's bank account or by a demand draft.

Further, international credit cards, ATM cards, debit cards can be used on Internet also for any purpose for which exchange can be purchased from an authorised dealer in India. Examples of such purposes would be - for meeting travel expenses outside India; for import of books; purchase of downloadable software; or import of any other item into India that is permissible under the current Exim policy. (Press Release No 335/2002-2003 dated Sep 27, 2002)

D. Murali

Send this article to Friends by E-Mail
Comment on this article to BLFeedback@thehindu.co.in

Stories in this Section
Anti-dumping duty on acrylic fibre imports

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line