The Reserve Bank of India (RBI) has decided to review the all-in-cost ceiling for trade credits for imports into India.
Accordingly, it has been decided that for a maturity period of over six months LIBOR for the respective currency of credit or applicable benchmark, up to one year, the all-in-cost ceiling in respect of trade credits will now be revised to 75 basis points as against the previous 50 basis points.
However, the all-in-cost ceiling for trade credits for more than a year up to three years, will remain unchanged at 125 basis points.
?This amendment to trade credit policy will come into force immediately. All other aspects of trade credit remain unchanged,? the central bank said.
These instructions supersede earlier instructions on trade credit issued by the Reserve Bank and will be subject to review from time to time.
The all-in-cost ceilings include arranger fee, upfront fee, management fee, handling and processing charges, out of pocket and legal expenses, if any. The all-in-cost ceilings will be reviewed from time to time.