Recently RBI issued Notification No. FEMA.3(R)/2018-RB dated December 17, 2018 and made changes to the Trade Credit (Supplier’s Credit/Buyer’s Credit) framework. The circular covered borrowing & lending in foreign currency (including Trade Credit which is a type of borrowing in foreign currency). The changes effected were covered in Schedule II of the said circular.
Subsequently, RBI issued A.P. (DIR Series) Circular No. 23 dated March 13, 2019 and laid out the revised framework for Trade Credit in India. This revised policy replaces the existing Master Direction on Trade Credits with immediate effect.
This brings us to the pertinent question – what has changed? Our team at Myforexeye studied the two circulars and has consulted with few industry veterans and prepared a short summary for clients & other enthusiasts. The summary is for Trade Credit under the ‘automatic route’.
What has changed/been amended?
What is new?
What remains the same?
16 Oct 2019 04:12 PM
Excess of exports over imports results in a trade surplus which indicated a growth in the economy as there is more surplus funds at the hands of the consumers.
11 Oct 2019 04:16 PM
forward foreign exchange is a contract through which one can either buy or sell a fixed amount of foreign currency at a pre-determined price which is settled at a future date.
30 Sep 2019 04:51 PM
The interest rates are higher than the other economies, there is likely to be an inflow of foreign exchange thus making the local currency appreciates as demand increases.
23 Sep 2019 04:58 PM
Currency risk is the risk which arises with the change in value of one currency with respect to another,Managed by using derivatives products like forward contracts.
20 Sep 2019 12:52 PM
A cross border payment refers to transactions which are operated in atleast two different countries. The operations may be between individuals,financial institutions.
13 Sep 2019 12:56 PM
Foreign Exchange Swap is a contract which includes simultaneous borrowing and lending. It includes two transaction- forward and spot executed at future date.