Trade Credit of Diamond LCs Revised to Maximum
180 Days from 90 Days
[RBI Circular No. 02
dated 7th July 2014]
Sub: Foreign Exchange
Management Act, 1999 – Import of Rough, Cut and Polished Diamonds
Attention of Authorised
Dealer Category – I (AD Category – I) banks is invited to the A.P.(DIR Series)
Circular No.59 dated May 6, 2011, in terms of which AD Category – I banks were
permitted to approve Suppliers’ and Buyers’ Credit (Trade Credit), including
the usance period of Letters of Credit for import of
Rough, Cut and
Polished Diamonds for a
period not exceeding 90 days from the date of shipment.
2. Taking into consideration the representations received from the diamond
importers and the GJEPC, it has been decided, in consultation with the
Government of India, that the Clean Credit i.e. credit given by a foreign
supplier to its Indian customer/ buyer, without any Letter of Credit
(Suppliers’ Credit) / Letter of Undertaking (Buyers’ Credit) / Fixed Deposits
from any Indian financial institution for import of Rough, Cut and Polished
Diamonds, may be permitted for a period not exceeding 180 days from the date of
shipment. The revised directions will come into force with immediate effect.
3. AD Category – I banks should ensure that due diligence is
undertaken and Know-Your-Customer (KYC) Norms and Anti-Money Laundering (AML)
Standards, issued by the Reserve Bank are adhered to while undertaking the
import transactions. Further, any large or abnormal increase in the volume of
business should be closely examined to ensure that the transactions are bonafide. All other instructions relating to imports of
Rough, Cut and Polished Diamonds shall continue. 4. AD Category – I banks may
bring the contents of this circular to the notice of their constituents and
customers concerned.
5. The directions contained in this circular have been issued under
Section 10 (4) and Section 11 (1) of the Foreign Exchange Management Act
(FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals,
if any, required under any other law.