RBI vide RBI/2012-13/202 A.P. (DIR Series) Circular No. 28 dated 11 September, 2012 had decided to allow the companies in the infrastructure sector, where “infrastructure” is as defined under the extant guidelines on External Commercial Borrowings (ECB) to avail of trade credit up to a maximum period of five years for import of capital goods as classified by DGFT subject to the following conditions: -

  1. The trade credit must be abinitio contracted for a period not less than fifteen months and should not be in the nature of short-term roll overs; and
  2. AD 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.

The all-in-cost ceilings of trade credit will be as under:

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* for the respective currency of credit or applicable benchmark

RBI further clarified that, the all-in-cost ceilings include arranger fee, upfront fee, management fee, handling/ processing charges, out of pocket and legal expenses, if any.