Type of Transaction Where Buyer’s Credit Cannot be Done
- Incase of local trade
- Advance payment for Imports: Buyers Credit for any amount paid as advance either part or full is not allowed as RBI Caster Circular on External Commercial Borrowing and Trade Credit. Inference has to drawn the above circular. Circular says maximum tenure allowed for buyers credit from the date of shipment is (shipped on board date) upto 360 days in case of raw material and upto 3 years in case capital goods. Any Advance Payment always done before shipment of goods. And thus not allowed.
- Not allowed for import of services
Type of Transaction Where Buyer’s Credit can be Done for Limited Amount
Case where import bill are directly received by importer from his overseas supplier, buyers credit amount is restricted upto $ 3,00,000.
- Import bill received by wholly owned Indian subsidiary of foreign companies from their principal
- Import bill received by Status Holder Exporters as defined in the Foreign Trade Policy, 100% Export Oriented Units, Units in Special Economic Zones, Public Sector Undertakings and Limited Companies
- Import bills received by all limited companies viz. public limited companies, deemed public limited and private limited companies.
Type of Transaction Where Buyer’s Credit can be Done for Limited Tenure
When below given goods / commodity are involved, buyer’s credit and suppliers credit cannot exceed 90 days from the date of shipment as per Reserve Bank of India (RBI) guidelines
- Rough, Cut and Polishes Diamonds
- Silver, Platinum, Palladium, Rodhium
- Master Direction – External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency by Authorised Dealers and Persons other than Authorised Dealers
- RBI Master Direction – Import of Goods and Services
- Buyer’s / Supplier’s Credit on Rough, Cut and Polished Diamonds
- Import of Platinum, Palladium, Rhodium, Silver