For filing salaried return Form 16 is issued by the employer to its employees. Salaried Individual gets various allowance / expense under the head of Salary, which are either tax free or exempt from salary income.
This article talks about various Allowances Under Section 10 and extent to which they are exempted.
1. How will the Customer know whether the Registration has been approved or rejected by the Relationship Bank?
Answer: The Customer will receive an email on his registered email id on approval or rejection by the Relationship bank. The customer can also check the status of the registration using the link sent to
the email id.
In earlier article “Forex Trading Platform – FX-Retail” we discussed about basic features of the FX-Retail platform.
This article further dives into the terms and conditions applicable while dealing on FX-Retail.
RBI was getting issue of transparent and fair pricing in the retail forex market in various fora and public interactions. In 2017 RBI issued “Discussion paper on foreign exchange trading platform for retail participants” and based on the feedback received a web based trading platform was developed by Clearcorp which is called FX-Retail.
Continue reading Forex Trading Platform “FX-Retail” from CCIL & RBI
Correspondent banking services are essential for companies and individuals to transact internationally and make cross-border payments. Recently read a report “Cross-Border Interbank Payments and Settlements – Emerging Opportunities for Digital Transformation” which highlighted many issues related to existing cross border payments and how Central Banks around the world are working towards solving these problems.
This article highlights issues related to Cross Border payments from the perspective of Sender and Beneficiary, Commercial Banks and what initiatives are underway to solve those problems.
Continue reading Correspondent Banking: Issues and Current Initiatives
Blockchain has been a buzz word for sometime, but now it has started touching our day to day life by solving actual problems. In relation to international trade, blockchain technology has made progress in
Continue reading Cross Border Payments – SWIFT vs RippleNet xCurrent
Over the years Indian importers have used Suppliers Credit and Buyers Credit as two different modes of Import financing. RBI had defined them as Trade Credit under Master Direction for ECB and Trade Credit.
Suppliers Credit structure was understood as financing of import usance Letter of Credit (LC) by Overseas branches / Foreign banks where as Buyers Credit was considered as financing against LOU/LOC till it was stopped by RBI.
Below given are RBI FAQs on Trade Credit updated as on 26- Dec-2018. RBI has issued revised guidelines under” Trade Credit : New Regulatory Framework“. Will update this article as when RBI updates the FAQs with revised guidelines.
Continue reading RBI FAQs on Trade Credit : Updated as on 26 Dec 2018
As discussed in the earlier article, RBI issued a circular related to Trade Credit – New Regulatory Framework which has provided clarity on many aspects of Trade credit (Buyers Credit / Suppliers Credit). One of this aspect is All-in-Cost Ceiling.
This article is about All-in-Cost definition, relevant extracts of RBI circular, what has changed and what will be its impact on trade credit products offered by banks.
Continue reading Trade Credit : Changes in All-in-Cost Ceiling
As discussed in earlier article, RBI issued a circular related to Trade Credit – New Regulatory Framework which has provided clarity on many aspects of Trade credit. One of the aspect is Trade Credit (Buyers Credit / Suppliers Credit) availed by units based in SEZ/FTWZ/DTA.
In this article we have provided relevant extracts related to SEZ/FTWZ/DTA, definition, documentation and process to be followed by developers and units.
Continue reading Can SEZ, FTWZ and DTA units avail Buyers Credit ?
RBI has issued a new regulatory framework for Trade Credit (TC) on March 13, 2019 effective immediately. Details of the circular is given below. In next articles we will cover the major changes in the RBI circular.
Continue reading RBI Circular : Trade Credit – New Regulatory Framework
In the earlier articles we have discussed about documents required under letter of credit (LC) and how to prepare and submit compliant document.
In this article we will discuss about, what is Negotiable Bill of Lading, Why endorsement is required, who should endorse and what are the endorsements required.
Continue reading How to Endorse a Negotiable Bill of Lading ?
In the earlier articles, we have discussed about LC format MT700, and how to prepare and check documents under LC. This article provides a checklist for exporter after Letter of Credit (LC) is opened before shipment of goods. This will help exporter better understand the details in LC and whether exporter will be able to comply with its terms. If not, exporter should ask to get amendment in relevant clause.
Continue reading How to Check if Letter of Credit is Workable
Post RBI disallowed LOU and LOC for buyers credit transactions, importers and banks are trying different structures which can assist in Import finance. Some of these structures are
This article is about Buyers Credit Against Standby Letter of Credit (SBLC), its meaning, process flow, documents required, costing, applicable rules, issues with the current structure and what should importer do to avail it.
Continue reading Buyers Credit Against Standby Letter of Credit (SBLC) / Bank Guarantee
New Article: RBI Circular: Trade Credit : New Regulatory Framework
RBI revised Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 on December 17, 2018 (link in reference). Revision is made to ECB guidelines, Trade Credit, borrowing by banks outside India and others.
This articles covers changes made to Trade Credit guidelines.
Post RBI disallowed LOU and LOC for buyers credit transactions, importers and banks are trying different structures which can assist in Import finance. Some of these structures are
Continue reading Reimbursement Finance (Usance LC Reimbursement at Sight)
Forward contract being an agreement to exchange currencies at a future date, it is likely that sometimes the customer may be unable to adhere to the contracted delivery schedule or the underlying transaction may itself get modified or cancelled. The importer/exporter may, therefore, in these cases request for
Continue reading Guidelines on Early Delivery, Extension & Cancellation of Forward Contract
Exchange rate is a rate at which one currency can be exchanged into another currency. In other words, it is the value of one currency in terms of another. Say:
USD 1 = INR 70
Purpose of Letter of credit (“LC”) is to give payment security to the beneficiary subject to documents presented under the LC complying with the requirements of the LC.
To check if documents are compliant, banks examine the required documents based on:
Continue reading How to Prepare and Check Letter of Credit Documents
Documents under Documentary Credit (letter of credit) are broadly classified into four categories namely
The Hindu Business Line Published our report on Buyers Credit Outstanding going down by $25 Billion on today’s front page.
Published with Approval: Original Article Link
Continue reading PNB scam fallout: Outstanding buyers’ credit shrinks by $25 b
Since RBI Stopped Buyers Credit Transactions against LOU and LOC, few questions kept on coming up regularly
In this article we have provided the data and analysis which will answer the first two questions.
Continue reading Buyers Credit Outstanding Down by $25 Billion
Indian Banks have closed 37 Overseas branches till date and another 60 – 70 branches are under review. This article gives an overall summary of Indian banks presence internationally, reason for reducing number of branches and bankwise update on branches closed or in process of closing.
Continue reading Why are Indian Banks Closing Overseas Branches ?
Department Related Parliamentary Standing Committee on Commerce Chaired by Shri Naresh Gujral, presented it report on 06 August 2018 on “Impact of Banking Misappropriation on Trade and Industry“
The report extensively covers RBI Ban on LOU / LOC and its impact on the Industry and committee’s recommendations. In summary, Committee has recommends that LoU/ LoC should be restored at the earliest albeit with proper safeguards.”
Continue reading LoU/ LoC should be restored with proper safeguards: Standing Committee Report
New Article: What can be termed as Suppliers Credit?
Supplier’s Credit is a structure of financing Import into India. In this structure, overseas suppliers or financial institutions outside India provide financing to importer on Libor linked rates against Usance letter of credit (LC). Supplier’s credit internationally is also known as Usance Payable at Sight (UPAS) structure.
Continue reading Letter of Credit Clauses Related to Suppliers Credit
Earlier article “Types of Swift Message used in Letter of Credit and Suppliers Credit” discussed details related to Category 7 message. This article further explore MT700 used for Letter of Credit Issuance. This will help importers understand various fields in MT700, related UCP 600 reference etc.
SWIFT system is used for Bank to Bank communication and Bank to Corporate communication. There are different type of Swift messages format related to specific purpose. This article focuses on Category 7 message.
Continue reading Types of SWIFT Message used in Letter of Credit and Suppliers Credit
The LEI is a 20-digit, alpha-numeric code that identifies legal entities participating in financial transactions. Each LEI is unique and contains reference information that enables simple and quick identification of an entity. As an international standard (based on ISO 17442), all LEI information is openly published and accessible to all.
Article in firstpost.com printed with permission:
An industry-wide practice that worked well until the end of business hours on Tuesday, which allowed D Dhanasekaran’s Tiruppur-based textiles firm — Abi Tex Mills — import machinery from Oman and boost production, has now gone haywire with the Reserve Bank of India’s (RBI) decision to bar banks from issuing guarantees in the form of letters of undertaking (LoUs) and letters of comfort. “My machinery took a year to be imported and has been installed in the factory for a few months now. But now with buyer’s credit cancelled, I am focused on how to make payments instead of my production,” Dhanasekaran said.
Continue reading Reserve Bank’s decision to ban LoUs will badly Impact SME
As per Government of India revert in Rajya Sabha, PNB has taken below steps to ensure that such unauthorised activities in SWIFT systems are not repeated (other banks may have changed accordingly):
Continue reading Indian Banks adds Additional Control to SWIFT System
New Article: RBI Circular: Trade Credit : New Regulatory Framework
Latest RBI Circular : RBI stops Buyers Credit. As is circular copy given below. Please refer bold section.
Continue reading RBI Stops Buyers Credit Transactions (LOU & LOC)
A bank branch goes through four kinds of audits and inspection
In relation to buyers credit transaction, below are the few audit point which are covered by above audits.
Continue reading Bank Audit – Buyers Credit and Nostro Account
During the PNB Fraud case, one of the Banks made a statement that:
“It is an active participant in the secondary market for buyer’s credit transactions and it has sold “all the referred transactions’’.
This article tries to throw some light on what is buyers credit secondary market, how the structure works and why banks do transaction in secondary market.
The Telegraph has quoted me in the below article related to PNB scam impact on buyers credit: Article: “Nimo Fallout on Imports”
RBI in its 2016 Circular to banks had mentioned problem in relation to process followed for issue and reconciliation of SWIFT messages related to Trade finance products and corrective actions banks should take to prevent any fraud. Worth a read.
Continue reading RBI 2016 Circular : Frauds Related to Trade Finance Transactions – Misuse of SWIFT
Latest Articles:
This article gives layman summary of the PNB fraud case and its impact on buyers credit product and various stake holders like Indian Bank Overseas Branches, Local Banks in India and Importers.
Continue reading Implication on Buyers Credit because of PNB Fraud
New Article: What can be termed as Suppliers Credit?
Supplier’s Credit is a structure of financing Import into India. In this structure, overseas suppliers or financial institutions outside India provide financing to importer on Libor linked rates against Usance letter of credit (LC). Importer and Overseas Bank will have to follow below process
On 5 December 2017, European Union (EU) Council approved and published a list of non-cooperative jurisdictions. Criteria used were:
Continue reading EU list of Non-Cooperative Jurisdictions : No Impact on Buyers Credit
As per Accounting Standard 11 – The effects of Changes in Foreign Exchange Rates on Import of Capital Goods / Fixed Assets are
Continue reading Applicability of AS 11 in Buyers Credit on Capital Goods
In earlier article “WHT (Withholding Tax) on Interest on Buyers Credit” and “Withholding Tax (WHT) on Suppliers Credit Transaction”, we had discussed that if buyers credit or suppliers credit is arranged from Mauritius based bank / branches, there was no withholding tax on interest payment as per Double Taxation Avoidance Agreements (DTAA).
India-Mauritius Tax Treaty was amended on 10 May 2016 and got effective from 01 April 2017. In this article, only amendment related to Interest Payment (Article 11) is covered.
Continue reading Interest Payment to Mauritius: 7.5% Withholding Tax
In earlier article we have discussed about various aspect of Libor and its Impact on buyers credit transaction.
In brief, Libor attempts to answer a fundamental question: What is the cost of money? It does this for a range of currencies (dollars, euros, pounds, etc.) and for a range of maturities.
Recently a query from importer came in after buyers credit transaction was funded for replacing the underlying import document with another document.
Continue reading Replacing Import Documents after Buyers Credit Funding
Currency fluctuation is one of the factor effecting Buyers Credit.
Chart: www.xe.com
From 62 Level starting 2015, USD INR moved to 68 levels and since then has come back to 64 levels in 2017. This article explores impact of stronger rupee on importers who have availed buyers credit.
As per RBI Master Direction on External Commercial Borrowing and Trade Credit banks are allowed to sanction buyers credit on import of capital goods for 3 years with Letter of Undertaking.
In order to avail above buyers credit, Importer will have to get term loan sanctioned with buyers credit as sub-limit with his bank. As seen in earlier article “Buyers Credit on Capital Goods“, moratorium period is one of the factor which importer needs to take care at time of sanctioning of term loan. This article explains
Buyers Credit transactions are funded on Libor rates. Thus any change in Libor directly impact overall costing of the transaction.
Libor rates started rising in 2015 and pace of which got picked up since beginning of 2017. Below 3 Month Libor and 6 Month Libor charts shows the trend. There are two charts for two range.
Continue reading Rising Libor Rates and Its Impact on Buyers Credit
Trigger for this topic is a question that a reader asked:
Can I take buyer credit quote of 12M+LIBOR for capital goods import. Is there any specified guidelines that we have to take 6M+LIBOR / 3M+LIBOR only.
Continue reading Link Between Libor Periods & Buyers Credit Tenure
Form 15CA and Form 15CB Certificate may be applicable in few cases of Buyers Credit Repayment. Over the period of time there has been many changes to regulation and latest one issued on 16th December 2015 and got implemented from April 1, 2016.
Continue reading Form 15CA and Form 15CB for Buyers Credit Repayments
Buyer's Credit & Supplier's Credit 