ANNOUNCEMENT 15 Nov 2011In November 2011, the government of India announced a change in its trade finance instruments.
NUMBER OF INTERVENTIONS
On 15 November 2011, the Reserve Bank of India (RBI) increased the all-in-cost ceiling for availing import trade credits from 200 bps to 350 bps over 6 months LIBOR.
The all-in-cost ceiling refers to the maximum spread over LIBOR at which contracts for trade credits can be made, and it includes arranger fee, upfront fee, management fee, handling/ processing charges, out of pocket and legal expenses, if any. According the RBI, the measure was introduced owing to certain developments in the global financial markets and difficulties for importers to raise trade credit. The increase in this ceiling is expected to make it easier for domestic firms to import goods to the benefit of foreign suppliers.
The vailidity of the above rate has been extended several times and is currently applicable until 30 June 2014.