As per 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.
In the recent past, representations have been made to Reserve Bank of India, by The Gem & Jewellery Export Promotion Council and Diamond importers 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.
RBI in consultation of Government of India has issued the necessary revised directions vide RBI Lr.No. RBI/2014-15/119 A.P. (DIR Series) Circular No.2 dt.July 7, 2014.
The revised directions will come into force with immediate effect.
It is the responsibility of AD Category – I banks to 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. RBI has also clarified that all other instructions relating to imports of Rough, Cut and Polished Diamonds shall continue.
The move is expected to benefit a large number of medium Gem importers.