With a view to contain the surging current account deficit, the Reserve Bank of India (RBI) has tightened norms for import of precious and semi-precious stones by imposing a limit of 90 days towards letter of credit.
The RBI, in its notification, said ‘suppliers and buyers, credit (trade credit) including the usance period of Letters of Credit opened for import of precious stones and semi-precious stones should not exceed 90 days from the date of shipment’. The revised directions will come to force with immediate effect.
A letter of credit is issued by a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
As per this norm, banks are permitted to approve the Suppliers' and Buyers' credit through the letter of credit opened for import of precious stones in any form for a period not exceeding 90 days from the date of shipment. It is also applicable for jewellery made of gold, precious metal, semi-precious, any studded with diamond and precious stone.
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