For Quick Alerts
For Daily Alerts

Short term financing for merchanting trade transcations: RBI

Short term financing for merchanting trade transcations: RBI
Merchanting trade or intermediary trade transactions entail goods purchase by Indian residents from non-resident Indians (NRIs) and again re-selling them to the NRI without the goods actually touching the Indian shore. Goods covered within the scheme are those allowed under the current Foreign Trade Policy of India (FTP) for imports and exports.

The guidelines in lieu of merchanting trade were previously released by the Reserve Bank of India (RBI) in the year 2003. With some revisions and provisions, RBI has again released the guidelines on merchanting yesterday.

As net foreign exchange inflows result on account of merchanting, RBI has allowed the provision of short-term credit for both the import and export leg of the trade (purchase of goods by the resident and resale to NRI resident). Simultaneously, time period for completion of the merchanting trade activity has also been revised from the stipulated six months to nine months.

For accounting the merchanting trade time, shipment date/ import leg receipt or export leg receipt (whichever is earlier) shall be deemed as commencement while for the trade to be considered as completed date of shipment or import or export leg receipt which is later shall be considered.

Also, foreign exchange outlay shall not be allowed beyond 4 months time. In order to confirm genuineness of the trade, bank should verify all such trade-related documents; including packing list, insurance documents, transport documents and invoices among others.

For better tracking of merchanting trading by the authorities, AD bank has been prescribed to report outstanding merchanting trade on half-yearly basis and report any defaults to the RBI conecerning either of the arm of the trade.

Company Search
Get Instant News Updates
Notification Settings X
Time Settings
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more