Import of Gold on Loan Basis - RBI Clarifies
RBI had notified the maximum tenor of gold loan as 240 days consisting of 60 days for manufacture and exports +180 days for fixing the price and repayment of gold loan as per the Foreign Trade Policy 2004-2009 of the Government of India and that the tenor of the Standby Letter of Credit (SBLC), for import of gold on loan basis, wherever required, should be in line with the tenor of gold loan.
Para 4A 23.2 and para 4A 23.3 of the Hand Book of Procedures (HBP) Vol. I of the Foreign Trade Policy (FTP) 2009-14 states that, "the export has to be completed within a maximum period of 90 days from the date of release of gold on loan basis", and that, "the exporter shall have flexibility to fix the price and repay gold loan within 180 days from date of export".
Accordingly, the maximum tenor of gold loan becomes 270 days at present (i.e. 90 days for manufacture and export + 180 days for fixing the price and repayment) as per FTP 2009-14.
Now, RBI clarifies that:
(i) the maximum period of gold loan shall be as per the Foreign Trade Policy 2009-14 or as notified by the Government of India from time to time, in this regard and
(ii) the tenor of SBLC, for import of gold on loan basis, wherever required, should also be in line with the tenor of gold loan.
RBI A.P. (DIR Series) Circular No. 83, Dated: February 27, 2012