SCHEDULE II - Trade Credit for Imports [See Regulations 4(B)(ii) & 6(B)(iii)] - Foreign Exchange Management (Borrowing and Lending) Regulations, 2018

SCHEDULE II [See Regulations 4(B)(ii) 6(B)(iii)] Trade Credit for Imports Importers may raise trade credits from outside India in accordance with the provisions contained in this Schedule. 1. Purpose Trade Credits can be raised for the purpose of import of non-capital and capital goods as permitted under the extant Foreign Trade Policy of the DGFT and for purchase of non-capital and capital goods within a Special Economic Zone (SEZ) or from a different SEZ subject to terms and conditions as stipulated by the Reserve Bank from time to time. Explanation : SEZ is as defined in the SEZ Act, 2005 . 2. Currency of borrowing Trade credits can be raised in any freely convertible foreign currency as well as in Indian Rupees or any other currency as specified by the Reserve Bank in consultation with the Government of India. 3. Amount of borrowing Importers can raise trade credit up to 50 million equivalent per import transaction for import of capital or non-capital goods or any other amount as decided by the Reserve Bank in consultation with the Government of India. 4. Period The period of trade credit reckoned from the date of shipment shall be as under: i. For import of non-capital goods Maximum period of up to one year and linked with the operating cycle, or for a period as per the guidelines issued by the Reserve Bank from time to time for any import of any goods / for import by any specific sector. ii. For import of capital goods Maximum period of three years or for a period as per the guidelines issued by the Reserve Bank from time to time. 5. Recognised Lenders Overseas suppliers, banks and other financial institutions, foreign equity holders and financial institutions in International Financial Services Centres (IFSCs) in India or any other entities as decided by the Reserve Bank in consultation with the Government of India. 6. Cost: i. For trade credits in foreign exchange, the maximum spread over the benchmark of 6-month LIBOR or applicable benchmark for the respective currency will be 250 basis points per annum or as prescribed by the Reserve Bank in consultation with the Government of India. ii. For Rupee denominated trade credit, the all-in-cost shall be commensurate with prevailing market conditions or as prescribed by the Reserve Bank in consultation with the Government of India. 7. Security and guarantee The borrower covered in this Schedule may provide security to the lender / suppliers, as specified by the Reserve Bank from time to time in terms of these regulations or under any other Regulations framed under the Act. The borrower may also provide corporate and / or personal guarantee as security for the borrowing subject to terms and conditions as specified by the Reserve Bank from time to time. Further, AD Category I banks are permitted to issue bank guarantees in favour of overseas supplier, bank or financial institution duly ensuring the underlying import /trade credit complies with extant norms. 8. Reporting requirements The reporting requirement and procedure will be as specified by the Reserve Bank from time to time.