IECD No. 3/04.02.02/2002-03

July 10, 2002

The Chairmen/Chief Executives
of all commercial banks,

Dear Sir,

Normal Transit Period (NTP) for exports
to Iraq under U.N. guidelines

Please refer to our circular No.12/04.02.02/2000-01 dated March 7, 2001 advising banks to extend the concessional rate of interest in respect of exports to Iraq under U.N. guidelines for a maximum period of 90 days.

2. Based on the general experience of banks/exporters in respect of export of goods to Iraq in realising the proceeds in time, the issue has been re-examined by us in consultation with Foreign Exchange Dealers' Association of India and on reconsideration, the NTP has been enhanced to a maximum of 120 days from the date of shipment of goods to Iraq under U.N. guidelines by duly amending the relevant rule vide their AR Circular No.04/2002 dated April 1, 2002 (copy enclosed). Accordingly, banks may charge interest on post-shipment credit for exports to Iraq under U.N. Guidelines as a special case for a temporary period as under:

	Interest rates
a) On demand bills for transit period (as specified by FEDAI) upto 120 days	Not exceeding PLR minus 2.5 percentage points.
b) Usance bills
i) upto 120 days	Not exceeding PLR minus 2.5 percentage points
ii) beyond 120 days and upto six months from the date of shipment	Not exceeding PLR plus 0.5 percentage point.

3. Please acknowledge receipt.

Yours faithfully,

(Smt. R.K. Makhija)
General Manager

 

Foreign Exchange Dealers' Association of India
(Registered under Section 25 of The Companies Act, 1956)
17th Floor, Maker Towers `F' Cuffe Parade, Mumbai - 400 005.
Tel 218 4432/218 2549/218 4200 FAX 218 9946 TLX 011-82767

FEDA IN

E-mail: fedai@bom5.vsnl.net.in       Website : www.fedai.org.in

AR Circular No.04/2002

1st April 2002

All Authorised Dealers in Foreign Exchange

Normal Transit Period
Exports to Iraq under U N Guidelines

Please refer to FEDAI Rule 2 A.4 (ii) and Circular AR 1/2001 dated 2nd February 2001.

With the approval of our Managing Committee the Rule stands amended as under:

'Rule 2 A.4 (ii) - Exports to Iraq

In respect of exports to Iraq under United Nations Guidelines, where payment under letters of credit is made on arrival of goods upon issuance of certificate by U.N. Agency to the effect that the exports conform to the guidelines laid down by United Nations, the applicable Normal Transit Period shall be for a maximum of 120 days from the date of shipment for which concessional rate of interest shall be recovered.

The concessional rates of interest as advised by RBI from time to time for the first 90 days and beyond 90 days (upto 120 days) are applicable for this transactions'.

Please be guided accordingly and make a suitable note against the relevant Rule in the Rule Book in your possession.

Secretary