RBI scraps LoUs, LOCs for trade credit
The Dollar Business Bureau The Reserve Bank of India (RBI) on Tuesday scrapped issuance of guarantees in the form of Letter of Undertaking (LoU) and Letter of Comfort (LoC) by the commercial banks, with immediate effect. The latest regulatory clampdown by the RBI came in the wake of fraud in Punjab National Bank (PNB), as the regulator tries to plug a loophole and improve due diligence in trade credit by banks. However, the regulator said that the Letters of Credit and bank guarantees may continue to be issued, subject to meeting certain rules. These instruments are a forms of trade finance used by importers for funding their international purchases. “On a review of the extant guidelines, it has been decided to discontinue the practice of issuance of LoUs/LoCs for Trade Credits ...
Govt imposes MEP of $850/MT on onions to boost domestic supplies
The Dollar Business Bureau In order to increase local supplies and to control rising prices, the Government on Thursday levied a minimum export price (MEP) of $850 per metric tonne (MT) on onions till the end of this year. Minimum Export Price is the minimum rate below which exports are not allowed. In December 2015, the Government has scrapped the MEP of onion. “Export of all varieties of onions will be allowed only on Letter of Credit (LC) subject to a minimum export price (MEP) of $850 FOB per metric tonne till December 31, 2017, Directorate General of Foreign Trade (DGFT) said in a notification (No.39/2015-2020), dated November 23. The retail prices of onion have surged to Rs.50-65 per kg in most of the ...
BGR energy scraps power plant contract in Iraq
The Dollar Business Bureau BGR Energy Systems has canceled a $246-million order to set up a 500 MW gas turbine power plant in Iraq for Al Nasiriya. The company in its BSE filing said, “The company has now struck off a carryover contract value of $246 million from its order book." It has entered into an Engineering Procurement Construction (EPC) contract on October 13, 2013 which was valued at $246 million for the Al Nasiriya 500 MW Gas Turbine Power Plant project with the Ministry of Electricity, Iraq(MoE). According to the terms of the contract, the MoE has provided a Letter of Credit for 50 percent of the contract value in favor of BGR Energy. It has also issued a performance bond equal ...
Challenges in international trade and role of International Chamber of Commerce (ICC)
Rajesh Narain Gupta, Managing Partner, SNG & Partners The role of the International Chamber of Commerce (ICC) has become crucial in today’s world due to the ever increasing trade disputes between countries, traders and banks, and with nations competing in placing protectionist measures in contravention of globally-set rules. In the days to come, ICC, which is regarded as the voice of the business world, is set to play a bigger role, especially in the case of emerging economic powers like India. The ICC, a few years short of its centenary, has been formulating and updating the rules regarding contractual obligations to make those uniform and help parties overcome conflicting national regulations which are detrimental to seamless flow of trade ...
