Cir. Letter No. 07 /EPP.16(326)NFCA-2002

Head/Principal Offices of
all Authorized Dealers
in Foreign Exchange,

Dear Sirs,

TRADE LOANS UNDER FE 25 OF 1998

In continuation of our circular letter No. 5/EPP.16(326)NFCA-2002 dated August 23, 2002, we would like to further clarify as under:-

i) Authorised Dealers are allowed to utilize the funds under FE 25, generated through the following sources, for lending for trade related activities i.e. imports and exports:

a) Interbank placements

b) Interbank SWAPs (Buy/Sell $)

ii) Foreign currency funds generated through SWAPs (Buy/Sell $) from the State Bank would also be eligible for financing of above trade-related activities.

2. It may further be noted that re-discounting of the export documents abroad in Foreign Currency is also permissible during normal course of business. Authorised Dealers are allowed to remit re-discounting charges according to para 18 Chapter XIV of FE Manual (8th Edition 2002).

3. Please advise your branches and other constituents accordingly.