Regulatory Alerts2021-06-21
Added
FEPD Circular No. 22: Indicative cost for access to short term permissible trade finance in foreign exchange
The document establishes flexible indicative costs for short-term export and import trade finance by allowing alternative reference rates, declared by competent bodies, to replace LIBOR with a prescribed markup of 3.50 percent per annum. It permits flexible tenors for financing and specifies that effective interest may be compounded in advance for export bills or in arrears for import finance when tenure-linked rates are absent. For risk-free benchmark rates, an additional risk premium not exceeding 2.50 percent per annum may be added to the markup. Authorized Dealers are instructed to refrain from arranging LIBOR-tagged financing once global discourse indicates a deadline for its usability.
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