The Reserve Bank of India (RBI) has directed authorised category 1 banks to ensure that the period of trade credit, including the usance period of Letters of Credit, opened for import of rough, cut and polished diamonds should not exceed 90 days from the date of shipment.
RBI said the revised directions would come into force with immediate effect.
RBI said the directions has been issued in the context of recent developments, and has asked authorised banks to ensure that due diligence is undertaken and `know-your-customer' norms and anti-money laundering standards, issued by the RBI are adhered to while undertaking the import transactions.
Further, any large or abnormal increase in the volume of business should be closely examined to ensure that the transactions are bonafide and are not intended for interest/currency arbitrage, RBI said in its notification.
All other instructions relating to imports of rough, cut and polished diamonds will continue, it said.
The earlier instructions, issued on 29 December 2009, on direct import of gold, platinum / palladium/ rhodium /silver and advance remittance for import of rough diamonds, will remain unchanged, RBI said.