India - Country Commercial Guide
Trade Financing

It covers payment methods and information on, banking systems, foreign exchange controls, and U.S. and correspondent banking. 

Last published date: 2020-08-25

Methods of Payment 

Import financing procedures adhere to western business practices.  The safest method of receiving payments from Indian importers is through an irrevocable letter of credit (L/C).  The L/C should be payable in favor of the supplier against presentation of shipping documents through the importer’s bank.  Importers open L/Cs valid for three to six months depending upon the terms of the agreement. Typically, L/Cs are opened for a specified period to cover production and shipping.  There are several lines of credit available to U.S companies.

The Indian Rupee is partially convertible currency.  The Reserve Bank of India (RBI) and Foreign Exchange Management Act, 1999 govern transactions involving foreign exchange.  RBI delegates its powers to authorized dealers with suitable guidelines to deal in foreign exchanges.

Indian importers must comply with guidelines in Master Direction-Import of goods and services for import related payments.  The guidelines specify time limits for import payments and advance remittances including interest payment mechanism.  They also cover procedures for receiving import documents and for purchase of foreign currency, gold, aviation goods, non-physical imports, and other special situations such as import payments through online Payment Gateway Service Providers.

A resident Indian may pay for import of goods in foreign exchange with international credit card or debit card issued through the credit/debit card servicing bank in India against the charge slip signed by the importer and if the transaction conforms to the foreign trade policy in force.

RBI authorized banks can enter into factoring arrangement with international factoring companies, preferably, members of the Factors Chain International.  RBI approval is not required for transactions compliant with latest foreign trade policy and import related foreign exchange guidance.

Deferred payment arrangements (including suppliers’ and buyers’ credit) up to five years are treated as trade credits.   RBI has issued related guidance in Master Direction - External Commercial Borrowings, Trade Credits and Structured Obligations (Updated as of August 8, 2019).  Indian importers have access to trade credits extended by overseas suppliers, banks, financial institutions, and other lenders recognized in this framework.  They can choose between local currency or foreign currency for import of capital goods and non-capital goods allowed under India’s foreign trade policy.  

India also has its credit rating framework enabled by credit rating agencies registered and authorized by Securities and Exchange Board of India (SEBI).  Such agencies compute and share credit scores and reports with financial institutions and applicants. Credit rating agencies in India include Credit Rating Information Services of India Limited (CRISIL), India Rating and Research Private Limited, The Investment Information and Credit Rating Agency (ICRA), Credit Analysis and Research Limited (CARE), Brickwork Ratings India Private Limited, SMERA Ratings Limited and Infometrics Valuation and Rating Private Limited.

The card mechanism in India supports a wide variety of debit and credit cards issued by banks and supported by Visa, MasterCard, Discover, American Express, RuPay and JCB networks.   According to the Reserve Bank of India (RBI), the number of credit cards and debit cards issued have soared to 50 million and 824 million, respectively.

For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide.

Banking Systems 

India has an extensive banking network in urban and rural areas that includes 12 public sector, 22 private sector and 44 foreign commercial banks.  10 small finance banks and seven payment banks are the latest addition to the banking network to improve financial inclusion in the country.  In addition, there is a large network of regional rural banks and cooperative banks.  Public sector banks in India that have dominated the Indian banking industry for many years have witnessed turmoil in recent times due to bad asset quality and non-performing assets.  The Government of India recently led a massive restructuring and recapitalization of public sector banks to address the issues of non-performing assets and rising loan defaults.

Open banking in India is gaining popularity with emergence of Unified Payment Interface (UPI) and mobile wallets for digital payments.  Indian banks, realizing the need to be a part of digital innovation, have embraced FinTech solutions by offering digital lending, insurance, capital market and asset management, and Robo- advisory services.

RBI, as the central banking institution, has the sole authority for issuing bank notes and is also responsible for granting licenses for new bank branches.  It is also the supervisory body for banking operations in India and administers exchange control, banking regulations and government’s monetary policy.  Indian banks must also adhere to the prudential norms laid down by the Basel Group.

Indian companies that are importing goods or borrowing from U.S. companies should comply with RBI guidelines in administering Foreign Exchange Management Act, 1999.

Foreign Exchange Controls 

The RBI sets India’s exchange-control policy and administers foreign exchange regulations in consultation with the Government of India.  RBI also acts as a custodian of foreign exchange reserves in India.  India’s foreign exchange control regime is governed by the Foreign Exchange Management Act (FEMA).  The objective of FEMA is to facilitate external trade and payments, to promote the orderly development and maintenance of the foreign exchange market in India and to liberalize economic policies.

U.S. Banks and Local Correspondent Banks

American Express India

Cyber City, Tower C, DLF Bldg. No.8, Sector - 25. DLF City Phase ll

Gurugram - 122002, Haryana, India

Tel: +91 124 4190000; 1800 419 2122 (Toll Free)


Bank of America India

18th Floor, A Wing, One BKC. G Block, Bandra Kurla Complex, Bandra (E)

Mumbai - 400051, Maharashtra, India

Tel:  +91 22 66323000


J.P. Morgan Chase India

J.P. Morgan Tower, Off CST Road, Kalina, Santacruz East

Mumbai - 400098, Maharashtra, India

Tel: +91 22 6157 3000


Citibank India

FIFC, 8th Floor, C-54 & C-55, G Block, Bandra Kurla Complex

Mumbai – 400051, Maharashtra, India

Tel: +91 22 4955 2484

Export-Import Bank of the United States (EXIM)

The Export-Import Bank of the United States (EXIM) is the official export credit agency of the United States.  When private sector lenders are unable or unwilling to provide financing, EXIM fills in the gap for American businesses by equipping them with the financing tools necessary to compete for global sales.  In doing so, the Bank levels the playing field for U.S. goods and services going up against foreign competition in overseas markets, so that American companies can create more jobs at home.  EXIM consistently maintains a low default rate and closely monitors credit and other risks in its portfolio.  This ensures comprehensive management of EXIM transactions throughout the entire transaction lifecycleCounty limitation schedule lists the level of EXIM support for India.

EXIM Bank’s COVID-19 Response page is updated with EXIM’s response activities to fully support the U.S. exporting community during this crisis.  On March 25, the U.S. Export Import Bank’s (EXIM) Board of Directors unanimously approved four new, time-limited emergency measures to temporarily expand the types of financing EXIM can provide as part of the U.S. government’s efforts to address and mitigate the economic crisis in the coming months.  The emergency measures will be in place for one year from May 1, 2020.  These four measures are:

Bridge Loan Product

Supply Chain Financing Guarantee Program

Working Capital Guarantee Program

Pre-Delivery / Pre-Export Financing Program