JAMMU: Jammu and Kashmir government today endorsed the proposed institutional mechanism to provide banking facilities to traders for conducting business across the LoC.
"To take the cross-LoC trade to the next level, the Cabinet, which met here today under the Chairmanship of Chief Minister Mehbooba Mufti, endorsed the proposed institutional mechanism to provide banking facilities to traders for conducting their business across the LoC," Education Minister Naeem Akhtar told reporters.
The banking mechanism will help boost trade and enable import and export of listed commodities at a larger scale and faster pace, he said, adding it will address the regulatory aspects related to trade between India and Pakistan.
Commercial banks in Jammu & Kashmir and Pakistan-occupied Kashmir would provide facility to their respective exporters to realise their dues by opening a Trade Facilitation Account, he said.
On credit basis model, the exporter will get the money on day one with the bank debiting facilitation account and parting with its funds until they are paid by the importer and the amount is credited to the account, he said.
"Interest payable for transactions based on credit shall be included in the facilitation fee. The facilitation fee for credit based transactions would include interest, documentation charges and handling charges etc," he said.
The minister said that the goods will be invoiced in exporter's domestic currency. Hence, there is no exchange risk for the exporters. Any exchange risk shall be borne by the importer, he added. The settlement would be done in US Dollar.