The availability of letters of credit (L/C) in India is improving according to local media.

Business Standard is reporting that this is because the availability of US dollars in the overseas market is improving and confidence is returning to the banking sector, and since May, banks have been finding it easier to provide short-term credit.

Short-term availability

India's widely read business daily says that the country's banks are witnessing a surge in demand for certain short-term trade finance facilities, including L/Cs opened by buyers of Indian goods.

Bankers had reported that this facility had totally stopped since the global financial crisis last year dried up liquidity pools and prevented banks from borrowing from overseas interbank overnight markets.

Restored confidence

Now the foreign operations of Indian banks are finding it possible to borrow once again from these markets because US dollars are now more widely available.

Moreover, banks are regaining sufficient confidence to lend and borrow from each other according to Business Standard.

It says this means that buyers of Indian goods and services can now obtain L/Cs from Indian banks.

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