Normal Transit Period (NTP)

Normal Transit Period (NTP) is the average time taken from when export bills (documents related to export transactions) are processed until the payment for those bills is received. It is important to note that this period is not the time it takes for the goods to physically reach their destination.

The concept of NTP is used to calculate the interest on export bills and determine the due dates for payments under export credit agreements.

Categories and Timeframes

01. Usance Bills (Fixed Due Date):

• If the due date is predetermined (based on the shipment date or bill of exchange), the NTP does not apply because the exact due date is already known.

02. Bills on Delivery Basis (DP or At Sight) Without Letter of Credit:

• Foreign currency bills: NTP is 25 days.
• Rupee bills (not under LC): NTP is 20 days.

03. Exceptional Situations:

• Banks may adjust the NTP (higher or lower) based on historical data, the exporter's location, the overseas buyer's location, and the mode of transportation.
• If financing is extended beyond the prescribed NTP, the maximum allowable period is 90 days from the shipment date.

04. Export to UN-Guided Countries:

• NTP may extend to a maximum of 120 days.

05. Bills Under Letters of Credit (LC):

• Reimbursement provided at the negotiating center: NTP is 3 days.
• Reimbursement provided at a different center in India: NTP is 7 days.
• Reimbursement provided by overseas banks: NTP is 20 days.
• Exports to Russia under RBI state credit: NTP is also 20 days.

06. Telegraphic Transfer (TT) Reimbursement under LC:

• If reimbursement is provided electronically, NTP is 5 days.
• For cases where reimbursement is delayed based on specific LC terms, the time is extended by the additional days mentioned in the LC.

Key Points

• Banks are responsible for documenting deviations from the standard NTP with proper rationale.
• No changes to the due date are allowed once an export bill has been purchased, discounted, or negotiated.