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Meaning of Normal Transit Period and Notional Due Date

Meaning of Normal Transit Period and Notional Due Date

Normal Transit Period (NTP) is commonly misunderstood for the time taken for the goods to reach the destination. It is not so. The term Normal Transit period (NTP) used for the average period normally involved from the date of negotiation/ purchase/ discount of a bill, till the credit of that bill proceeds in the Nostro account of the financing bank.

In India, the NTP for foreign currency and Rupee bills is prescribed by Foreign Exchange Dealers Association of India (FEDAI). The details are as under.

NTP for Foreign currency bills;

  • For all foreign Currency bills: 25 days.
  • Exports to Iraq under UN guidelines (Maximum): 120 days.

For TT reimbursement under LC;

  • Where LC provides reimbursement by electronic media: 5 days
  • Where LC provides reimbursement claim after the number of days from the date of negotiation: 5 days+ addition period provided by the LC.

For Rupee bills;

  • Reimbursement at the center of negotiation:  3days.
  • Bills under LC with reimbursement at other centers: 7days
  • Reimbursement outside India and bills not under collection: 20 days
  • Export to Russia under LC for which Reimbursement is by RBI: 20 days.

The Notional Due Date (NDD) is arrived at by adding transit period, usance period and grace period if any to the date of purchase/ discount/ negotiation. However, in the cases of export usance bills,  where due dates are fixed or are reckoned from the date of shipment or date of the bill of exchange etc,  the actual due date is known, therefore, in such cases, adding transit period is not applicable.

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