Brazil, Russia, India, China and South Africa (BRICS) will sign two agreements on Thursday, which could facilitate trade between them. This is because the implementation of the two agreements could result in reducing transaction costs.
Briefing newspersons, the Secretary, Ministry of External Affairs, Mr Sudhir Vyas, said that the master agreement to extend credit facility in local countries amongst BRICS and multi-lateral letter of credit confirmation will be signed at the summit. The one-day BRICS summit will be held here on Thursday. “The two agreements are enabling agreements. They are subject to prevailing national laws. The agreements are not binding. The user or the credit giver cannot demand a certain requirement of banks. But they provide a framework, which subject to national can be put to use depending on what benefits accrue on a case-to-case basis,” Mr Vyas said.
Local currency facility
The master agreement for extending credit in local currencies seeks to lay down broad parameters and guidelines to be applied by signatory banks to process local currency requests which will be agreed on bilaterally on the basis of a bilateral local currency facility agreement.
On the issue of BRICS development bank being set up at the summit, officials said that it is an idea that has been in the air for some time.