MUMBAI: Several banks find themselves in a tricky situation due to the India-China trade logjam. Banks, which have issued letters of credit (LC) to finance Indian importers, have been told by leading courier companies that trade documents will not be delivered following delays in customs clearance in India, two senior bankers told ET. Once the goods are shipped, key documents such as bill of lading, certificate of origin, and inspection certificate are couriered by the bank of the Chinese supplier to the Indian bank financing the local importer. “As a bank we are reviewing our liabilities. Courier firms, which have temporarily suspended picking up import shipments, have also stopped delivering trade papers. But goods and documents are different, and delays in clearance of goods should not automatically result in not picking up the documents too. But that’s a call many couriers have taken,” said the trade finance head of a large MNC bank. “While customs authorities have gradually started releasing the imports, we fear delays may continue for at least a few weeks,” said the official. According to trade circles, it is unclear how Indian importers would recover the demurrage charges they have to pay as goods shipped from China, Hong Kong and Macau lie in the warehouses. “If the physical trade documents do not reach Indian banks, the importer cannot collect the goods even if customs clearance is obtained. Who would be liable then?” asked another banker. As a risk-mitigation measure, some of the LC issuing banks are also asking Indian importers to cough up extra margin or bring in collateral in connection with shipments from China. “In such cases, the bank is transferring the risk to the customer. We are going on a case to case basis,” said a senior official of an Indian private sector bank. “Some of the Indian banks are choosing to deal with only large Chinese banks while taking exposure against LCs issues,” he said. A fortnight ago, customs authorities decided to carry out full physical verification of goods originating from China. While there was no official communication from the apex indirect tax body to customs offices, changes were carried out in the system to ensure that all imports from China are thoroughly examined. Subsequently, it is understood that authorities decided to clear goods for which bills of entry have been filed on or before June 30. “We are clearing all imports as before..this was a temporary decision,” said a customs officials. Traders, bankers and intermediaries like courier firms, however, are keeping their fingers crossed. Courier companies ETspoke with said they were monitoring the situation which is beyond their control and would keep their customers informed.