IECD.No. 47/3840/04.02.01/97-98
June 11, 1998
(Saka)
The Chairmen/Chief Executives
of commercial banks
Dear Sir,
Export Credit
As an additional measure of support
to step up the rate of growth of exports, it has been decided to extend to exporters
credit under a special facility. This facility is temporary and would be available
upto December 31, 1999. It would not be renewed beyond this period. Under the
facility, banks should provide exporters rupee credit at 6.5 per cent per
2. Financing banks are advised to
obtain satisfactory documentary evidence, and keep it on their records, regarding
the level of exports achieved by the exporter during the period April 1997-March
1998 and to ensure that only the 'incremental' export is financed under the
special facility.
3. Rupee export credit provided
under the special facility will be eligible for refinance by RBI at interest
rate of 4 per cent per annum to the extent of 100 per cent of such credit. The
detailed instructions regarding Export Refinance are being issued by RBI separately.
4. Banks have been authorised to
grant export credit in foreign currency, at rates No. EFD.14/04.02.11/93-94
dated 6th Oct. 1993 EFD, linked to LIBOR, vide instructions contained in circulars
IECD. 21/04.02.15/93-94 dated 8th November 1993 and 10/04.02.15/94-95 dated
3rd September 1994. Banks meet the requirements of export credit in foreign
currency mainly from their FCNR(B) etc. funds. In the light of this position
and with a view to enabling exporters to access export credit in foreign currency
more effectively at internationally competitive rates, it has been decided that
banks should charge a spread of not more than 1.5 per cent over LIBOR (excluding
withholding tax) as against 2/2.5 per cent over LIBOR presently permitted to
be charged.
5. Exporters and their representative
bodies have been frequently representing to the Reserve Bank that exporters
do not get credit limits/enhancement in credit limits sanctioned in time. They
have also been representing to the Reserve Bank that collateral security is
being insisted upon by banks before considering request for enhancements in
credit limits. Reserve Bank is keen to ensure that all its measures according
primacy and importance to export credit with a view to achieving export growth
are fully supported at the level of banks through suitable guidelines ensuring
adequate delegation of powers and sanction of need-based and timely credit.
Exporters have the option to avail themselves of export credit either in rupee
or foreign currency. It should, therefore, be possible for exporters to avail
of export credit in foreign currency when they choose to do so without experiencing
any difficulty or delay at the branches of banks. Banks are, therefore, advised
to review all aspects of their internal guidelines/procedures immediately to
achieve the above objective.
Yours faithfully
(A. Chandramouliswaran)
Chief General Manager