|
RBI/2006-07/ 63
Ref. MPD. No. 282/07.01.279/2006-07
July 12, 2006
Aashadha 10, 1928(S)
The Chairmen/Chief Executives of
all Scheduled Banks (excluding RRBs)
Dear Sir,
Master Circular on Export Credit
Refinance Facility
We enclose the Master Circular
on Export Credit Refinance Facility which consolidates and updates all instructions/guidelines
issued on the subject upto June 30, 2006. This Master Circular has also been
placed on the RBI's website (www.rbi.org.in).
Instructions/Guidelines issued on the subject during the period from July 1,
2005 to June 30, 2006 are placed separately in the Appendix.
Yours faithfully
(M.D. Patra)
Adviser-in-Charge
|
Master Circular
|
|
Export Credit Refinance
Facility
|
|
Table of Contents
|
|
1.
|
Introduction
|
|
2.
|
Participants
|
|
3.
|
Export Credit Refinance Facility
|
|
4.
|
Limit
|
|
5.
|
Interest Rate
|
|
6.
|
Margin Requirement
|
|
7.
|
Duration
|
|
8.
|
Collateral
|
|
9.
|
Minimum Amount of Availment
|
|
10.
|
Place of Availment
|
|
11.
|
Repayment
|
|
12.
|
Penalties
|
|
13.
|
Documentation
|
|
14.
|
Reporting Requirement
|
|
15.
|
Condition
|
|
16.
|
Annexes
- Reporting Formats
- Definitions
- Forms
|
|
17.
|
Appendix : List of Circulars
|
Master Circular on Export Credit Refinance
(ECR) Facility
1. Introduction
1.1 The Reserve Bank of India (RBI)
provides export credit refinance facility to banks under Section 17(3A) of the
Reserve Bank of India Act 1934, in order to encourage banks to extend more liberal
export credit. This facility is given on the basis of banks' eligible outstanding
rupee export credit both at the pre-shipment and post-shipment stages. The quantum
of refinance is fixed from time to time based on the stance of monetary and
credit policy of the RBI.
2. Participants
2.1 All scheduled banks (excluding
RRBs), which are authorised dealers in foreign exchange and have extended export
credit are eligible to avail of the export credit refinance facility.
3. Export Credit Refinance
Facility
3.1 The definition of outstanding
export credit reckoned for the purpose of calculation of export credit refinance
limits of banks had been modified effective April 27, 2000. Outstanding export
credit for working out refinance limits, accordingly, includes export bills
rediscounted with EXIM Bank/other banks/Financial Institutions and export credit
against which refinance has been obtained from NABARD/EXIM Bank. However, it
will not include Pre-shipment Credit in Foreign Currency (PCFC), export bills
discounted/rediscounted under the scheme of 'Rediscounting of Export Bills Abroad'
(EBR), overdue rupee export credit and other export credit not eligible for
refinance. With the modified definition, the banks have the benefit of rediscounting
export bills with institutions like EXIM Bank, without sustaining reduction
in refinance limits from the RBI (Annex I).
4. Limit
4.1 At present, the scheduled banks
are provided export credit refinance to the extent of 15.0 per cent of the outstanding
export credit eligible for refinance as at the end of the second preceding fortnight.
5. Interest Rate
5.1 Export credit refinance facility
is available at the Repo Rate (which is linked to Reverse Repo Rate under the
Liquidity Adjustment Facility (LAF), as announced from time to time.
5.2 Interest shall be payable with
monthly rests and the amounts of such interest calculated on daily balances
would be debited to the account of such advances at the end of respective month
or earlier when the balance outstanding is wiped out.
6. Margin Requirement
6.1 No margin is required to be maintained.
7.Duration
7.1 Repayable on demand or on the expiry of fixed
periods not exceeding one hundred and eighty days.
8.Collateral
8.1 RBI extends the export credit
refinance against the Demand Promissory Note (DPN) of banks supported by a declaration
that they have been extended export credit and the outstanding amount eligible
for refinance is not less than the loan/advance from the RBI.
9. Minimum Amount of Availment
9.1 The minimum amount of availment
under this facility is Rupees one lakh and multiples thereof.
10. Place of Availment
10.1 This facility can be availed
of at centres wherever the Reserve Bank has a Banking Department.
11. Repayment
11.1 The refinance has to be repaid
on demand or within 180 days.
12. Penalties
12.1 In the event of a scheduled
bank having irregular availment of export credit refinance, a penal rate of
interest as decided by the Reserve Bank from time to time will be charged on
the outstanding loan or loans.
12.2 The instances on which penal
rate would be applicable for irregular availment of export credit refinance
are set out in Table 1.
|
Table 1: Illustration of Irregular
Availment of Export Credit Refinance
|
|
a)
|
Utilisation of ECR exceeds
the total limit.
|
|
b)
|
Wrong calculation/ reporting
of refinance limit by banks.
|
|
c)
|
Non-repayment of refinance
within 180 days.
|
|
d)
|
Delay in reporting excess
utilisation by banks.
|
|
13. Documentation
13.1 The banks have to execute
the following documents for availing of export credit refinance facility (Annex
II):
- A stamped agreement in Form No. DAD 297.
- A Demand Promissory Note (DPN) in Form No. DAD
295 A.
- Board Resolution in Form No. DAD 298 authorising
the borrowing under the scheme and also the officials who will execute loan
documents on behalf of the bank.
- For enhancement of limit, a letter in Form No.
DAD 299 extending the agreement to enhance limit together with consolidated
DPN for the fresh limit.
- In terms of Para 7.30 of Banking Department
Manual, Agreements and letters of extension need not be renewed so long as
there is no change in the terms thereof. DPN should, however, be renewed every
three years of their dates of execution not withstanding their validity for
three years from the date of transaction.
13.2 The borrowing bank should
submit to the Monetary Policy Department, Reserve Bank of India, a fortnightly
declaration in form No. DAD.389 together with a statement of Export Refinance
Entitlement in form No.DAD.390 to enable Reserve Bank of India to monitor the
position of the outstanding borrowings under the scheme in relation to its outstanding
export credit advances.
14. Reporting Requirement
14.1 The availing banks are required
to report their outstanding export credit eligible for refinance within five
days from the relevant date in the format provided in Annex III.
15. Condition
15.1 It is essential that the
outstanding borrowings at all times are fully covered by the borrowing bank’s
holding of export bills/amount of eligible pre-shipment advances as reported
in their latest declaration. If at any time it is found that the total amount
of bills held by banks/amount of eligible pre-shipment advances covered by the
declaration falls below the amount borrowed, the bank should forthwith adjust
or repay excess refinance from the RBI.
16. Annexes
16.1 Definitions, Forms of Agreement
and Reporting Formats pertaining to Export Credit Refinance Facility are listed
in Annex I,
Annex II
and Annex III,
respectively.
17. Appendix
17.1 All the Circulars issued
by the Reserve Bank of India related to Export Credit Refinance Facility are
listed in Appendix.
|