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Master Circular - Rupee / Foreign Currency Export Credit and Customer Service To Exporters
4lease refer to the Master Circular )B*) No+)ir+1E3p2+BC+"'"&+"!+""!!"#!%#$ /ate/ ,ul- !. !"#! consoli/atin
the instructions gui/elines issue/ to banks till ,une $". !"#!. relating to Rupee 5oreign Currenc- E3port Cre/it
6 Customer Ser7ice to E3porters+ 8he Master Circular has been suitabl- up/ate/ b- incorporating the instructionsissue/ upto ,une $". !"#$ an/ has also been place/ on the RBI 9ebsite 1http:999+rbi+org+in2+ A cop- of the
8he RBI first intro/uce/ the scheme of E3port 5inancing in #0'>+ 8he scheme is inten/e/ to make short%term
9orking capital finance a7ailable to e3porters at internationall- comparable interest rates+
n/er the earlier scheme in force upto ,une $". !"#". RBI fi3e/ onl- the ceiling rate of interest for e3port cre/it
9hile banks 9ere free to /eci/e the rates of interest 9ithin the ceiling rates keeping in 7ie9 the Benchmark 4rimeLen/ing Rate 1B4LR2 an/ sprea/ gui/elines an/ taking into account track recor/ of the borro9ers an/ the risk
perception+ In or/er to enhance transparenc- in banks pricing of their loan pro/ucts. banks 9ere a/7ise/ to fi3 the
B4LR after taking into account 1i2 actual cost of fun/s. 1ii2 operating e3penses an/ 1iii2 a minimum margin to co7eregulator- re@uirement of pro7isioning capital charge an/ profit margin+ Ho9e7er. the B4LR s-stem. intro/uce/
in !""$. fell short of its original obDecti7e of bringing transparenc- to len/ing rates+ 8his 9as mainl- because un/e
the B4LR s-stem. banks coul/ len/ belo9 B4LR+ 5or the same reason. it 9as also /ifficult to assess the
transmission of polic- rates of the Reser7e Bank to len/ing rates of banks+
Accor/ingl-. base/ on the recommen/ations of the Working <roup on Benchmark 4rime Len/ing Rate 1Chairman
Shri )eepak Mohant-2 banks 9ere a/7ise/ to s9itch o7er to the s-stem of Base Rate 9+e+f+ ,ul- #. !"#"+ 8he Base
Rate S-stem is aime/ at enhancing transparenc- in len/ing rates of banks an/ enabling better assessment oftransmission of monetar- polic-+ n/er the Base Rate S-stem. applicable 9+e+f+ ,ul- #. !"#". interest rates
applicable for all tenors of rupee e3port cre/it a/7ances are at or abo7e Base Rate+
P*RT - *RUPEE E$PORT CRE%T
1( PRE-S2PME"T RUPEE E$PORT CRE%T
Rupee 4re%shipment Cre/it4acking Cre/it
)efinition
3Pre-s0ipment / Pac4ing Credit3 means an- loan or a/7ance grante/ or an- other cre/it pro7i/e/ b- a bank to
an e3porter for financing the purchase. processing. manufacturing or packing of goo/s prior to shipment 9orkingcapital e3penses to9ar/s ren/ering of ser7ices on the basis of letter of cre/it opene/ in his fa7our or in fa7our ofsome other person. b- an o7erseas bu-er or a confirme/ an/ irre7ocable or/er for the e3port of goo/s ser7ices
from In/ia or an- other e7i/ence of an or/er for e3port from In/ia ha7ing been place/ on the e3porter or some
other person. unless lo/gement of e3port or/ers or letter of cre/it 9ith the bank has been 9ai7e/+
1i2 8he perio/ for 9hich a packing cre/it a/7ance ma- be gi7en b- a bank 9ill /epen/ upon the circumstances of
the in/i7i/ual case. such as the time re@uire/ for procuring. manufacturing or processing 19here necessar-2 an/
shipping the relati7e goo/s ren/ering of ser7ices+ It is primaril- for the banks to /eci/e the perio/ for 9hich apacking cre/it a/7ance ma- be gi7en. ha7ing regar/ to the 7arious rele7ant factors so that the perio/ is sufficient t
enable the e3porter to ship the goo/s ren/er the ser7ices+
1ii2 If pre%shipment a/7ances are not a/Duste/ b- submission of e3port /ocuments 9ithin $'" /a-s from the /ate o
a/7ance. the a/7ances 9ill cease to @ualif- for prescribe/ rate of interest for e3port cre/it to the e3porter ab initio
1iii2 RBI 9oul/ pro7i/e refinance onl- for a perio/ not e3cee/ing #?" /a-s as per instructions issue/ b- RBI
)isbursement of 4acking Cre/it
1i2 *r/inaril-. each packing cre/it sanctione/ shoul/ be maintaine/ as separate account for the purpose of
monitoring the perio/ of sanction an/ en/%use of fun/s+
1ii2 Banks ma- release the packing cre/it in one lump sum or in stages as per the re@uirement for e3ecuting theor/ers LC+
1iii2 Banks ma- also maintain /ifferent accounts at 7arious stages of processing. manufacturing etc+ /epen/ing on
the t-pes of goo/s ser7ices to be e3porte/ e+g+ h-pothecation. ple/ge. etc+. accounts an/ ma- ensure that the
outstan/ing balance in accounts are a/Duste/ b- transfer from one account to the other an/ finall- b- procee/s ofrelati7e e3port /ocuments on purchase. /iscount. etc+
1i72 Banks shoul/ continue to keep a close 9atch on the en/%use of the fun/s an/ ensure that cre/it at lo9er rates o
interest is use/ for genuine re@uirements of e3ports+ Banks shoul/ also monitor the progress ma/e b- the e3porterin timel- fulfillment of e3port or/ers+
#+#+& Li@ui/ation of 4acking Cre/it
1i2 <eneral
8he packing cre/it pre%shipment cre/it grante/ to an e3porter ma- be li@ui/ate/ out of procee/s of bills /ra9n fo
the e3porte/ commo/ities on its purchase. /iscount etc+. thereb- con7erting pre%shipment cre/it into post%shipmen
cre/it+ 5urther. subDect to mutual agreement bet9een the e3porter an/ the banker it can also be repai/ prepai/ outof balances in E3change Earners 5oreign Currenc- Ac 1EE5C Ac2 as also from rupee resources of the e3porter to
the e3tent e3ports ha7e actuall- taken place+ If not so li@ui/ate/ repai/. banks are free to /eci/e the rate of interesas in/icate/ in paragraph &+!+$ from the /ate of a/7ance+
Where the e3porter is unable to ten/er e3port bills of e@ui7alent 7alue for li@ui/ating the packing cre/it /ue to the
shortfall on account of 9astage in7ol7e/ in the processing of agro pro/ucts like ra9 cashe9 nuts. etc+. banks ma-
allo9 e3porters. inter alia. to e3tinguish the e3cess packing cre/it b- e3port bills /ra9n in respect of b-%pro/uctlike cashe9 shell oil. etc+
b2 Where partial /omestic sale is in7ol7e/
Ho9e7er. in respect of e3port of agro%base/ pro/ucts like tobacco. pepper. car/amom. cashe9 nuts etc+. the
e3porter has necessaril- to purchase a some9hat larger @uantit- of the ra9 agricultural pro/uce an/ gra/e it into
e3portable an/ non%e3portable 7arieties an/ onl- the former is e3porte/+ 8he non%e3portable balance is necessaril-sol/ /omesticall-+ 5or the packing cre/it co7ering such non%e3portable portion. banks are re@uire/ to charge
commercial rate of interest applicable to the /omestic a/7ance from the /ate of a/7ance of packing cre/it an/ that
portion of the packing cre/it 9oul/ not be eligible for an- refinance from RBI+
E3port of /eoile/ /efatte/ cakes
Banks are permitte/ to grant packing cre/it a/7ance to e3porters of H4S groun/nut an/ /eoile/ /efatte/ cakes to
the e3tent of the 7alue of ra9 materials re@uire/ e7en though the 7alue thereof e3cee/s the 7alue of the e3port
or/er+ 8he a/7ance in e3cess of the e3port or/er is re@uire/ to be a/Duste/ either in cash or b- sale of resi/ual b-%
pro/uct oil 9ithin a perio/ not e3cee/ing $" /a-s from the /ate of a/7ance to be eligible for concessional rate ofinterest+
1iii2 Banks ha7e. ho9e7er. operational fle3ibilit- to e3ten/ the follo9ing rela3ations to their e3porter clients 9ho
ha7e a goo/ track recor/:
a2 Repa-ment li@ui/ation of packing cre/it 9ith procee/s of e3port /ocuments 9ill continue ho9e7er. this coul/
be 9ith e3port /ocuments relating to an- other or/er co7ering the same or an- other commo/it- e3porte/ b- thee3porter+ While allo9ing substitution of contract in this 9a-. banks shoul/ ensure that it is commerciall- necessar-
an/ una7oi/able+ Banks shoul/ also satisf- themsel7es about the 7ali/ reasons as to 9h- packing cre/it e3ten/e/for shipment of a particular commo/it- cannot be li@ui/ate/ in the normal metho/+ As far as possible. the
substitution of contract shoul/ be allo9e/ if the e3porter maintains account 9ith the same bank or it has the
appro7al of the members of the consortium. if an-+
b2 8he e3isting packing cre/it ma- also be marke/%off 9ith procee/s of e3port /ocuments against 9hich no packincre/it has been /ra9n b- the e3porter+ Ho9e7er. it is possible that the e3porter might a7ail of E4C 9ith one bank
an/ submit the /ocuments to another bank+ In 7ie9 of this possibilit-. banks ma- e3ten/ such facilit- after ensurin
that the e3porter has not a7aile/ of packing cre/it from another bank against the /ocuments submitte/+ If an-
packing cre/it has been a7aile/ of from another bank. the bank to 9hich the /ocuments are submitte/ has to ensurthat the procee/s are use/ to li@ui/ate the packing cre/it obtaine/ from the first bank+
c2 8hese rela3ations s0ould not 5e extended to transactions of sister associate group concerns+
Running Account 5acilit-
1i2 As state/ earlier. pre%shipment cre/it to e3porters is normall- pro7i/e/ on lo/gment of LCs or firm e3port
or/ers+ It is obser7e/ that the a7ailabilit- of ra9 materials is seasonal in some cases+ In some other cases. the time
taken for manufacture an/ shipment of goo/s is more than the /eli7er- sche/ule as per e3port contracts+ In man-
cases. the e3porters ha7e to procure ra9 material. manufacture the e3port pro/uct an/ keep the same rea/- forshipment. in anticipation of receipt of letters of cre/it firm e3port or/ers from the o7erseas bu-ers+ Ha7ing regar/
to /ifficulties being face/ b- the e3porters in a7ailing of a/e@uate pre%shipment cre/it in such cases. banks ha7ebeen authorise/ to e3ten/ 4re%shipment Cre/it 6Running *ccount7facilit- in respect of an- commo/it-. 9ithout
insisting on prior lo/gement of letters of cre/it firm e3port or/ers. /epen/ing on the bankFs Du/gement regar/ingthe nee/ to e3ten/ such a facilit- an/ subDect to the follo9ing con/itions:
a2 Banks ma- e3ten/ the GRunning AccountF facilit- onl- to those e3porters 9hose track recor/ has been goo/ as
also to E3port *riente/ nits 1E*s2 nits in 5ree 8ra/e ones E3port 4rocessing ones 1E4s2 an/ Special
Economic ones 1SEs2
b2 In all cases 9here 4re%shipment Cre/it GRunning AccountF facilit- has been e3ten/e/. letters of cre/it firm
or/ers shoul/ be pro/uce/ 9ithin a reasonable perio/ of time to be /eci/e/ b- the banks+
c2 Banks shoul/ mark off in/i7i/ual e3port bills. as an/ 9hen the- are recei7e/ for negotiation collection. agains
the earliest outstan/ing pre%shipment cre/it on 5irst In 5irst *ut 15I5*2 basis+ Nee/less to a// that. 9hile markinoff the pre%shipment cre/it in the manner in/icate/ abo7e. banks shoul/ ensure that e3port cre/it a7ailable in
respect of in/i7i/ual pre%shipment cre/it /oes not go be-on/ the perio/ of sanction or $'" /a-s from the /ate of
a/7ance. 9hiche7er is earlier+
/2 4acking cre/it can also be marke/%off 9ith procee/s of e3port /ocuments against 9hich no packing cre/it hasbeen /ra9n b- the e3porter+
1ii2 If it is notice/ that the e3porter is foun/ to be abusing the facilit-. the facilit- shoul/ be 9ith/ra9n forth9ith+
In cases 9here e3porters ha7e not complie/ 9ith the terms an/ con/itions. the a/7ance 9ill attract commerci
len/ing rate ab initio+ In such cases. banks 9ill be re@uire/ to pa- higher rate of interest on the portion of refinanca7aile/ of b- them from the RBI in respect of the relati7e pre%shipment cre/it+ All such cases shoul/ be reporte/ to
the Monetar- 4olic- )epartment. Reser7e Bank of In/ia. Central *ffice. Mumbai &"" ""# 9hich 9ill /eci/e the
rate of interest to be charge/ on the refinance amount+
8iv9 Running account ,acility s0ould not 5e granted to su5-suppliers(
Interest on 4acking Cre/it
Interest rate structure an/ instructions in regar/ thereto are /etaile/ in paragraph &+
E3port Cre/it against procee/s of che@ues. /rafts. etc+ representing a/7ance pa-ment for e3ports
1i2 Where e3porters recei7e /irect remittances from abroa/ b- means of che@ues. /rafts etc+ in pa-ment for e3ports
banks ma- grant e3port cre/it to e3porters of goo/ track recor/ till the realisation of procee/s of the che@ue. /raft
etc+ recei7e/ from abroa/. after satisf-ing themsel7es that it is against an e3port or/er. is as per tra/e practices in
respect of the goo/s in @uestion an/ is an appro7e/ metho/ of realisation of e3port procee/s as per e3tant rules+
1ii2 If. pen/ing compliance 9ith the abo7e con/itions. an e3porter has been grante/ accommo/ation at normal
commercial interest rate. banks ma- gi7e effect to prescribe/ rate for e3port cre/it rate retrospecti7el- once the
aforesai/ con/itions ha7e been complie/ 9ith an/ refun/ the /ifference to the e3porter+
Rupee 4re%shipment Cre/it to specific sectorssegments
Rupee E3port 4acking Cre/it to manufacturer suppliers for e3ports route/ through S8CMM8C*ther E3por
Houses. Agencies etc+
1i2 Banks ma- grant e3port packing cre/it to manufacturer suppliers 9ho /o not ha7e e3port or/ersletters of cre/i
in their o9n name an/ goo/s are e3porte/ through the State 8ra/ing CorporationMinerals an/ Metal 8ra/ingCorporation or other e3port houses. agencies etc+
1ii2 Such a/7ances 9ill be eligible for refinance. pro7i/e/ the follo9ing re@uirements are complie/ 9ith apart fromthe usual stipulations:
1a2 Banks shoul/ obtain from the e3port house a letter setting out the /etails of the e3port or/er an/ the portionthereof to be e3ecute/ b- the supplier an/ also certif-ing that the e3port house has not obtaine/ an/ 9ill not ask fo
packing cre/it in respect of such portion of the or/er as is to be e3ecute/ b- the supplier+
1b2 Banks shoul/. after mutual consultations an/ taking into account the e3port re@uirements of the t9o parties.
apportion bet9een the t9o i+e+ the E3port House an/ the Supplier. the perio/ of packing cre/it for 9hich theconcessionar- rate of interest is to be charge/+ 8he concessionar- rates of interest on the pre%shipment cre/it 9ill b
a7ailable upto the stipulate/ perio/s in respect of the e3port houseagenc- an/ the supplier put together+
1c2 8he e3port house shoul/ open inlan/ LCs in fa7our of the supplier gi7ing rele7ant particulars of the e3port LC
or or/ers an/ the outstan/ings in the packing cre/it account shoul/ be e3tinguishe/ b- negotiation of bills un/ersuch inlan/ LCs+ If it is incon7enient for the e3port house to open such inlan/ LCs in fa7our of the supplier. the
latter shoul/ /ra9 bills on the e3port house in respect of the goo/s supplie/ for e3port an/ a/Dust packing cre/it
a/7ances from the procee/s of such bills+ In case the bills /ra9n un/er such arrangement are not accompanie/ b-bills of la/ing or other e3port /ocuments. the bank shoul/ obtain through the supplier a certificate from the e3port
house at the en/ of e7er- @uarter that the goo/s supplie/ un/er this arrangement ha7e in fact been e3porte/+ 8he
certificate shoul/ gi7e particulars of the relati7e bills such as /ate. amount an/ the name of the bank through 9hich
the bills ha7e been negotiate/+
1/2 Banks shoul/ obtain an un/ertaking from the supplier that the a/7ance pa-ment. if an-. recei7e/ from the e3pohouse against the e3port or/er 9oul/ be cre/ite/ to the packing cre/it account+
Rupee E3port 4acking Cre/it to Sub%Suppliers
4acking cre/it can be share/ bet9een an E3port *r/er Hol/er 1E*H2 an/ sub%supplier of ra9 materials.
components etc+ of the e3porte/ goo/s as in the case of E*H an/ manufacturer suppliers. subDect to the follo9ing:
1a2 Running Account facilit- is not contemplate/ un/er the scheme+ 8he scheme 9ill co7er the LC or e3port or/er
recei7e/ in fa7our of E3port Houses8ra/ing HousesStar 8ra/ing Houses etc+ or manufacturer e3porters onl-+ 8he
scheme shoul/ be ma/e a7ailable to the e3porters 9ith goo/ track recor/+
1b2 Bankers to an E*H 9ill open an inlan/ LC specif-ing the goo/s to be supplie/ b- the sub%supplier to the E*Hagainst the e3port or/er or LC recei7e/ b- him as a part of the e3port transaction+ *n the basis of such a LC. the
sub%suppliers banker 9ill grant E4C as 9orking capital to enable the sub%supplier to manufacture the components
re@uire/ for the goo/s to be e3porte/+ *n suppl-ing the goo/s. the LC opening bank 9ill pa- to the sub%suppliersbanker against the inlan/ /ocuments recei7e/ on the basis of inlan/ LC+ Such pa-ments 9ill thereafter become the
E4C of the E*H+
1c2 It is upto the E*H to open an- number of LCs for the 7arious components re@uire/ 9ith the appro7al of his
bankerlea/er of consortium of banks 9ithin the o7erall 7alue limit of the or/er or LC recei7e/ b- him+ 8aking intaccount the operational con7enience. it is for the LC opening bank to fi3 the minimum amount for opening such
LCs+ 8he total perio/ of packing cre/it a7aile/ b- the sub%supplier 1s2. in/i7i/uall- or se7erall- an/ the E*H
shoul/ be 9ithin normal c-cle of pro/uction re@uire/ for the e3porte/ goo/s+ Normall-. the total perio/ 9ill becompute/ from the /ate of first /ra9al of packing cre/it b- an- one of the sub%suppliers to the /ate of submission
of e3port /ocuments b- E*H+
1/2 8he E*H 9ill be responsible for e3porting the goo/s as per e3port or/er or o7erseas LC an/ an- /ela- in the
process 9ill subDect him to the penal pro7isions issue/ from time to time+ *nce the sub%supplier makes a7ailable thgoo/s as per inlan/ LC terms to the E*H. his obligation of performance un/er the scheme 9ill be treate/ as
complie/ 9ith an/ the penal pro7isions 9ill not be applicable to him for /ela- b- E*H. if an-+
1e2 8he scheme is an a//itional 9in/o9 besi/es the e3isting s-stem of sharing of packing cre/it bet9een E*H an/
manufacturer in respect of e3porte/ goo/s as /etaile/ in paragraph #+!+# abo7e+ 8he scheme 9ill co7er onl- the fir
stage of pro/uction c-cle+ For example. a manufacturer e3porter 9ill be allo9e/ to open /omestic LC in fa7our ofhis imme/iate suppliers of components etc+ that are re@uire/ for manufacture of e3portable goo/s+ 8he scheme 9il
not be e3ten/e/ to co7er suppliers of ra9 materialscomponents etc+ to such imme/iate suppliers+ In case the E*His merel- a tra/ing house. the facilit- 9ill be a7ailable commencing from the manufacturer to 9hom the or/er has
been passe/ on b- the 8ra/ing House+
1f2 E*sE4SE units suppl-ing goo/s to another E*E4SE unit for e3port purposes are also eligible for
rupee pre%shipment e3port cre/it un/er this scheme+ Ho9e7er. the supplier E*E4SE unit 9ill not be eligiblefor an- post%shipment facilit- as the scheme /oes not co7er sale of goo/s on cre/it terms+
1g2 8he scheme /oes not en7isage an- change in the total @uantum of a/7ance or perio/+ Accor/ingl-. the cre/it
e3ten/e/ un/er the s-stem 9ill be treate/ as e3port cre/it from the /ate of a/7ance to the sub%supplier to the /ate oli@ui/ation b- E*H un/er the inlan/ e3port LC s-stem an/ upto the /ate of li@ui/ation of packing cre/it b-shipment of goo/s b- E*H an/ 9ill be eligible for refinance from RBI b- the respecti7e banks for the appropriate
perio/s+ It has to be ensure/ that no /ouble financing of the same leg of the transaction is in7ol7e/+
1h2 Banks ma- approach the EC<C for a7ailing suitable co7er in respect of such a/7ances+
1i2 8he scheme /oes not en7isage e3ten/ing cre/it b- a sub%supplier to the E*Hmanufacturer an/ thus. the
pa-ment to sub%suppliers has to be ma/e against submission of /ocuments b- LC opening bank treating the
pa-ment as E4C of the E*H+
Rupee 4re%shipment Cre/it to Construction Contractors
1i2 8he packing cre/it a/7ances to the construction contractors to meet their initial 9orking capital re@uirements fo
e3ecution of contracts abroa/ ma- be ma/e on the basis of a firm contract secure/ from abroa/. in a separateaccount. on an un/ertaking obtaine/ from them that the finance is re@uire/ b- them for incurring preliminar-
e3penses in connection 9ith the e3ecution of the contract e+g+. for transporting the necessar- technical staff an/
purchase of consumable articles for the purpose of e3ecuting the contract abroa/. etc+
1ii2 8he a/7ances shoul/ be a/Duste/ 9ithin $'( /a-s of the /ate of a/7ance b- negotiation of bills relating to the
contract or b- remittances recei7e/ from abroa/ in respect of the contract e3ecute/ abroa/+ 8o the e3tent the
outstan/ings in the account are not a/Duste/ in the stipulate/ manner. banks ma- charge normal rate of interest on
such a/7ance+
1iii2 8he e3porters un/ertaking proDect e3port contracts inclu/ing e3port of ser7ices ma- compl- 9ith the
gui/elinesinstructions issue/ b- Reser7e Bank of In/ia. 5oreign E3change )epartment. Central *ffice. Mumbai
from time to time+
E3port of Ser7ices
4re%shipment an/ post%shipment finance ma- be pro7i/e/ to e3porters of all the #'# tra/able ser7ices co7ere/un/er the <eneral Agreement on 8ra/e in Ser7ices 1<A8S2 9here pa-ment for such ser7ices is recei7e/ in free
foreign e3change as state/ at Chapter $ of the 5oreign 8ra/e 4olic- !""0%#&+ All pro7isions of this circular shall
appl- mutatis mutan/is to e3port of ser7ices as the- appl- to e3port of goo/s unless other9ise specifie/+ A list of
ser7ices is gi7en in Appen/i3 #" of HB47#+ 8he financing bank shoul/ ensure that there is no /ouble financing anthe e3port cre/it is li@ui/ate/ 9ith remittances from abroa/+ Banks ma- take into account the track recor/ of the
e3portero7erseas counter part- 9hile sanctioning the e3port cre/it+ 8he statement of e3port recei7ables from suchser7ice pro7i/ers ma- be tallie/ 9ith the statement of pa-ables recei7e/ from the o7erseas part-+
In 7ie9 of the large number of categories of ser7ice e3ports 9ith 7arie/ nature of business as 9ell as in the
en7ironment of progressi7e /eregulation 9here the matters 9ith regar/ to micro management are left to be /eci/e/
b- the in/i7i/ual financing banks. the banks ma- formulate their o9n parameters to finance the ser7ice e3porters+
E3porters of ser7ices @ualif- for 9orking capital e3port cre/it 1pre an/ post shipment2 for consumables. 9ages.supplies etc+
Banks ma- ensure that =
8he proposal is a genuine case of e3port of ser7ices+
8he item of ser7ice e3port is co7ere/ un/er Appen/i3 #" of HB47#+
pro/uction an/ processing are to be integrate/+ 8he pro/ucer has to enter into contract farming 9ith farmers an/ h
to ensure suppl- of @ualit- see/s. pestici/es. micro%nutrients an/ other material to the group of farmers from 9hom
the e3porter 9oul/ be purchasing the pro/ucts as ra9 material for pro/uction of the final pro/ucts for e3port+ 8he<o7ernment. therefore. suggeste/ that such e3port processing units ma- be pro7i/e/ packing cre/it un/er the
e3tant gui/elines for the purpose of procuring an/ suppl-ing inputs to the farmers so that @ualit- inputs area7ailable to them 9hich in turn 9ill ensure that onl- goo/ @ualit- crops are raise/+ 8he e3porters 9ill be able to
purchase import such inputs in bulk. 9hich 9ill ha7e the a/7antages of economies of scale+
Banks ma- treat the inputs supplie/ to farmers b- e3porters as ra9 material for e3port an/ consi/er
sanctioning the lines of cre/ite3port cre/it to processorse3porters to co7er the cost of such inputs re@uire/ b-
farmers to culti7ate such crops to promote e3port of agri pro/ucts+ 8he processor units 9oul/ be able to effect bulk
purchases of the inputs an/ suppl- the same to the farmers as per a pre%/etermine/ arrangement+
Banks ha7e to ensure that the e3porters ha7e ma/e the re@uire/ arrangements 9ith the farmers an/ o7ersea
bu-ers in respect of crops to be purchase/ an/ pro/ucts to be e3porte/ respecti7el-+ 8he financing banks 9ill also
appraise the proDects in agri e3port ones an/ ensure that the tie%up arrangements are feasible an/ proDects 9oul/take off 9ithin a reasonable perio/ of time+
8he- are also to monitor the en/%use of fun/s. 7i+ /istribution of the inputs b- the e3porters to the farmers
for raising the crops as per arrangements ma/e b- the e3portermain processor units+
8he- ha7e to further ensure that the final pro/ucts are e3porte/ b- the processorse3porters as per the term
an/ con/itions of the sanction in or/er to li@ui/ate the pre%shipment cre/it as per e3tant instructions+
POST-S2PME"T RUPEE E$PORT CRE%T
)efinition:
4ost%shipment Cre/it means an- loan or a/7ance grante/ or an- other cre/it pro7i/e/ b- a bank to an e3porter of
goo/s ser7ices from In/ia from the /ate of e3ten/ing cre/it after shipment of goo/s ren/ering of ser7ices to the
/ate of realisation of e3port procee/s as per the perio/ of realiation prescribe/ b- 5E). an/ inclu/es an- loan ora/7ance grante/ to an e3porter. in consi/eration of. or on the securit- of an- /ut- /ra9back allo9e/ b- the
<o7ernment from time to time+ As per the current instructions of 5E). the perio/ prescribe/ for realisation of
e3port procee/s is #! months from the /ate of shipment+
8-pes of 4ost%shipment Cre/its:
4ost%shipment a/7ance can mainl- take the form of %
1i2 E3port bills purchase//iscounte/negotiate/+
1ii2 A/7ances against bills for collection+
1iii2 A/7ances against /ut- /ra9back recei7able from <o7ernment+
4ost%shipment cre/it is to be li@ui/ate/ b- the procee/s of e3port bills recei7e/ from abroa/ in respect of goo/s
e3porte/ ser7ices ren/ere/+ 5urther. subDect to mutual agreement bet9een the e3porter an/ the banker it can also
be repai/ prepai/ out of balances in E3change Earners 5oreign Currenc- Account 1EE5C AC2 as also fromprocee/s of an- other unfinance/ 1collection2 bills+ Such a/Duste/ e3port bills shoul/ ho9e7er continue to be
follo9e/ up for realiation of the e3port procee/s an/ 9ill continue to be reporte/ in the *S statement+
In or/er to re/uce the cost to e3porters 1i+e+ interest cost on o7er/ue e3port bills2. e3porters 9ith o7er/ue e3port
bills ma- also e3tinguish their o7er/ue post shipment rupee e3port cre/it from their rupee resources+ Ho9e7er. thecorrespon/ing <R form 9ill remain outstan/ing an/ the amount 9ill be sho9n outstan/ing in *S statement+ 8he
e3porterFs liabilit- for realisation 9oul/ continue till the e3port bill is realise/+
Rupee Post-s0ipment Export Credit
4erio/
i+ In the case of /eman/ bills. the perio/ of a/7ance shall be the Normal 8ransit 4erio/ 1N842 as specifie/ b-5E)AI+
ii+ In case of usance bills. cre/it can be grante/ for a ma3imum /uration of $'( /a-s from /ate of shipment
inclusi7e of Normal 8ransit 4erio/ 1N842 an/ grace perio/. if an-+ Ho9e7er. banks shoul/ closel- monitor the nee
for e3ten/ing post%shipment cre/it upto the permissible perio/ of $'( /a-s an/ the- shoul/ persua/e the e3portersto realise the e3port procee/s 9ithin a shorter perio/+
3"ormal transit period3 means the a7erage perio/ normall- in7ol7e/ from the /ate of negotiation purchase
/iscount till the receipt of bill procee/s in the Nostro account of the bank concerne/. as prescribe/ b- 5E)AI from
time to time+ It is not to be confuse/ 9ith the time taken for the arri7al of goo/s at o7erseas /estination+
iv( *n overdue 5ill
in the case of a /eman/ bill. is a bill 9hich is not pai/ before the e3pir- of the normal transit perio/. plus
grace perio/ an/
in the case of a usance bill. is a bill 9hich is not pai/ on the /ue /ate+
Interest Rate Structure
Interest rate structure on post%shipment cre/it an/ instructions in regar/ thereto are /etaile/ in paragraph &+
A/7ances against n/ra9n Balances on E3port Bills
In respect of e3port of certain commo/ities 9here e3porters are re@uire/ to /ra9 the bills on the o7erseas bu-er
upto 0" to 0? percent of the 5*B 7alue of the contract. the resi/uar- amount being un/ra9n balance is pa-able b-
the o7erseas bu-er after satisf-ing himself about the @ualit- @uantit- of goo/s+
4a-ment of un/ra9n balance is contingent in nature+ Banks ma- consi/er granting a/7ances against un/ra9n
balances at concessional rate of interest base/ on their commercial Du/gement an/ the track recor/ of the bu-er+
Such a/7ances are. ho9e7er. eligible for concessional rate of interest for a ma3imum perio/ of 0" /a-s onl- to thee3tent these are repai/ b- actual remittances from abroa/ an/ pro7i/e/ such remittances are recei7e/ 9ithin #?"
/a-s after the e3pir- of N84 in the case of /eman/ bills an/ /ue /ate in the case of usance bills+ 5or the perio/be-on/ 0" /a-s. the rate of interest specifie/ for the categor- E3port Cre/it Not *ther9ise Specifie/ 1ECN*S2 at
post%shipment stage ma- be charge/+
A/7ances against Retention Mone-
1i2 In the case of turnke- proDectsconstruction contracts. progressi7e pa-ments are ma/e b- the o7erseas emplo-er
in respect of ser7ices segment of the contract. retaining a small percentage of the progressi7e pa-ments as retention
mone- 9hich is pa-able after e3pir- of the stipulate/ perio/ from the /ate of the completion of the contract. subDecto obtention of certificate1s2 from the specifie/ authorit-+
1ii2 Retention mone- ma- also be sometimes stipulate/ against the supplies portion in the case of turn%ke- proDectsIt ma- like%9ise arise in the case of sub%contracts+ 8he pa-ment of retention mone- is contingent in nature as it is
/effere/ liabilit-+
1i72 8he follo9ing gui/elines shoul/ be follo9e/ in regar/ to grant of a/7ances against retention mone-:
No a/7ances ma- be grante/ against retention mone- relating to ser7ices portion of the contract+
E3porters ma- be a/7ise/ to arrange. as far as possible. pro7ision of suitable guarantees. instea/ of retentio
Banks ma- consi/er. on a selecti7e basis. granting of a/7ances against retention mone- relating to thesupplies portion of the contract taking into account. among others. the sie of the retention mone- accumulate/. itsimpact on the li@ui/ fun/s position of the e3porter an/ the past performance regar/ing the timel- receipt of
retention mone-+
8he pa-ment of retention mone- ma- be secure/ b- LC or Bank <uarantee 9here possible+
Where the retention mone- is pa-able 9ithin a perio/ of one -ear from the /ate of shipment. accor/ing tothe terms of the contract. banks shoul/ charge prescribe/ rate of interest upto a ma3imum perio/ of 0" /a-s+ 8he
rate of interest prescribe/ for the categor- ECN*S at post%shipment stage ma- be charge/ for the perio/ be-on/
0" /a-s+
Where the retention mone- is pa-able after a perio/ of one -ear from the /ate of shipment. accor/ing to thterms of the contract an/ the correspon/ing a/7ance is e3ten/e/ for a perio/ e3cee/ing one -ear. it 9ill be treate/
as post%shipment cre/it gi7en on /eferre/ pa-ment terms e3cee/ing one -ear. an/ the bank is free to /eci/e the rat
of interest+
A/7ances against retention mone- 9ill be eligible for concessional rate of interest onl- to the e3tent thea/7ances are actuall- repai/ b- remittances recei7e/ from abroa/ relating to the retention mone- an/ pro7i/e/ suc
pa-ments are recei7e/ 9ithin #?" /a-s from the /ue /ate of pa-ment of the retention mone-. accor/ing to the term
of the contract
E3port on Consignment Basis
<eneral
E3port on consignment basis len/s scope for a lot of misuse in the matter of repatriation of e3port procee/s
8herefore. e3port on consignment basis shoul/ be at par 9ith e3ports on outright sale basis on cash terms inmatters regar/ing the rate of interest to be charge/ b- banks on post%shipment cre/it+ 8hus. in the case of e3ports o
consignment basis. e7en if e3tension in the perio/ be-on/ $'( /a-s is grante/ b- the 5oreign E3change )epartme
15E)2 for repatriation of e3port procee/s. banks 9ill charge appropriate prescribe/ rate of interest onl- upto thenotional /ue /ate 1/epen/ing upon the tenor of the bills2. subDect to a ma3imum of $'( /a-s+
E3port of precious an/ semi%precious stones
4recious an/ semi%precious stones. etc+ are e3porte/ mostl- on consignment basis an/ the e3porters are not in a
position to li@ui/ate pre%shipment cre/it account 9ith remittances recei7e/ from abroa/ 9ithin a perio/ of $'( /a-from the /ate of a/7ance+ Banks ma-. therefore. a/Dust packing cre/it a/7ances in the case of consignment e3ports
as soon as e3port takes place. b- transfer of the outstan/ing balance to a special 1post%shipment2 account 9hich in
turn. shoul/ be a/Duste/ as soon as the relati7e procee/s are recei7e/ from abroa/ but not later than $'( /a-s from
the /ate of e3port or such e3ten/e/ perio/ as ma- be permitte/ b- 5oreign E3change )epartment. Reser7e Bank oIn/ia+ Balance in the special 1post%shipment2 account 9ill not be eligible for refinance from RBI+
E3tension of realiation of e3port procee/s for perio/ upto #!#( months
RBI 15E)2 has been allo9ing in /eser7ing cases. on application b- in/i7i/ual e3porters 9ith satisfactor- track
recor/. a longer perio/ upto #! months from the /ate of shipment for realiation of procee/s of e3ports in case offollo9ing categories of e3porters:
Consignment E3ports to CIS an/ East European Countries+
Consignment e3ports to Russian 5e/eration against repa-ment of State Cre/it in rupees+
E3porters 9ho ha7e been certifie/ as Status Hol/er in terms of 5oreign 8ra/e 4olic-+
#"" per cent E3port *riente/ nits an/ units set up un/er Electronic Har/9are 8echnolog- 4ark. Soft9are8echnolog- 4ark an/ Bio%8echnolog- 4ark Schemes+
5E) 7i/e A4 1)IR series2 circular No+&" /ate/ No7ember #. !"## has e3ten/e/ the perio/ of realiation an/
repatriation of e3port procee/s from ' months to #! months from the /ate of e3port. for a further perio/ upto
5urther in case of E3ports through the Warehouse=cum%)ispla- Centres abroa/. realisation of e3port procee/s has
been fi3e/ upto #( months from the /ate of shipment+
Banks ma- e3ten/ post%shipment cre/it to such e3porters for a longer perio/ ab%initio+ Accor/ingl-. the interest rat
upto #?" /a-s from the /ate of a/7ance 9ill be the rate applicable for usance bills for perio/ upto #?" /a-s+ Be-on#?" /a-s from the /ate of shipment. banks are free to /eci/e on the rate of interest+ In case the sale procee/s are no
realise/ 9ithin the sanctione/ perio/. the higher rate of interest as applicable for ECN*S%post%shipment 9ill appl
for the entire perio/ be-on/ #?" /a-s+
Refinance to banks against e3port cre/it 9oul/ ho9e7er. be a7ailable from RBI. upto a perio/ of #?" /a-s at post%shipment stage as per gui/elines issue/ b- RBI 1M4)2+
E3port of <oo/s for E3hibition an/ Sale
Banks ma- pro7i/e finance to e3porters against goo/s sent for e3hibition an/ sale abroa/ in the normal course in
the first instance. an/ after the sale is complete/. allo9 the benefit of the prescribe/ rate of interest on sucha/7ances. both at the pre%shipment stage an/ at the post%shipment stage. upto the stipulate/ perio/s. b- 9a- of a
rebate+ Such a/7ances shoul/ be gi7en in separate accounts+
4ost%shipment Cre/it on )eferre/ 4a-ment 8erms
Banks ma- grant post%shipment cre/it on /eferre/ pa-ment terms for a perio/ e3cee/ing one -ear. in respect of
e3port of capital an/ pro/ucer goo/s as specifie/ b- RBI 15E)2 from time to time+
Post-s0ipment *dvances against %uty %ra:5ac4 Entitlements
!+(+# Banks ma- grant post%shipment a/7ances to e3porters against their /ut- /ra9back entitlements an/ co7ere/b- EC<C guarantee as pro7isionall- certifie/ b- Customs Authorities pen/ing final sanction an/ pa-ment+
!+(+! 8he a/7ance against /ut- /ra9back recei7ables can also be ma/e a7ailable to e3porters against e3port
promotion cop- of the shipping bill containing the E<M Number issue/ b- the Customs )epartment+ Wherenecessar-. the financing bank ma- ha7e its lien note/ 9ith the /esignate/ bank an/ arrangements ma- be ma/e 9i
the /esignate/ bank to transfer fun/s to the financing bank as an/ 9hen /ut- /ra9back is cre/ite/ b- the Customs
!+(+$ 8hese a/7ances grante/ against /ut- /ra9back entitlements 9oul/ be eligible for concessional rate of interes
an/ refinance from RBI upto a ma3imum perio/ of 0" /a-s from the /ate of a/7ance+
!+'+# 8he Whole 8urno7er 4ost%shipment <uarantee Scheme of the E3port Cre/it <uarantee Corporation of In/ia
Lt/+ 1EC<C2 pro7i/es protection to banks against non%pa-ment of post%shipment cre/it b- e3porters+ Banks ma-. i
the interest of e3port promotion. consi/er opting for the Whole 8urno7er 4ost%shipment 4olic-+ 8he salient featureof the scheme ma- be obtaine/ from EC<C+
4rime Len/ing Rates 1B4LRs2 of in/i7i/ual banks a7ailable to their /omestic borro9ers+ Banks ha/. therefore.
free/om to /eci/e the actual rates to be charge/ 9ithin the specifie/ ceilings+ 5urther. the ceiling interest rates for
/ifferent time buckets un/er an- categor- of e3port cre/it shoul/ be on the basis of the B4LR rele7ant for the entirtenor of e3port cre/it+
8he Base Rate S-stem is applicable 9ith effect from ,ul- #. !"#"+ Accor/ingl-. interest rates applicable for all
tenors of rupee e3port cre/it a/7ances are at or abo7e Base Rate+
ECN*S
ECN*S means E3port Cre/it Not *ther9ise Specifie/ in the Interest Rate structure for 9hich banks are free to/eci/e the rate of interest keeping in 7ie9 the Base RateB4LR gui/elines+ Banks shoul/ not charge penal interest
in respect of ECN*S+
nterest Rate on Rupee Export Credit
Interest Rate Structure
8he Base Rate S-stem is applicable 9ith effect from ,ul- #. !"#"+ Accor/ingl-. interest rates applicable for alltenors of rupee e3port cre/it a/7ances sanctione/ on or after ,ul- "#. !"#" are at or abo7e Base Rate+
Interest Rates un/er the B4LR s-stem effecti7e upto <une => ?>1> 9ill be Gnot e3cee/ing B4LR minus !+(
percentage points per annumF for the follo9ing categories of E3port Cre/it:
Categories o, Export Credit
#+ Pre-s0ipment Credit 8,rom t0e date o, advance9
1a2 pto !>" /a-s
1b2 Against incenti7es recei7able from <o7ernment co7ere/ b- EC<C <uarantee upto 0"
/a-s
!+ Post-s0ipment Credit 8,rom t0e date o, advance9
i2 pto #?" /a-sii2 pto $'( /a-s for e3porters un/er the <ol/ Car/ Scheme+
c2 Against incenti7es recei7able from <o7t+ 1co7ere/ b- EC<C <uarantee2 upto 0" /a-s
/2 Against un/ra9n balances 1upto 0" /a-s2
e2 Against retention mone- 1for supplies portion onl-2 pa-able 9ithin one -ear from the
/ate of shipment 1upto 0" /a-s2
+P.R: Benchmark 4rime Len/ing Rate+"ote@ #+ Since these are ceiling rates. banks 9oul/ be free to charge an- rate belo9 the
ceiling rates+
!+ Interest rates for the abo7e%mentione/ categories of e3port cre/it be-on/ the tenors as prescribe/ abo7e are /eregulate/ an/ banks are free to /eci/e the rate of interest. keeping in
7ie9 the B4LR an/ sprea/ gui/elines+
&+!+! Application of Interest Rates
8he re7ision in interest rates ma/e from time to time is ma/e applicable to fresh a/7ances as also to the e3isting
a/7ances for the remaining perio/ of cre/it. unless other9ise specifie/+
Interest on 4re%shipment Cre/it
i+ Banks shoul/ charge interest on pre%shipment cre/it upto !>" /a-s at the rate to be /eci/e/ b- the bank 9ithin thceiling rate arri7e/ at on the basis of B4LR rele7ant for the entire tenor of the e3port cre/it un/er the categor-+ 8h
perio/ of cre/it is to be reckone/ from the /ate of a/7ance+ 8his gui/eline is applicable upto ,une $". !"#"+ 8he
Base Rate S-stem is applicable from ,ul- #. !"#" an/ accor/ingl- interest rates applicable for all tenors of rupeee3port cre/it a/7ances sanctione/ on or after ,ul- "#. !"#" are at or abo7e Base Rate+
ii+ If pre%shipment a/7ances are not li@ui/ate/ from procee/s of bills on purchase. /iscount. etc+ on submission of
e3port /ocuments 9ithin $'" /a-s from the /ate of a/7ance. or as in/icate/ at para #+#+& 1i2. the a/7ances 9ill
cease to @ualif- for prescribe/ rate of interest for e3port cre/it ab initio+
iii+ In cases 9here packing cre/it is not e3ten/e/ be-on/ the original perio/ of sanction an/ e3ports take place afte
the e3pir- of sanctione/ perio/ but 9ithin a perio/ of $'" /a-s from the /ate of a/7ance. e3porter 9oul/ be eligib
for concessional cre/it onl- upto the sanctione/ perio/+ 5or the balance perio/. interest rate prescribe/ for ECN*
at the pre%shipment stage 9ill appl-+ 5urther. the reasons for non%e3tension of the perio/ nee/ to be a/7ise/ b-banks to the e3porter+
i7+ In cases 9here e3ports /o not take place 9ithin $'" /a-s from the /ate of pre%shipment a/7ance. such cre/its
9ill be terme/ as ECN*S an/ banks ma- charge interest rate prescribe/ for ECN*S pre%shipment from the 7er-
first /a- of the a/7ance+
7+ If e3ports /o not materialise at all. banks shoul/ charge on relati7e packing cre/it /omestic len/ing rate pluspenal rate of interest. if an-. to be /eci/e/ b- the banks on the basis of a transparent polic- appro7e/ b- their
Interest on 4ost%shipment Cre/it
Earl- pa-ment of e3port bills
i+ In the case of a/7ances against /eman/ bills. if the bills are realise/ before the e3pir- of the normal transit perio1N842. interest at the prescribe/ rate shall be charge/ from the /ate of a/7ance till the /ate of realisation of such
bills+ 8he /ate of realisation of /eman/ bills for this purpose 9oul/ be the /ate on 9hich the procee/s get cre/ite/
to the banks Nostro accounts+
ii+ In the case of a/7ancecre/it against usance e3port bills. interest at prescribe/ rate ma- be charge/ onl- upto thenotionalactual /ue /ate or the /ate on 9hich e3port procee/s get cre/ite/ to the bankFs Nostro account abroa/.
9hiche7er is earlier. irrespecti7e of the /ate of cre/it to the borro9erse3porters account in In/ia+ In cases 9here
the correct /ue /ate can be establishe/ beforeimme/iatel- after a7ailment of cre/it /ue to acceptance b- o7erseas
bu-er or other9ise. prescribe/ interest can be applie/ onl- upto the actual /ue /ate. irrespecti7e of 9hate7er ma- bthe notional /ue /ate arri7e/ at. pro7i/e/ the actual /ue /ate falls before the notional /ue /ate+
iii+ Where interest for the entire N84 in the case of /eman/ bills or upto notionalactual /ue /ate in the case of
usance bills as state/ at 1b2 abo7e. has been collecte/ at the time of negotiationpurchase/iscount of bills. thee3cess interest collecte/ for the perio/ from the /ate of realisation to the last /ate of N84notional /ue /ateactual
/ue /ate shoul/ be refun/e/ to the borro9ers+
*7er/ue E3port Bills un/er the B4LR s-stem
i+ In case of e3port bills. the rate of interest /eci/e/ b- the bank 9ithin the ceiling rate stipulate/ b- RBI 9ill appl-
upto the /ue /ate of the bill 1upto N84 in case of /eman/ bill an/ specifie/ perio/ in case of usance bills2+
ii+ 5or the perio/ be-on/ the /ue /ate 7i+ for the o7er/ue perio/. the prescribe/ interest rate as applicable to post%
shipment rupee e3port cre/it 1not e3cee/ing B4LR minus !+( percentage points2 ma- be applie/ upto #?" /a-s
from the /ate of a/7ance. till further notice+
Interest on 4ost%shipment Cre/it A/Duste/ from Rupee Resources
but e3clu/ing man%ma/e fibre an/ han/icrafts. the <o7t+ pro7i/e/ a//itional sub7ention of ! per cent 1in a//ition
to the ! per cent offere/ earlier2 in pre%shipment cre/it for #?" /a-s an/ post%shipment cre/it for 0" /a-s 1for carp
sector. the pre%shipment cre/it 9oul/ be a7ailable for !>" /a-s2+ Accor/ingl-. banks 9oul/ charge interest rate note3cee/ing B4LR minus &+( '+( per cent. as applicable. on pre%shipment cre/it upto #?" /a-s an/ post%shipment
cre/it upto 0" /a-s on the outstan/ing amount for the perio/ April #. !""> to September $". !""?+ Ho9e7er. thetotal sub7ention 9ill be subDect to the con/ition that the interest rate. after sub7ention 9ill not fall belo9 > per cen
9hich is the rate applicable to the agriculture sector un/er priorit- sector len/ing+
In )ecember !""?. the <o7ernment of In/ia announce/ the secon/ scheme of interest sub7ention of ! percentage
points for certain emplo-ment oriente/ e3port sectors 7i+ 8e3tiles 1inclu/ing Han/loom2. han/icrafts. carpets.
leather. gems 6 De9eller-. marine pro/ucts an/ Small an/ Me/ium Enterprises for the perio/ )ecember #. !""? to
September $". !""0+ Accor/ingl-. banks 9oul/ charge interest rate not e3cee/ing B4LR minus &+( per cent on preshipment cre/it upto !>" /a-s an/ post%shipment cre/it upto #?" /a-s on the outstan/ing amount for the perio/
)ecember #. !""? to September $". !""0+ 8his scheme 9as subse@uentl- e3ten/e/ upto March $#. !"#"+
In April !"#". the <o7ernment of In/ia announce/ the thir/ scheme of interest rate sub7ention of ! percentagepoints for certain emplo-ment oriente/ e3port sectors 7i+ Han/icrafts. Carpets. Han/looms an/ Small 6 Me/ium
Enterprises 1SME2 for the perio/ April #. !"#" to March $#. !"##. subDect to the con/ition that banks 9ill charge
interest rate not e3cee/ing B4LR minus &+( percentage points on pre%shipment cre/it upto !>" /a-s an/ post%
shipment cre/it upto #?" /a-s on the outstan/ing amount for the abo7e perio/ to these sectors+ Ho9e7er. the totalsub7ention is subDect to the con/ition that the interest rate. after sub7ention 9ill not fall belo9 > per cent. 9hich is
the rate applicable to the short term crop loan un/er priorit- sector len/ing+
In August !"#". the <o7ernment of In/ia /eci/e/ to e3ten/ interest rate sub7ention of ! per cent on rupee e3port
cre/it 9ith effect from April #. !"#" to March $#. !"## on the same terms an/ con/itions to certain a//itionalsectors 7i+ Leather an/ Leather Manufactures. ,ute Manufacturing inclu/ing 5loor co7ering. Engineering <oo/s
an/ 8e3tiles+
In *ctober !"##. the <o7ernment of In/ia announce/ the fourth scheme of interest rate sub7ention of ! percentagepoints for certain emplo-ment oriente/ e3port sectors 7i+ Han/icrafts. Han/looms. Carpets an/ SMEs+
In ,une !"#!. the <o7ernment of In/ia announce/ the fifth scheme of interest rate sub7ention of ! percentage
points for certain emplo-ment oriente/ e3port sectors 7i Han/icrafts. Carpet. Han/looms. SMEs. Rea/-ma/e
<arments. 4rocesse/ Agriculture 4ro/ucts. Sport <oo/s an/ 8o-s+
In ,anuar- !"#$. <o7ernment of In/ia announce/ the si3th scheme of interest rate sub7ention of ! percentagepoints on the same terms an/ con/itions for Han/icrafts. Carpet. Han/looms. Small 6 Me/ium Enterprises.
Rea/-ma/e <arments. 4rocesse/ Agriculture <oo/s. Sports <oo/s an/ 8o-s for the perio/ April #. !"#$ to March$#. !"#&+ 8he scheme 9as also 9i/ene/ to inclu/e #$& tariff lines of engineering pro/ucts 8*nnex A9 on the samterms an/ con/itions for the perio/ ,anuar- #. !"#$ to March $#. !"#&+
Later in Ma- !"#$. the <o7ernment e3ten/e/ the ! per cent interest rate sub7ention scheme to a list of another #"
tariff lines in engineering goo/s sector 8*nnex B9 1in a//ition to the e3isting #$& tariff lines mentione/ abo7e2 an' tariff lines of te3tile goo/ sector 8*nnex 9 on the same terms an/ con/itions for the perio/ April #. !"#$ to
With the change o7er to the Base Rate S-stem. the interest rates applicable for all tenors of rupee e3port cre/it
a/7ances 9ith effect from ,ul- #. !"#" are at or abo7e Base Rate in respect of all freshrene9e/ a/7ances as
a/7ise/ 7i/e circular )B*)+)ir+1E3p2+BC+No+#"!"&+"!+""#!""0%#" /ate/ Ma- '. !"#"+ Accor/ingl-. banksshoul/ re/uce the interest rate chargeable to the e3porters as per the Base Rate S-stem in the abo7e mentione/
sectors eligible for e3port cre/it sub7ention b- the amount of sub7ention a7ailable. subDect to a floor rate of >4er
cent+ If. as a conse@uence. the interest rate charge/ to e3porters goes belo9 the Base Rate. such len/ing 9ill not beconstrue/ to be a 7iolation of the Base Rate gui/elines+
Banks are re@uire/ to completel- pass on the benefit of interest sub7ention. as applicable. to the eligible e3porters
upfront an/ submit the claims to RBI for reimbursement /ul- certifie/ b- the e3ternal au/itor+ 8he sub7ention
9oul/ be reimburse/ b- RBI on the basis of @uarterl- claims submitte/ b- the banks in the prescribe/ format+
P*RT-+
E$PORT CRE%T " FORE!" CURRE"C#
Pre-s0ipment Credit in Foreign Currency 8PCFC9
<eneral
With a 7ie9 to making cre/it a7ailable to e3porters at internationall- competiti7e rates. authorise/ /ealers ha7e
been permitte/ to e3ten/ pre%shipment Cre/it in 5oreign Currenc- 14C5C2 to e3porters for /omestic an/ importe/inputs of e3porte/ goo/s at LIB*RER* LIB*RERIB*R relate/ rates of interest as /etaile/ belo9:
Scheme
i+ 8he scheme is an a//itional 9in/o9 for pro7i/ing pre%shipment cre/it to In/ian e3porters at internationall-
competiti7e rates of interest+ It 9ill be applicable to onl- cash e3ports+ 8he instructions 9ith regar/ to Rupee E3poCre/it appl- to e3port cre/it in 5oreign Currenc- also mutatis mutan/is. unless other9ise specifie/+
ii+ 8he e3porter 9ill ha7e the follo9ing options to a7ail of e3port finance:
a+ to a7ail of pre%shipment cre/it in rupees an/ then the post%shipment cre/it either in rupees or /iscounting
re/iscounting of e3port bills un/er EBR Scheme mentione/ in paragraph '+#+
b+ to a7ail of pre%shipment cre/it in foreign currenc- an/ /iscount re/iscounting of the e3port bills in foreign
currenc- un/er EBR Scheme+
c+ to a7ail of pre%shipment cre/it in rupees an/ then con7ert /ra9als into 4C5C at the /iscretion of the bank+
iii+ Choice of currenc-
8he facilit- ma- be e3ten/e/ in one of the con7ertible currencies 7i+ S )ollars. 4oun/ Sterling. ,apanes
8o enable the e3porters to ha7e operational fle3ibilit-. it 9ill be in or/er for banks to e3ten/ 4C5C in one
con7ertible currenc- in respect of an e3port or/er in7oice/ in another con7ertible currenc-+ For example. an
e3porter can a7ail of 4C5C in S )ollar against an e3port or/er in7oice/ in Euro+ 8he risk an/ cost of crosscurrenc- transaction 9ill be that of the e3porter+
Banks are permitte/ to e3ten/ 4C5C for e3ports to AC countries+
8he applicable benefit to the e3porters 9ill accrue onl- after the realisation of the e3port bills or 9hen the
resultant e3port bills are re/iscounte/ on G9ithout recourseF basis+
Source of fun/s for banks
i+ 8he foreign currenc- balances a7ailable 9ith the bank in E3change Earners 5oreign Currenc- 1EE5C2 Accounts
Resi/ent 5oreign Currenc- Accounts R5C1)2 an/ 5oreign Currenc- 1Non%Resi/ent2 Accounts 1Banks2 Schemecoul/ be utilise/ for financing the pre%shipment cre/it in foreign currenc-+
ii+ Banks are also permitte/ to utilise the foreign currenc- balances a7ailable un/er Escro9 Accounts an/ E3porter5oreign Currenc- Accounts for the purpose. subDect to ensuring that the re@uirements of fun/s b- the account
hol/ers for permissible transactions are met an/ the limit prescribe/ for maintaining ma3imum balance in the
account un/er broa/ base/ facilit- is not e3cee/e/+
iii+ 5oreign currenc- borro9ings
In a//ition. banks ma- arrange for borro9ings from abroa/+ Banks ma- negotiate lines of cre/it 9ith
o7erseas banks for the purpose of grant of 4C5C to e3porters 9ithout the prior appro7al of the RBI. pro7i/e/ therate of interest on the borro9ing /oes not e3cee/ !(" basis points from No7ember #(. !"## 1#"" basis points upto
Banks shoul/ /ra9 on the line of cre/it arrange/ onl- to the e3tent of loans grante/ b- them to the e3porteun/er the 4C5C+ Ho9e7er. 9here the o7erseas bank making a7ailable the line of cre/it stipulates a minimum
amount for /ra9als 9hich shoul/ not be 7er- large. the small unutilise/ portion ma- be manage/ b- the bank
9ithin its foreign e3change position an/ Aggregate <ap Limit 1A<L2+ Similarl-. an- pre%pa-ment b- the e3porterma- also be taken 9ithin the foreign e3change position an/ A<L limits+
Banks ma- a7ail of lines of cre/it from other banks in In/ia if the- are not in a position to raise loans from
abroa/ on their o9n. subDect to the con/ition that ultimate cost to the e3porter shoul/ not e3cee/ $(" basis pointsfrom No7ember #(. !"## to Ma- &. !"#! 1!"" basis points upto No7ember #&. !"##2 abo7e LIB*R ER* LIB* ERIB*R. pro7i/e/ the bank /oes not ha7e a branch abroa/+ 8he sprea/ bet9een the borro9ing an/ len/ing
bank is left to the /iscretion of the banks concerne/+
Banks are free to /etermine the interest rates on e3port cre/it in foreign currenc- 9ith effect from Ma- (. !"#!+
i7+ In case the e3porters ha7e arrange/ for the suppliersF cre/it for procuring importe/ inputs. the 4C5C facilit- ma
be e3ten/e/ b- the banks onl- for the purpose of financing /omestic inputs for e3ports+
7+ Banks are also permitte/ to use foreign currenc- fun/s borro9e/ in terms of para &+!1i2 of Notification No+
5EMA+$!""" RB /ate/ Ma- $. !""" as also foreign currenc- fun/s generate/ through bu-%sell s9aps in the
/omestic fore3 market for granting pre%shipment cre/it in 5oreign Currenc- 14C5C2 subDect to a/herence toAggregate <ap Limit 1A<L2 prescribe/ b- RBI 15E)2+
Sprea/
i+ 8he sprea/ for pre%shipment cre/it in foreign currenc- 9ill be relate/ to the international reference rate such as
LIB*RER* LIB*RERIB*R 1' months2+ 8he len/ing rate to the e3porter shoul/ not e3cee/ $(" basis pointsfrom No7ember #(. !"## to Ma- &. !"#! 1!"" basis points upto No7ember #&. !"##2 abo7e LIB*R ER* LIB*
ERIB*R. e3clu/ing 9ithhol/ing ta3+ Banks are free to /etermine the interest rates on e3port cre/it in foreign
currenc- 9ith effect from Ma- (. !"#!+
ii+ LIB*R ER* LIB*R ERIB*R rates are normall- a7ailable for stan/ar/ perio/ of #. !. $. ' an/ #! monthBanks ma- @uote rates on the basis of stan/ar/ perio/ if 4C5C is re@uire/ for perio/s less than ' months+ Ho9e7e
9hile @uoting rates for non%stan/ar/ perio/. banks shoul/ ensure that the rate @uote/ is belo9 the ne3t upper
stan/ar/ perio/ rate+
iii+ Banks ma- collect interest on 4C5C at monthl- inter7als against sale of foreign currenc- or out of balances inEE5C accounts or out of /iscounte/ 7alue of the e3port bills if 4C5C is li@ui/ate/+
4erio/ of cre/it
i+ 8he 4C5C 9ill be a7ailable for a ma3imum perio/ of $'" /a-s+ An- e3tension of the cre/it 9ill be subDect to the
same terms an/ con/itions as applicable for e3tension of rupee packing cre/it an/ it 9ill also ha7e a//itionalinterest cost of !"" basis points abo7e the rate for the initial perio/ of #?" /a-s pre7ailing at the time of e3tension
ii+ 5urther e3tension 9ill be subDect to the terms an/ con/itions fi3e/ b- the bank concerne/ an/ if no e3port takes
place 9ithin $'" /a-s. the 4C5C 9ill be a/Duste/ at 8+8+ selling rate for the currenc- concerne/+ In such cases.
banks can arrange to remit foreign e3change to repa- the loan or line of cre/it raise/ abroa/ an/ interest 9ithoutprior permission of RBI+
iii+ 5or e3tension of 4C5C 9ithin #?" /a-s. banks are permitte/ to e3ten/ on a fi3e/ roll o7er basis of the principa
amount at the applicable LIB*RER* LIB*RERIB*R rate for e3ten/e/ perio/ plus permitte/ margin of $("
basis points from No7ember #(. !"## to Ma- &. !"#! 1!"" basis points upto No7ember #&. !"##2 abo7e LIB*R
ER* LIB*R ERIB*R+
Banks are free to /etermine the interest rates on e3port cre/it in foreign currenc- 9ith effect from Ma- (. !"#!+
)isbursement of 4C5C
i+ In case full amount of 4C5C or part thereof is utilise/ to finance /omestic input. banks ma- appl- appropriate
ii+ As regar/s the minimum lots of transactions. it is left to the operational con7enience of banks to stipulate the
minimum lots taking into account the a7ailabilit- of their o9n resources+ Ho9e7er. 9hile fi3ing the minimum lot.
banks ma- take into account the nee/s of their small customers also+
iii+ Banks shoul/ take steps to streamline their proce/ures so that no separate sanction is nee/e/ for 4C5C once thpacking cre/it limit has been authorise/ an/ the /isbursement is not /ela-e/ at the branches+
Li@ui/ation of 4C5C Account
<eneral
4C5C can be li@ui/ate/ out of procee/s of e3port /ocuments on their submission for /iscountingre/iscounting
un/er the EBR Scheme /etaile/ in para '+# or b- grant of foreign currenc- loans 1)4 Bills2+ SubDect to mutual
agreement bet9een the e3porter an/ the banker. it can also be repai/ prepai/ out of balances in EE5C Ac as alsofrom rupee resources of the e3porter to the e3tent e3ports ha7e actuall- taken place+
4acking cre/it in e3cess of 5+*+B+ 7alue
In certain cases. 17i+ agro base/ pro/ucts like H4S groun/nut. /efatte/ 6 /eoile/ cakes. tobacco. pepper.car/amom. cashe9 nuts. ntc+2 9here packing cre/it re@uire/ is in e3cess of 5*B 7alue. 4C5C 9oul/ be a7ailable
onl- for e3portable portion of the pro/uce+
Substitution of or/ercommo/it-
Repa-ment li@ui/ation of 4C5C coul/ be 9ith e3port /ocuments relating to an- other or/er co7ering the same oran- other commo/it- e3porte/ b- the e3porter or amount of balance in the EE5C Account+ While allo9ing
substitution of contract in this 9a-. banks shoul/ ensure that it is commerciall- necessar- an/ una7oi/able+ Banks
shoul/ also satisf- about the 7ali/ reasons as to 9h- 4C5C e3ten/e/ for shipment of a particular commo/it- cann
be li@ui/ate/ in the normal metho/+ As far as possible. the substitution of contract shoul/ be allo9e/ if the e3portemaintains account 9ith the same bank or it has the appro7al of the members of the consortium. if an-+
Cancellationnon%e3ecution of e3port or/er
i+ In case of cancellation of the e3port or/er for 9hich the 4C5C 9as a7aile/ of b- the e3porter from the bank. or i
the e3porter is unable to e3ecute the e3port or/er for an- reason. it 9ill be in or/er for the e3porter to repa- the loa
together 9ith accrue/ interest thereon. b- purchasing foreign e3change 1principal K interest2 from /omestic markethrough the bank+ In such cases. interest 9ill be pa-able on the rupee e@ui7alent of principal amount at the rate
applicable to ECN*S at pre%shipment stage plus a penal rate of interest from the /ate of a/7ance after a/Dustmentof interest of 4C5C alrea/- reco7ere/+
ii+ It 9ill also be in or/er for the banks to remit the amount to the o7erseas bank. pro7i/e/ the 4C5C 9as ma/e
a7ailable to e3porter from the line of cre/it obtaine/ from that bank+
iii+ Banks ma- e3ten/ 4C5C to such e3porters subse@uentl-. after ensuring that the earlier cancellation of 4C5C
9as /ue to genuine reasons+
Running Account 5acilit- for all commo/ities
i+ Banks are permitte/ to e3ten/ the GRunning AccountF facilit- un/er the 4C5C Scheme to e3porters for allcommo/ities. on the lines of the facilit- a7ailable un/er rupee cre/it. subDect to the follo9ing con/itions:
8he facilit- ma- be e3ten/e/ pro7i/e/ the nee/ for GRunning AccountF facilit- has been establishe/ b- the
e3porters to the satisfaction of the bank+
Banks ma- e3ten/ the facilit- onl- to those e3porters 9hose track recor/ has been goo/+
In all cases. 9here pre%shipment cre/it GRunning AccountF facilit- has been e3ten/e/. the LCs or firm or/eshoul/ be pro/uce/ 9ithin a reasonable perio/ of time+
8he 4C5C 9ill be marke/%off on the G5irst%in%5irst%*utF basis+
4C5C can also be marke/%off 9ith procee/s of e3port /ocuments against 9hich no 4C5C has been /ra9n
b- the e3porter+
ii+ Banks shoul/ closel- monitor the pro/uction of firm or/er or LC subse@uentl- b- e3porters an/ also the en/%usof fun/s+ It has to be ensure/ that no /i7ersion of fun/s is ma/e for /omestic use+ In case of non%utilisation of
4C5C /ra9als for e3port purposes. the penal pro7isions state/ abo7e shoul/ be ma/e applicable an/ the GRunning
AccountF facilit- shoul/ be 9ith/ra9n for the concerne/ e3porter+
iii+ Banks are re@uire/ to take an- prepa-ment b- the e3porter un/er 4C5C scheme 9ithin their foreign e3changeposition an/ Aggregate <ap Limit 1A<L2 as in/icate/ in paragraph (+#+$ 1iii2 1b2 abo7e+ With the e3tension of
GRunning AccountF facilit-. mismatches are likel- to occur for a longer perio/ in7ol7ing cost to the banks+ Banks
ma- charge the e3porters the fun/ing cost. if an-. in7ol7e/ in absorbing mismatches in respect of the prepa-mentbe-on/ one month perio/+
5or9ar/ Contracts
i+ In terms of paragraph (+#+! 1iii2 abo7e. 4C5C can be e3ten/e/ in an- of the con7ertible currencies in respect of a
e3port or/er in7oice/ in another con7ertible currenc-+ Banks are also permitte/ to allo9 an e3porter to bookfor9ar/ contract on the basis of confirme/ e3port or/er prior to a7ailing of 4C5C an/ cancel the contract 1forportion of /ra9al use/ for importe/ inputs2 at pre7ailing market rates on a7ailing of 4C5C+
ii+ Banks are permitte/ to allo9 customers to seek co7er in an- permitte/ currenc- of their choice 9hich is acti7el-
tra/e/ in the market. subDect to ensuring that the customer is e3pose/ to e3change risk in a permitte/ currenc- in
iii+ While allo9ing for9ar/ contracts un/er the scheme. banks ma- ensure compliance of the basic 5oreign
E3change Management re@uirement that the customer is e3pose/ to an e3change risk in the un/erl-ing transaction
at /ifferent stages of the e3port finance+
Sharing of E4C un/er 4C5C
i+ 8he rupee e3port packing cre/it is allo9e/ to be share/ bet9een an e3port or/er hol/er an/ the manufacturer of
the goo/s to be e3porte/+ Similarl-. banks ma- e3ten/ 4C5C also to the manufacturer on the basis of the /isclaime
from the e3port or/er hol/er through his bank+
ii+ 4C5C grante/ to the manufacturer can be repai/ b- transfer of foreign currenc- from the e3port or/er hol/er b-a7ailing of 4C5C or b- /iscounting of bills+ Banks shoul/ ensure that no /ouble financing is in7ol7e/ in the
transaction an/ the total perio/ of packing cre/it is limite/ to the actual c-cle of pro/uction of the e3porte/ goo/s+
iii+ 8he facilit- ma- be e3ten/e/ 9here the banker or the lea/er of consortium of banks is the same for both the
e3port or/er hol/er an/ the manufacturer or. the banks concerne/ agree to such an arrangement 9here the bankersare /ifferent for e3port or/er hol/er an/ manufacturer+ 8he sharing of e3port benefits 9ill be left to the mutual
agreement bet9een the e3port or/er hol/er an/ the manufacturer+
Supplies from *ne E*E4SE nit to another E*E4SE nit
i+ 4C5C ma- be ma/e a7ailable to both. the supplier E*E4SE unit an/ the recei7er E*E4 SE unit+
ii+ 8he 4C5C for supplier E*E4SE unit 9ill be for suppl- of ra9 materials components of goo/s 9hich 9il
be further processe/ an/ finall- e3porte/ b- recei7er E* E4 SE unit+
iii+ 8he 4C5C e3ten/e/ to the supplier E*E4SE unit 9ill ha7e to be li@ui/ate/ b- receipt of foreign e3chang
from the recei7er E*E4SE unit. for 9hich purpose. the recei7er E*E4SE unit ma- a7ail of 4C5C+
i7+ 8he stipulation regar/ing li@ui/ation of 4C5C b- pa-ment in foreign e3change 9ill be met in such cases not b-negotiation of e3port /ocuments but b- transfer of foreign e3change from the banker of the recei7er E*E4SE
unit to the banker of supplier E*E4SE unit+ 8hus. there 9ill not normall- be an- post%shipment cre/it in the
transaction from the supplier E*E4 SE unitFs point of 7ie9+
7+ In all such cases. it has to be ensure/ b- banks that there is no /ouble financing for the same transaction+
Nee/less to a//. the 4C5C to recei7er E*E4SE unit 9ill be li@ui/ate/ b- /iscounting of e3port bills+
(+#+#$ )eeme/ E3ports
4C5C ma- be allo9e/ for G/eeme/ e3portsF onl- for supplies to proDects finance/ b- multilateralbilateral
agenciesfun/s+ 4C5C release/ for G/eeme/ e3portsF shoul/ be li@ui/ate/ b- grant of foreign currenc- loan at postsuppl- stage. for a ma3imum perio/ of $" /a-s or upto the /ate of pa-ment b- the proDect authorities. 9hiche7er i
earlier+ 4C5C ma- also be repai/ prepai/ out of balances in EE5C Ac as also from rupee resources of the e3porte
to the e3tent supplies ha7e actuall- been ma/e+
(+#+#& Refinance
Banks 9ill not be eligible for an- refinance from RBI against e3port cre/it un/er the 4C5C scheme an/. as such.
the @uantum of 4C5C shoul/ be sho9n separatel- from the e3port cre/it figures reporte/ for the purpose of/ra9ing e3port cre/it refinance+
*ther aspects
8he applicable benefits such as cre/it of eligible percentage of e3port procee/s to EE5C Account etc+ to th
e3porters 9ill accrue onl- after realisation of the e3port bills an/ not at the stage of con7ersion of pre%shipmentcre/it to post%shipment cre/it 1e3cept 9hen bills are /iscounte/ re/iscounte/ 9ithout recourse2+
Surplus of e3port procee/s a7ailable after a/Dusting relati7e e3port finance an/ cre/it to EE5C accountshoul/ not be allo9e/ for setting off of import bills+
EC<C co7er 9ill be a7ailable in rupees onl-. 9hereas 4C5C is in foreign currenc-+
5or the purpose of reckoning banks performance in e3ten/ing e3port cre/it. the rupee e@ui7alent of the4C5C ma- be taken into account+
%iamond %ollar *ccount 8%%*9 Sc0eme
n/er the 5oreign 8ra/e 4olic- !""0%!"#&. firmscompanies /ealing in purchasesale of rough or cut an/ polishe/
/iamon/s. /iamon/ stu//e/ De9eller-. 9ith goo/ track recor/ of at least t9o -ears in import or e3port of /iamon/9ith an annual a7erage turno7er of Rs+ $ crore or abo7e /uring the prece/ing three licensing -ears 1from April to
March2 are permitte/ to carr- out their business through /esignate/ )iamon/ )ollar Accounts 1))As2+
n/er the ))A Scheme. it 9oul/ be in or/er for banks to li@ui/ate 4C5C grante/ to a ))A hol/er b- /ollar
procee/s from sale of rough. cut an/ polishe/ /iamon/s b- him to another ))A hol/er+ 15or /etails regar/ing the)iamon/ )ollar Accounts. bank ma- refer to A4 1)IR series2 circular No+#$ /ate/ *ctober !0. !""0 issue/ b-
5oreign E3change )epartment of RBI2
Post-s0ipment Export Credit in Foreign Currency
Re/iscounting of E3port Bills Abroa/ Scheme 1EBR2
<eneral
Banks ma- utilise the foreign e3change resources a7ailable 9ith them in E3change Earners 5oreign Currenc-Accounts 1EE5C2. Resi/ent 5oreign Currenc- Accounts 1R5C2. 5oreign Currenc- 1Non%Resi/ent2 Accounts
1Banks2 Scheme. to /iscount usance bills an/ retain them in their portfolio 9ithout resorting to re/iscounting+
iii+ Each bank can ha7e its o9n BA5 limit1s2 fi3e/ 9ith an o7erseas bank or a re/iscounting agenc- or an
arrangement 9ith an- other agenc- such as factoring agenc- 1in case of factoring arrangement. it shoul/ be on
G9ithout recourseF basis onl-2+
i7+ 8he e3porters. on their o9n. can arrange for themsel7es a line of cre/it 9ith an o7erseas bank or an- other
agenc- 1inclu/ing a factoring agenc-2 for /iscounting their e3port bills /irect subDect to the follo9ing con/itions:
1a2 )irect /iscounting of e3port bills b- e3porters 9ith o7erseas bank an/or an- other agenc- 9ill be /one onl-
through the branch of an authorie/ /ealer /esignate/ b- him for this purpose+
1b2 )iscounting of e3port bills 9ill be route/ through /esignate/ bank authorie/ /ealer from 9hom the packing
cre/it facilit- has been a7aile/ of+ In case. these are route/ through an- other bank. the latter 9ill first arrange to
a/Dust the amount outstan/ing un/er packing cre/it 9ith the concerne/ bank out of the procee/s of the re/iscounte
7+ 8he limits grante/ to banks b- o7erseas banks/iscounting agencies un/er BA5 9ill not be reckone/ for the
purpose of borro9ing limits fi3e/ b- RBI 15E)2 for them+
Eligibilit- criteria
i+ 8he Scheme 9ill co7er mainl- e3port bills 9ith usance perio/ upto #?" /a-s from the /ate of shipment 1inclusi7of normal transit perio/ an/ grace perio/. if an-2+ 8here is. ho9e7er. no bar to inclu/e /eman/ bills. if o7erseas
institution has no obDection to it+
ii+ In case borro9er is eligible to /ra9 usance bills for perio/s e3cee/ing #?" /a-s as per the e3tant instructions of
5E). 4ost%shipment Cre/it un/er the EBR ma- be pro7i/e/ be-on/ #?" /a-s+
iii+ 8he facilit- un/er the Scheme of Re/iscounting ma- be offere/ in an- con7ertible currenc-+
i7+ Banks are permitte/ to e3ten/ the EBR facilit- for e3ports to AC countries+
7+ 5or operational con7enience. the BA5 Scheme ma- be centralise/ at a branch /esignate/ b- the bank+ 8here 9il
ho9e7er. be no bar for other branches of the bank to operate the scheme as per the banks internal gui/elines
instructions+
Source of *n%shore fun/s
1i2 In the case of /eman/ bills subDect to 9hat has been state/ in paragraph '+#+$ 1i2 abo7e. these ma- ha7e to be
route/ through the e3isting post%shipment cre/it facilit- or b- 9a- of foreign e3change loans to the e3porters out othe foreign currenc- balances a7ailable 9ith banks in the Schemes ibi/+
1ii2 8o facilitate the gro9th of local market for re/iscounting e3port bills. establishment an/ /e7elopment of an
acti7e inter%bank market is /esirable+ It is possible that banks hol/ bills in their o9n portfolio 9ithout re/iscountinHo9e7er. in case of nee/. the banks shoul/ also ha7e access to the local market. 9hich 9ill enable the countr- to
sa7e foreign e3change to the e3tent of the cost of re/iscounting+ 5urther. as /ifferent banks ma- be ha7ing BA5 fo
7ar-ing amounts. it 9ill be possible for a bank 9hich has balance a7ailable in its limit to offer re/iscounting facili
to another bank 9hich ma- ha7e e3hauste/ its limit or coul/ not arrange for such a facilit-+
1iii2 Banks ma- a7ail of lines of cre/it from other banks in In/ia if the- are not in a position to raise loans from
abroa/ on their o9n or the- /o not ha7e branches abroa/. subDect to the con/ition that ultimate cost to the e3porter
shoul/ not e3cee/ $(" basis points from No7ember #(. !"## to Ma- &. !"#! 1!"" basis points upto No7ember #&.
abo7e LIB*R ER* LIB*R ERIB*R e3clu/ing 9ithhol/ing ta3+ 8he sprea/ bet9een the borro9ingan/ len/ing bank is left to the /iscretion of the banks concerne/+
Banks are free to /etermine the interest rates on e3port cre/it in foreign currenc- 9ith effect from Ma- (. !"#!+
1i72 Banks are also permitte/ to use foreign currenc- fun/s borro9e/ in terms of para &+!1i2 of notification No+
5EMA $!""" RB /ate/ Ma- $. !""" as also foreign currenc- fun/s generate/ through bu- % sell s9aps in the
/omestic fore3 market for granting facilit- of re/iscounting of E3port Bills Abroa/ 1EBR2 subDect to a/herence toAggregate <ap Limit 1A<L2 appro7e/ b- RBI 15E)2+
5acilit- of Re/iscounting 9ith recourse an/ 9ithout recourse
It is recognise/ that it 9ill be /ifficult to get G9ithout recourseF facilit- from abroa/ un/er BA5 or an- other facilit8herefore. the bills ma- be re/iscounte/ G9ith recourseF+ Ho9e7er. if an A) is in a position to arrange G9ithout
recourseF facilit- on competiti7e terms. it is permitte/ to a7ail itself of such a facilit-+
Accounting aspects
i+ 8he rupee e@ui7alent of the /iscounte/ 7alue of the e3port bills 9ill be pa-able to the e3porter an/ the sameshoul/ be utilise/ to li@ui/ate the outstan/ing e3port packing cre/it+
ii+ As the /iscounting of billse3tension of foreign e3change loans 1)4 bills2 9ill be in actual foreign e3change.
banks ma- appl- appropriate spot rate for the transactions+
iii+ 8he rupee e@ui7alents of /iscounte/ amountsforeign e3change loan ma- be hel/ in the bankFs books /istinct
i7+ In case of o7er/ue bills. banks ma- charge !"" basis points abo7e the rate of re/iscounting of foreign e3changeloan from the /ue /ate to the /ate of cr-stallisation+
7+ Interest rate as per RBI interest rate /irecti7e for post%shipment cre/it in rupees 9ill be applicable from the /ateof cr-stallisation+
7i+ In the e7ent of e3port bill not being pai/. it 9ill be in or/er for the bank to remit the amount e@ui7alent to the7alue of the bill earlier /iscounte/. to the o7erseas bankagenc- 9hich ha/ /iscounte/ the bill. 9ithout the prior
appro7al of the RBI+
Restoration of limits an/ a7ailabilit- of e3port benefits such as EE5C Account
As state/ in paragraph '+#+( abo7e. G9ithout recourseF facilit- ma- not generall- be a7ailable+ 8hus. the restorationof e3porterFs limits an/ the a7ailabilit- of e3port benefits. such as cre/it to EE5C accounts. in case of G9ith
recourseF facilit-. 9ill be effecte/ onl- on realisation of e3port procee/s an/ not on the /ate of /iscountingre/iscounting of the bills. Ho9e7er. if the bills are re/iscounte/ G9ithout recourseF. the restoration of e3porterFs
limits an/ a7ailabilit- of e3port benefits ma- be gi7en effect imme/iatel- on re/iscounting+
EC<C co7er
In the case of e3port bills re/iscounte/ G9ith recourseF. there 9ill not be an- change in the e3isting s-stem of
co7erage pro7i/e/ b- E3port Cre/it <uarantee Corporation 1EC<C2 as the liabilit- of the e3porter continues till th
relati7e bill is retire/pai/+ In other cases. 9here the bills are re/iscounte/ G9ithout recourseF. the liabilit- of EC<ceases as soon as the relati7e bills are re/iscounte/+
Refinance
Banks 9ill not be eligible for refinance from the RBI against e3port bills /iscounte/re/iscounte/ un/er the Schem
an/ as such. the bills /iscounte/re/iscounte/ in foreign currenc- shoul/ be sho9n separatel- from the e3port cre/figures reporte/ for purposes of /ra9ing e3port cre/it refinance+
E3port cre/it performance
1i2 *nl- the bills re/iscounte/ abroa/ G9ith recourseF basis an/ outstan/ing 9ill be taken into account for the
purpose of e3port cre/it performance+ 8he bills re/iscounte/ abroa/ G9ithout recourseF 9ill not count for the e3po
cre/it performance+
1ii2 Bills re/iscounte/ G9ith recourseF in the /omestic market coul/ get reflecte/ onl- in the case of the first bank
/iscounting the bills as that bank alone 9ill ha7e recourse to the e3porter an/ the bank re/iscounting 9ill not
reckon the amount as e3port cre/it+
"TEREST O" E$PORT CRE%T " FORE!" CURRE"C#
nterest rate structure on Export Credit in Foreign Currency
In respect of e3port cre/it to e3porters at internationall- competiti7e rates un/er the schemes of 4re%shipment
Cre/it in 5oreign Currenc- 14C5C2 an/ Re/iscounting of E3port Bills Abroa/ 1EBR2. banks are free to /etermin
the interest rates on e3port cre/it in foreign currenc- 9ith effect from Ma- (. !"#!+ Ho9e7er. upto Ma- &. !"#!banks ma- fi3 the rates of interest 9ith reference to ruling LIB*R. ER* LIB*R or ERIB*R. 9here7er
1c2 E3port Bills 1)eman/ or sance2 realie/after /ue /ate but upto /ate of cr-stalliation
Rate for 1ii2 1b2 abo7e plus !"" basis points
Note: i2 Bank shoul/ not le7- an- other charges o7er an/ abo7e the interest rate un/er an- name 7i+ ser7icecharge management charge etc+ 8he practice of IBA fi3ing out of pocket e3penses has been /one a9a- 9ith effec
from August !"#! an/ the /ecision to reco7er out of pocket e3penses is left to in/i7i/ual banks+ While reco7eringout of pocket e3penses. banks shoul/ ensure that the charges are reasonable an/ on an actual cost basis+
ii2 Banks are free to /eci/e the rate of interest. being the rupee cre/it rate. for pre%shipment an/ post%shipment
cre/it be-on/ the tenors prescribe/ abo7e. keeping in 7ie9 the gui/elines on Base Rate+
P*RT-C
CUSTOMER SER'CE *"% SMP.FC*TO" OF PROCE%URES
Customer Service
<eneral
i+ Banks ma- pro7i/e timel- an/ a/e@uate cre/it an/ also ren/er essential customer ser7icesgui/ance in regar/ to
proce/ural formalities an/ e3port opportunities to their e3porter clients+
ii+ Banks shoul/ open E3port Counsel *ffices to gui/e e3porters particularl- the small ones an/ those taking upnon%tra/itional e3ports+
Working <roup to re7ie9 E3port Cre/it
As part of the on%going efforts to a//ress 7arious issues relating to customer ser7ice to e3porters. the Reser7e Ban
of In/ia ha/ constitute/ a Working <roup in Ma- !""(. consisting of select banks an/ e3portersF organiations tore7ie9 E3port Cre/it+ 8he <roup has come out 9ith a comprehensi7e set of recommen/ations most of 9hich ha7e
been accepte/ an/ communicate/ to banks+ 1*nnex 12+
<ol/ Car/ Scheme for e3porters
8he <o7ernment 1Ministr- of Commerce an/ In/ustr-2. in consultation 9ith RBI ha/ in/icate/ in the 5oreign
8ra/e 4olic- !""$%"& that a <ol/ Car/ Scheme 9oul/ be 9orke/ out b- RBI for cre/it9orth- e3porters 9ith goo/track recor/ for eas- a7ailabilit- of e3port cre/it on best terms+ Accor/ingl-. in consultation 9ith select banks an/
e3porters. a <ol/ Car/ Scheme 9as /ra9n up+ 8he Scheme en7isages certain a//itional benefits base/ on the
recor/ of performance of the e3porters+ 8he <ol/ Car/ hol/er 9oul/ enDo- simpler an/ more efficient cre/it/eli7er- mechanism in recognition of his goo/ track recor/+ 8he salient features of the Scheme are:
All cre/it9orth- e3porters. inclu/ing those in small an/ me/ium sectors. 9ith goo/ track recor/ 9oul/ be
eligible for issue of <ol/ Car/ b- in/i7i/ual banks as per the criteria to be lai/ /o9n b- the latter+
<ol/ Car/ un/er the Scheme ma- be issue/ to all eligible e3porters inclu/ing those in the small an/me/ium sectors 9ho satisf- the lai/ /o9n con/itions+
8he scheme 9ill not be applicable for e3porters blackliste/ b- EC<C or ha7ing o7er/ue bills in e3cess of
<ol/ Car/ hol/er e3porters. /epen/ing on their track recor/ an/ cre/it 9orthiness. 9ill be grante/ better
terms of cre/it inclu/ing rates of interest than those e3ten/e/ to other e3porters b- the banks+
Applications for cre/it 9ill be processe/ at norms simpler an/ un/er a process faster than for other
e3porters+
Banks 9oul/ clearl- specif- the benefits the- 9oul/ be offering to <ol/ Car/ hol/ers+
8he charges sche/ule an/ fee%structure in respect of ser7ices pro7i/e/ b- banks to e3porters un/er the
Scheme 9ill be relati7el- lo9er than those pro7i/e/ to other e3porters+
8he sanction an/ rene9al of the limits un/er the Scheme 9ill be base/ on a simplifie/ proce/ure to be
/eci/e/ b- the banks+ 8aking into account the anticipate/ e3port turno7er an/ track recor/ of the e3porter the bank
ma- /etermine nee/%base/ finance 9ith a liberal approach+
In%principle limits 9ill be sanctione/ for a perio/ of $ -ears 9ith a pro7ision for automatic rene9al subDec
to fulfillment of the terms an/ con/itions of sanction+
A stan/%b- limit of not less than !" per cent of the assesse/ limit ma- be a//itionall- ma/e a7ailable tofacilitate urgent cre/it nee/s for e3ecuting su//en or/ers+ In the case of e3porters of seasonal commo/ities. the
peak an/ off%peak le7els ma- be appropriatel- specifie/+
In case of unanticipate/ e3port or/ers. norms for in7entor- ma- be rela3e/. taking into account the sie an
nature of the e3port or/er+
Re@uests from car/ hol/ers 9oul/ be processe/ @uickl- b- banks 9ithin !( /a-s #( /a-s an/ > /a-s for
fresh applications rene9al of limits an/ a/ hoc limits. respecti7el-+
<ol/ Car/ hol/ers 9oul/ be gi7en preference in the matter of granting of packing cre/it in foreign currenc-
Banks 9oul/ consi/er 9ai7er of collaterals an/ e3emption from EC<C guarantee schemes on the basis of
car/ hol/ers cre/it9orthiness an/ track recor/+
8he facilit- of further 7alue a//ition to their car/s through supplementar- ser7ices like A8M. Internet
banking. International /ebit cre/it car/s ma- be /eci/e/ b- the issuing banks+
8he applicable rate of interest to be charge/ un/er the <ol/ Car/ Scheme 9ill not be more than the general
rate for e3port cre/it in the respecti7e bank an/ 9ithin the ceiling prescribe/ b- RBI+ In keeping 9ith the spirit ofthe Scheme. banks 9ill en/ea7our to pro7i/e the best rates possible to <ol/ Car/ hol/ers on the basis of their ratin
an/ past performance+
In respect of the <ol/ Car/ hol/ers. the prescribe/ rate of interest on post%shipment rupee e3port cre/it ma
<ol/ Car/ hol/ers. on the basis of their track recor/ of timel- realiation of e3port bills. 9ill be consi/ere/
for issuance of foreign currenc- cre/it car/s for meeting urgent pa-ment obligations. etc+
Banks ma- ensure that the 4C5C re@uirements of the <ol/ Car/ hol/ers are met b- gi7ing them priorit-
o7er non%e3port borro9ers 9ith regar/ to granting loans out of their 5CNR 1B2 fun/s. etc+
Banks 9ill consi/er granting term loans in foreign currenc- in /eser7ing cases out of their 5CNR 1B2. R5C
etc+ fun/s+ 1Banks ma- not grant such loans from their o7erseas borro9ings un/er the !( per cent 9in/o9 of
o7erseas borro9ings+2
)ela- in cre/iting the procee/s of e3port bills /ra9n in foreign currenc-
)ela-s are obser7e/ in passing on the cre/it of e3port bills /ra9n in foreign currenc- to the e3porters after the
foreign currenc- amounts are cre/ite/ to the GNostroF accounts of the banks+
Although there are instructions that the prescribe/ post%shipment interest rate 9ill cease from the /ate of cre/it to
the Nostro account. the cre/it limits enDo-e/ b- the e3porters remain froen till the actual /ate of cre/it of rupeee@ui7alent to the account of the customer+ 8here is. therefore. nee/ to promptl- restore the limit of the e3porters on
realisation of bills an/ pass on the rupee cre/it to the customer+
4a-ment of compensation to e3porters for /ela-e/ cre/it of e3port bills
In respect of the /ela- in affor/ing cre/it in respect of cre/it a/7ices complete in all respects. the
compensation stipulate/ b- 5E)AI shoul/ be pai/ to the e3porter client. 9ithout 9aiting for a /eman/ from the
e3porter+
Banks shoul/ /e7ise a s-stem to monitor timel- cre/it of the e3port procee/s to the e3porters account an/
pa-ment of compensation as per 5E)AI rules+
8he internal au/it an/ inspection teams of the banks shoul/ specificall- comment on these aspects in the
Sanction o, export credit proposals
8ime limit for sanction
8he sanction of freshenhance/ e3port cre/it limits shoul/ be ma/e 9ithin &( /a-s from the /ate of receipt of cre/
limit application 9ith the re@uire/ /etailsinformation supporte/ b- re@uisite financialoperating statements+ In casof rene9al of limits an/ sanction of a/ hoc cre/it facilities. the time taken b- banks shoul/ not e3cee/ $" /a-s an/
#( /a-s respecti7el-. other than for <ol/ Car/ hol/ers+
At times. e3porters re@uire a/ hoc limits to take care of large e3port or/ers 9hich 9ere not foreseen earlier+ Banks
shoul/ respon/ to such situations promptl-+ Apart from this. banks shoul/ a/opt a fle3ible approach in respect of
e3porters. 9ho for genuine reasons are unable to bring in correspon/ing a//itional contribution in respect of highecre/it limits sought for specific or/ers+ No a//itional interest is to be charge/ in respect of a/ hoc limits grante/ b-
9a- of pre%shipmentpost%shipment e3port cre/it+
In cases 9here the e3port cre/it limits are utilise/ full-. banks ma- a/opt a fle3ible approach in negotiating the bil
/ra9n against LCs an/ consi/er in such cases /elegating /iscretionar-higher sanctioning po9ers to branchmanagers to meet the cre/it re@uirements of the e3porters+ Similarl- branches ma- also be authorie/ to /isburse a
certain percentage of the enhance/a/ hoc limits. pen/ing sanction b- the higher authoritiesboar/committee 9ho
ha/ originall- accor/e/ sanctions to enable the e3porters to e3ecute urgent e3port or/ers in time+
*ther re@uirements
All reDections of e3port cre/it proposals shoul/ be brought to the notice of the Chief E3ecuti7e of the bank
e3plaining the reasons for reDection+
8he internal au/it an/ inspection teams of the banks shoul/ comment specificall- on the timel- sanction of
e3port cre/it limits 9ithin the time sche/ule prescribe/ b- RBI+
8he e3port cre/it limits shoul/ be e3clu/e/ for bifurcation of the 9orking capital limit into loan an/ cashcre/it components+
Banks shoul/ nominate suitable officers as compliance officers in their foreign /epartmentsspecialie/
branches to ensure prompt an/ timel- /isposal of cases pertaining to e3porters+
It is necessar- to submit a re7ie9 note at @uarterl- inter7als to the Boar/ on the position of sanction of cre/limits to e3porters+ 8he note ma- co7er among other things. number of applications 19ith @uantum of cre/it2
sanctione/ 9ithin the prescribe/ time%frame. number of cases sanctione/ 9ith /ela- an/ pen/ing sanction
e3plaining reasons therefor+
Simpli,ication o, procedure ,or delivery o, export credit in ,oreign currency and in rupees
<eneral
With a 7ie9 to ensuring timel- /eli7er- of cre/it to e3porters an/ remo7ing proce/ural hassles. the follo9inggui/elines. applicable to rupee e3port cre/it as 9ell as e3port cre/it in foreign currenc-. ma- be brought into effec
Banks shoul/ simplif- the application form an/ re/uce /ata re@uirements from e3porters for assessment of
their cre/it nee/s. so that e3porters /o not ha7e to seek outsi/e professional help to fill in the application form or t
furnish /ata re@uire/ b- the banks+
Banks shoul/ a/opt an- of the metho/s. 7i+ 4roDecte/ Balance Sheet metho/. 8urno7er metho/ or CashBu/get metho/. for assessment of 9orking capital re@uirements of their e3porter%customers. 9hiche7er is most
suitable an/ appropriate to their business operations+
In the case of consortium finance. once the consortium has appro7e/ the assessment. member banks shoul/
simultaneousl- initiate their respecti7e sanction processes+
ii+ *n line cre/it to e3porters
Banks pro7i/e Line of Cre/it normall- for one -ear 9hich is re7ie9e/ annuall-+ In case of /ela- in
rene9al. the sanctione/ limits shoul/ be allo9e/ to continue uninterrupte/ an/ urgent re@uirements of e3porters
shoul/ be met on a/ hoc basis+
In case of establishe/ e3porters ha7ing satisfactor- track recor/. banks shoul/ consi/er sanctioning a Lineof Cre/it for a longer perio/. sa-. $ -ears. 9ith in%built fle3ibilit- to step%upstep%/o9n the @uantum of limits
9ithin the o7erall outer limits assesse/+ 8he step%up limits 9ill become operati7e on attainment of pre%/etermine/
performance parameters b- the e3porters+ Banks shoul/ obtain securit- /ocuments co7ering the outer limitsanctione/ to the e3porters for such longer perio/+
In case of e3port of seasonal commo/ities. agro%base/ pro/ucts. etc+. banks shoul/ sanction 4eakNon%pea
8erm Loan re@uirements for e3pansion of capacit-. mo/erniation of machiner- an/ up gra/ation oftechnolog- shoul/ also be met b- banks at their normal rate of interest+
Assessment of e3port cre/it limits shoul/ be nee/ base/ an/ not /irectl- linke/ to the a7ailabilit- of
collateral securit-+ As long as the re@uirement of cre/it limit is Dustifie/ on the basis of the e3porters performance
an/ track recor/. the cre/it shoul/ not be /enie/ merel- on the groun/s of non%a7ailabilit- of collateral securit-+
iii+ Wai7er of submission of or/ers or LCs for a7ailing pre%shipment cre/it+
Banks shoul/ not insist on submission of e3port or/er or LC for e7er- /isbursement of pre%shipment cre/itfrom e3porters 9ith consistentl- goo/ track%recor/+ Instea/. a s-stem of perio/ical submission of a statement of
LCs or e3port or/ers in han/ shoul/ be intro/uce/+
Banks ma- 9ai7e. ab initio. submission of or/erLC in respect of e3porters 9ith goo/ track recor/ an/ putin place the s-stem of obtaining perio/ical statement of outstan/ing or/ersLCs on han/+ 8he same ma- be
incorporate/ in the sanction proposals as 9ell as in the sanction letters issue/ to e3porters an/ appropriatel-
brought to the notice of EC<C+ 5urther. if such 9ai7ers are permitte/ at a time subse@uent to sanction of e3port
cre/it limits 9ith the appro7al of the appropriate authorit-. the same ma- be incorporate/ in the terms of sanction
b- 9a- of amen/ments an/ communicate/ to EC<C+
i7+ Han/ling of e3port /ocuments
Banks are re@uire/ to obtain. among others. original sale contractconfirme/ or/er proforma in7oice countersigne
b- o7erseas bu-er in/ent from authorie/ agent of o7erseas bu-er for han/ling the e3port /ocuments as per5oreign E3change Management regulations+ Submission of such /ocuments nee/ not be insiste/ upon at the time o
han/ling the e3port /ocuments. since the goo/s ha7e alrea/- been 7alue/ an/ cleare/ b- the Customs authorities.
e3cept in the case of transactions 9ith Letters of Cre/it 1LC2 9here the terms of LC re@uire submission of the salecontract other alternati7e /ocuments+
7+ 5ast track clearance of e3port cre/it
At specialie/ branches an/ branches ha7ing sieable e3port business. a facilitation mechanism for assistin
e3porter%customers shoul/ be put in place for @uick initial scrutin- of cre/it application an/ for /iscussions forseeking a//itional information or clarifications+
Banks shoul/ streamline their internal s-stems an/ proce/ures to compl- 9ith the stipulate/ time limits for
/isposal of e3port cre/it proposals an/ also en/ea7our to /ispose of e3port cre/it proposals ahea/ of the prescribe
time sche/ule+ A flo9 chart in/icating chronological mo7ement of cre/it application from the /ate of receipt till th/ate of sanction shoul/ also accompan- cre/it proposals+
Banks shoul/ /elegate higher sanctioning po9ers to their branches for e3port cre/it+
Banks shoul/ consi/er re/ucing at least some of the inter7ening la-ers in the sanctioning process+ It 9oul/
be /esirable to ensure that the total number of la-ers in7ol7e/ in /ecision%making in regar/ to e3port finance /oesnot e3cee/ three+
Banks shoul/ intro/uce a s-stem of ,oint Appraisal b- officials at branches an/ a/ministrati7e offices. to
facilitate @uicker processing of e3port cre/it proposals+
Where feasible. banks shoul/ set up a Cre/it Committee at specialie/ branches an/ at a/ministrati7e
offices. for sanctioning 9orking capital facilities to e3porters+ 8he Cre/it Committee shoul/ ha7e sufficientl-higher sanctioning po9ers+
7i+ 4ublicit- an/ training
<enerall-. e3port cre/it at internationall- competiti7e rates is ma/e a7ailable in foreign currenc- at select
branches of banks+ In or/er to make the scheme more popular an/ consi/ering the competiti7e interest rate onforeign currenc- loans an/ to mitigate an- possible e3change risk. e3porters nee/ to be encourage/ to make
ma3imum use of e3port cre/it in foreign currenc-+ Banks locate/ in areas 9ith concentration of e3porters shoul/.
therefore. gi7e 9i/e publicit- to this important facilit- an/ make it easil- accessible to all e3porters inclu/ing sma
e3porters an/ ensure that more number of branches are /esignate/ for making a7ailable e3port cre/it in foreign
Banks ma- also arrange to publicise 9i/el- the facilit- of prescribe/ interest rates being a7ailable for
/eeme/ e3ports an/ ensure that operating staff are a/e@uatel- sensitie/ in this regar/+
*fficers at operating le7el shoul/ be pro7i/e/ 9ith a/e@uate training+ In the matter of transfer of officials
from critical branches /ealing in e3port cre/it. banks shoul/ ensure that the ne9 incumbents poste/ possessa/e@uate kno9le/ge e3posure in the areas of fore3 as 9ell as e3port cre/it to a7oi/ /ela-s in
processingsanctioning of e3port cre/it limits an/ thereb- subDecting e3porters to the risk of cancellation of e3port
7ii+ Customer E/ucation
Banks shoul/ bring out a Han/ Book containing salient features of the simplifie/ proce/ures for sanction o
e3port cre/it in 5oreign Currenc- at internationall- competiti7e rates as 9ell as in Rupees for the benefit of their
i+ Banks shoul/ ensure that e3portersF cre/it re@uirements are met in full an/ promptl- at competiti7e rates+ 8he
abo7e referre/ gui/elines must be implemente/. both in letter an/ spirit. so as to bring about a perceptibleimpro7ement in cre/it /eli7er- an/ relate/ banking ser7ices to e3port sector+ Banks shoul/ also a//ress the
/eficiencies. if an-. in the mechanism of /eplo-ment of staff in their organisations to eliminate the bottlenecks in
the flo9 of cre/it to the e3port sector+
ii+ Banks shoul/ set up an internal team to 7isit branches perio/icall-. sa-. once in t9o months to gauge the e3tentof implementation of the <ui/elines+
Constitution o, a separate Su5-Committee under State .evel +an4ers7 Committee
Conse@uent upon the 9in/ing up of the State Le7el E3port 4romotion Committee 1SLE4C2. issues relating to
e3port finance an/ other bank relate/ issues at the state le7el 9ill be taken up. henceforth. b- a Sub%Committee of
the State Le7el BankersF Committee 1SLBC2+ 8his Sub%Committee. kno9n as JSub%Committee of SLBC for E3po4romotionJ. 9oul/ inclu/e local e3portersF associations. the State Bank of In/ia. t9o three lea/ing banks han/lin
sieable e3port business. )irectorate <eneral of 5oreign 8ra/e. Customs. State <o7ernment 1)epartment ofCommerce an/ In/ustr- an/ )epartment of 5inance2. the E3port%Import Bank. E3port Cre/it an/ <uaranteeCorporation. 5oreign E3change )ealersF Association of In/ia besi/es the Reser7e Bank 15oreign E3change
)epartment an/ )epartment of Banking Super7ision2 at the regional le7el. as members+
8he Sub%Committee is e3pecte/ to meet at half%-earl- inter7als. or earlier. if consi/ere/ necessar-+ 8he con7enor
bank of the SLBC 9oul/ be the Con7enor of the Sub%Committee in the respecti7e states an/ the meetings 9oul/ bchaire/ b- the E3ecuti7e )irector of the con7enor bank+ 8he intimation of the /ates of con7ening forthcoming
meetings are communicate/ to all concerne/ 9ell in a/7ance so that issues of the e3port sector are 9ell a//resse/
REPORT"! REUREME"TS
Export credit per,ormance indicator ,or 5an4s
0+#+# Banks are re@uire/ to reach a le7el of outstan/ing e3port cre/it e@ui7alent of #! per cent of each banks
A/Duste/ Net Bank Cre/it 1ANBC2#+ Accor/ingl-. the performance of banks is being re7ie9e/ b- the RBI. )B*))irecti7es )i7ision. 1E3port Cre/it2 at 0al, yearly inter7als+ 8he performance of the banks in e3ten/ing e3port
cre/it 9ill be assesse/ on the basis of the @uarterl- /ata submitte/ b- the banks to Reser7e Bank of In/ia.
)epartment of Banking Super7ision. Central *ffice. *SM*S )i7ision. Mumbai+
0+#+! Banks shoul/ en/ea7our to reach a le7el of e3port cre/it e@ui7alent to #! per cent of the bankFs ANBC+ Whebanks ha7e alrea/- pro7i/e/ e3port cre/it to the e3tent of #! per cent. en/ea7our shoul/ be ma/e to increase the
same to a higher le7el an/ ensure that there is no fall in the ratio+ No 9orth9hile e3port or/er shoul/ be /enie/
e3port cre/it from the banks+
0+#+$ 5ailure to achie7e the stipulate/ le7el of e3port cre/it an/ or failure to sho9 a /istinct impro7ement in e3portcre/it performance coul/ in7ite bank%specific polic- responses 9hich coul/ inclu/e raising of reser7e re@uirement
an/ 9ith/ra9al of refinance facilities+ 8he )irecti7es )i7ision. 1E3port Cre/it2. )epartment of Banking *peration
an/ )e7elopment. of the Reser7e Bank of In/ia 9oul/ closel- monitor the e3port cre/it performance of the banks+
uarterly data o, export credit dis5ursements
Banks shoul/ submit the e3port cre/it /isbursement /ata on a @uarterl- basis in the format gi7en in *nnex ?Banks shoul/ ensure that the statement reaches Reser7e Bank of In/ia. )epartment of Banking Super7ision. Centr
*ffice. *SM*S )i7ision. Centre%#. Worl/ 8ra/e Centre. Cuffe 4ara/e. Mumbai &""""( positi7el- b- the en/ ofthe month follo9ing the @uarter to 9hich it relates+
Pre-s0ipment credit to %iamond Exporters - Con,lict %iamonds - mplementation o, Gim5erleyProcess Certi,ication Sc0eme 8GPCS9
8ra/ing in conflict /iamon/s has been banne/ b- + N+ Resolutions Nos+ ##>$ an/ ##>' as the conflict /iamon/spla- a large role in fun/ing the rebels in the ci7il 9ar torn areas of Sierra Leone+ 8here is also a 4rohibition on the
/irect in/irect import of all rough /iamon/s from Sierra Leone an/ Liberia in terms of N Resolution No+
#$"'1!"""2 an/ #$&$1!""#2 respecti7el-+ In/ia. among other countries. has a/opte/ a N man/ate/ ne9Oimberle- 4rocess Certification Scheme to ensure that no rough /iamon/s mine/ an/ illegall- tra/e/ enter the
countr-+ 8herefore. import of /iamon/s into In/ia shoul/ be accompanie/ b- Oimberle- 4rocess Certificate 1O4CSimilarl-. e3ports from In/ia shoul/ also be accompanie/ b- the O4C to the effect that no conflict rough /iamon/
ha7e been use/ in the process+ 8he O4Cs 9oul/ be 7erifie/ 7ali/ate/ in the case of imports e3ports b- the <eman/ ,e9eller- E3port 4romotion Council+ In or/er to ensure the implementation of Oimberle- 4rocess Certificatio
Scheme. banks shoul/ obtain an un/ertaking in the format gi7en in *nnex = from such of the clients 9ho ha7e
been e3ten/e/ cre/it for /oing an- business relating to /iamon/s+
Recommendations o, t0e ;or4ing !roup to Revie: Export Credit
8he Working <roup to Re7ie9 E3port Cre/it has recommen/e/ se7eral measures to impro7e customer ser7ice+ 8hrecommen/ations 9hich ha7e been accepte/ an/ communicate/ to the banks are gi7en belo9:
Revie: o, t0e existing procedure ,or export credit
1i2 8here is a nee/ for attitu/inal change in the approach of banks officials in /ealing 9ith small an/ me/ium
e3porters+ Banks ma- take suitable steps in this regar/+
1ii2 Banks shoul/ put in place a control an/ reporting mechanism to ensure that the applications for e3port cre/itespeciall- from Small an/ Me/ium E3porters are /ispose/ of 9ithin the prescribe/ time frame+
1iii2 While processing applications for E3port Cre/it. banks shoul/ raise all @ueries in one shot in or/er to a7oi/
/ela-s in sanctioning cre/it+
1i72 Small an/ Me/ium E3porters especiall- in the upcountr- centers shoul/ be properl- traine/ b- SSI e3portorganiations 9ith technical assistance from banks regar/ing correct filling up of forms+
172 Collateral securit- shoul/ not be insiste/ upon as far as possible+
17i2 State Le7el E3port 4romotion Committees 1SLE4Cs2 9hich ha7e been reconstitute/ as sub%committees of theSLBCs shoul/ pla- a greater role in promoting coor/ination bet9een banks an/ e3porters+
Revie: o, t0e !old Card Sc0eme
1i2 Since the number of <ol/ Car/s issue/ b- banks 9as lo9. banks 9ere a/7ise/ to spee/ up the process of issue the car/s to all the eligible e3porters especiall- the SME e3porters an/ ensure that the process is complete/ 9ithin
perio/ of three months+
1ii2 Simplifie/ proce/ure for issue of <ol/ Car/s as en7isage/ un/er the scheme shoul/ be implemente/ b- all
1iii2 Banks ma- consi/er e3empting all /eser7ing <ol/ Car/ hol/er e3porters from the 4acking Cre/it <uarantee
Sectoral Schemes of EC<C on the basis of their track recor/+
Revie: o, export credit ,or non-star exporters
Banks shoul/ post no/al officers at Regional onal *ffices maDor branches for atten/ing to cre/it relate/ problem
1i2 8he interest rates prescribe/ b- RBI upto ,une $". !"#" are ceiling rates+ Since the banks are at libert- to charglesser rates of interest. banks ma- consi/er e3ten/ing e3port cre/it at rates lesser than the ceiling rates prescribe/
1ii2 Banks shoul/ gi7e priorit- for the foreign currenc- e3port cre/it re@uirements of e3porters o7er foreign
currenc- loans to non%e3porter borro9ers+
nterest on Export Credit in Foreign Currency
As recommen/e/ b- the Working <roup. the ceiling rate of interest on e3port cre/it in foreign currenc- b- banks
9as re7ise/ to LIB*R plus #"" basis points 9+e+f+ April #?. !""' from the e3isting ceiling rate of LIB*R plus >(
basis points+ 8he re7ision in the interest 9oul/ be applicable not onl- to fresh a/7ances but also to the e3istinga/7ances for the remaining perio/+ 8his rise is subDect to the con/ition that banks 9ill not le7- an- other charges i
an- manner un/er an- name 7i+ ser7ice charge. management charge. etc+ 8he practice of IBA fi3ing out of pockete3penses has been /one a9a- 9ith effect from August !"#! an/ the /ecision to reco7er out of pocket e3penses is
left to in/i7i/ual banks+ While reco7ering out of pocket e3penses. banks shoul/ ensure that the charges are
reasonable an/ on an actual cost basis+ Subse@uentl-. the ceiling rate of interest on e3port cre/it in foreign currencb- banks 9as re7ise/ to LIB*R plus $(" basis points 9+e+f+ 5ebruar- (. !""0+ Ho9e7er 9ith the gra/ual easing of
the con/itions in the o7erseas market. the ceiling rate of interest on e3port cre/it in foreign currenc- b- banks 9as
re7ise/ to LIB*R plus !"" basis points 9+e+f+ 5ebruar- #0. !"#"+ Oeeping in 7ie9 the tight li@ui/it- con/itions anthe 9i/ening of cre/it sprea/s /ue to /e7elopments in the international financial markets. the ceiling rate of interes
on e3port cre/it in foreign currenc- b- banks 9as increase/ to LIB*R plus $(" basis points from No7ember #(.
!"## to Ma- &. !"#!+ With a 7ie9 to increasing the a7ailabilit- of fun/s to e3porters. banks are free to /eterminethe interest rates on e3port cre/it in foreign currenc- 9ith effect from Ma- (. !"#!+
Liberia controlle/ b- forces rebelling against the legitimate an/ internationall- recognise/ <o7ernment of the
rele7ant countr-+
1ii2 not to /o /irect or in/irect import of rough /iamon/s from Sierra Leone an/or Liberia 9hether or not such
/iamon/s originate/ in Liberia in terms of N Securit- Council Resolution No+#$"' 1!"""2 9hich prohibits the/irect or in/irect import of all rough /iamon/s from Sierra Leone an/ N Securit- Council Resolution No+#$&$
1!""#2 9hich pre7ents such import of all rough /iamon/s from Sierra Leone an/ N Securit- Council Resolution
No+#$&$1!""#2 9hich pre7ents such import from Liberia+
1ii2 to follo9 Oimberle- 4rocess Certification Scheme for /ealing in /iamon/s+
I am also gi7ing m- consent to the 9ith/ra9al of all m- cre/it entitlements. if at an- time. I am foun/ guilt- of
kno9ingl- ha7ing con/ucte/ business in such /iamon/sJ+
*nnex17i/e para &+
Anne3 to circular )B*)+)IR1E3p2+BC+No+'0 "&+"!+""#!"#!%#$ /ate/ ,anuar- #&. !"#$+
&5inancing of E3ports % Efficienc- of Banksan/ Qualit- of Customer Ser7ices
)B*)+No+ECC+BC+'>C+!0>L1#!2 =?# "!+"'+#0?#
Statistics relating to E3port Cre/it =Submission of Statements %
)B*)+ECC+BC+($C+!0>4%>?#>+"&+#0>
?
5inancing of E3ports % Nee/ for Counselling
Small E3porters an/ E3porters of Non%tra/itional Items
)B*)+BM+'?"C+!0>O%'0">+"&+#0'
0*pening of E3port Counsel *ffices b- Banks
(ANBC is Net Bank Credit (NBC) plus investments made by banks in non-SLR bonds held in Held to Maturity (HM) !ate"ory# a!hievement o$ the banks %ould be assessed in terms o$ ANBC or !redit e&uivalent amount o$ '$$-Balan!e Sheet posure ('B%hi!hever is hi"her# he 'B $or a number o$ banks (most o$ them $orei"n banks) %as at a mu!h hi"her level# +urther* +CNR (B) deposand NRNR deposits are not dedu!ted $rom NBC#)