Mumbai: The Reserve Bank of India has asked all commercial banks to cut the interest rate on loans given to exporters in sectors like textiles, leather and handicrafts by two percentage points, following government''s decision to offer relief to exporters hit hard by rise in rupee value.

In a notification published late on Friday on its website, RBI said pre-shipment credit up to 180 days, and post-shipment credit up to 90 days, should be 4.5 per cent below prime lending rate against 2.5 per cent earlier.

RBI, in its notification, said that interest relief of two percentage points should be given to nine sectors - textiles, leather products, readymade garments, handicrafts, engineering products, sports goods, processed agriculture products, marine items and toys.

The benefit would extend to small and medium exporters whose investment in plant and machinery does not exceed Rs10 crore, it said.

Under the revised guidelines, export credit to these categories will be available at 4.5 per cent less than the prime lending rate, which is in the range of 12 per cent. Earlier, the difference was 2.5 per cent.

This rate will apply to pre-shipment and post-shipment credit disbursed between April and December 2007.

The subsidy of two per cent would be borne by the central government, which early this announced an Rs1,400 crore package for exporters feeling the pinch after the Indian currency rose nearly nine per cent against the dollar since the beginning of 2007.

The move is part of a government package of relief for exporters announced last week, in view of the rising rupee.