RBI cuts export credit refinance limit to 32% of banks' outstanding export credit
03 June 2014
Reserve Bank of India (RBI) has decided to reduce the eligible limit of export credit refinance (ECR) facility from the level of 50 per cent of the outstanding rupee export credit eligible for refinance as at the end of the second preceding fortnight to 32 per cent with immediate effect. The central bank announced this at its second bi-monthly monetary policy review today.
Outstanding export credit for the purpose of working out refinance limits will be aggregate outstanding export credit minus export bills rediscounted with other banks/Exim Bank/financial institutions, export credit against which refinance has been obtained from NABARD/Exim Bank, pre-shipment credit in foreign currency (PCFC), export bills discounted/rediscounted under the scheme of 'rediscounting of export bills abroad' (EBR), overdue rupee export credit and other export credit not eligible for refinance, RBI said.
RBI had raised the eligible limit of the ECR facility for scheduled banks (excluding RRBs) from 15 per cent of the outstanding export credit eligible for refinance to 50 per cent, effective fortnight beginning 30 June 2012, with a view to enhancing the credit flow to the export sector. That was meant to provide additional liquidity support to banks of over Rs30,000 crore. The rate of interest charged on the ECR facility was to continue at the prevailing repo rate of 8 per cent under the LAF.
The Export Credit Refinance (ECR) limit was earlier fixed at 15 per cent of the outstanding rupee export credit eligible for refinance as at the end of the second preceding fortnight.