The Reserve Bank of India has enhanced the eligible limit of the export credit refinance facility from 15 per cent to 50 per cent of the outstanding export credit, thereby providing additional liquidity of over Rs30,000 crore to the export sector.
''With a view to enhancing the credit flow to the export sector, it has been decided to enhance the eligible limit of the export credit refinance (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 June 30, 2012,'' RBI said in a release today.
The relaxation in ECR facility would be available only for rupee-based export credit and not for foreign currency-based export credit.
The rate of interest charged on the ECR facility will continue to be the prevailing repo rate under the Liquidity Adjustment Facility (LAF), which is currently 8.0 per cent, RBI said.
At present, the ECR limit is fixed at 15 per cent of the outstanding rupee export credit eligible for refinance as at the end of the second preceding fortnight.
The RBI's move to enhance refinancing to the extent of 50 per cent of banks' (other than RRBs) outstanding export credit against 15 per cent earlier will encourage banks to increase credit flow to the export sector.
While this move would release overall liquidity of banks, it may not benefit all banks across the board. The benefit would accrue to banks with a big export portfolio.