Export credit rates to be above Base Rate from 1 July

07 May 2010

1

Effective 1 July 2010, the interest rate applicable to rupee export credit advances of all tenors will be at or above the Base Rate, the new minimum lending rate prescribed for commercial banks in the country, the Reserve Bank of India (RBI) has said.

Accordingly, the RBI has directed all scheduled commercial banks to revise the rate on export credit, both pre-shipment and post-shipment - with effect from 1 May 2010 to 30 June 2010.

Effective 1 May 2010 to 30 June 2010 interest rates on rupee export credit of all scheduled commercial banks will not exceed the now existing base prime lending rate (BPLR) minus 2.5 percentage points per annum for both pre-shipment and post-shipment credit, the RBI said in a notification issued on Thursday. This will apply to:

Pre-shipment credit of up to 270 days, against incentives receivable from government covered by ECGC guarantee of up to 90 days;
 
Post-shipment credit on demand bills for transit period of up to 180 days (as specified by FEDAI);
 
Usance bills (for total period comprising usance period of export bills, transit period as specified by FEDAI, and grace period, wherever applicable);
 
Up to 365 days for exporters under the Gold Card scheme, against incentives receivable from the government (covered by ECGC Guarantee), against retention money (for supplies portion only) payable within one year from the date of shipment (up to 90 days) undrawn balances up to 90 days;

Interest rates for export credit beyond the tenors as prescribed above are deregulated and banks are free to decide the rate of interest, keeping in view the BPLR and spread guidelines, RBI said.

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