RBI cuts bank export credit rate

25 Sep 2001

1

Mumbai: The Reserve Bank of India has directed all commercial banks to cut the pre- and post-shipment rate by 100 basis points with immediate effect. The banks will now have to charge a maximum rate of 250 basis points below their prime-lending rate (PLR) as compared to 150 basis points that could be charged earlier.

The rates will be applicable for pre-shipment credit up to 180 days and post-shipment credit up to 90 days. These rates will apply to export credits granted by the bank from 26 September up to 31 March 2002.

The RBI has also drawn up a special package for large value exports of six select product categories - pharmaceuticals, agrochemicals, transport equipment, cement, iron and steel and electric machinery. Exporters under the special package will be extended credit at concessional rates for an extended period up to 365 days at pre-shipment as well as post-shipment stage.

Pre-shipment credit will now be available under the new rates of PLR plus 0.5 percentage points extending the credit period beyond 270 days up to 365 days. Earlier, exporters had to repay export credit within 180 days, beyond which they were charged a maximum commercial rate of PLR plus 4 percentage points. For post-shipment too, the new rate will be applicable for periods beyond 180 days and up to 365 days.

The RBI has also offered a sop for exporters who depend on imports for manufacturing; they can now offer credit to their overseas raw material manufacturers at Libor plus 1 per cent as against Libir plus 0.75 per cent earlier. Also, Exim Bank has been permitted to extend buyers credit of Rs 200 crore without reference to the RBI.

Similar permission will also be granted to the participating banks.

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