Providing relief to exporters hit by shrinking global demand, the Reserve Bank of India (RBI) today extended the concessional interest rate scheme by six months till October this year.
The ceiling of interest rate on pre-shipment rupee export credit up to 270 days and post-shipment credit up to 180 days at BPLR minus 2.5 per cent was to expire on April 30, 2009.
"It has been decided to extend the validity... Up to October 31, 2009," the RBI said in a circular to the scheduled commercial banks.
Since these are ceiling rates, banks would not be able to charge exporters interest rates above the benchmark prime lending rate (PLR) minus 2.5 per cent.
The Federation of Indian Export Organisations has been demanding that exporters should be given credit at 7 per cent without linking with the prime lending rate.
The exporters has been hit by recession in major markets of the US, Europe and the Middle East, which together accounts to over 70 per cent of India's overseas sales.
After registering growth of over 30 per cent in the first six months of the last fiscal, India's exports dipped by 12.1 per cent in October 2008 for the first time in five years and has been on the downslide since then.
