Refinance routes restructured

Market Measures

 Both the refinances, which could be drawn in two phases - normal and back stop in the ratio of 50:50 of the total requirement, have been changed.

 In both export as well as liquidity refinancing, amount drawn under the normal facility has been brought down from 50 per cent to 33 per cent while there has been an increase in the proportion under the backstop facility from 50 per cent to 67 per cent with effect from December 27,2003.

 The reversal of the proportion has been down in the light of the fact that under the current liquidity conditions and with the emergence of liquidity adjustment facility, since the mid-term review of October 2002, the utilisation of these facilities, both by banks for export credit and primary dealers for liquidity, has been negligible.

 While export refinance has been rejigged, exporters on the other hand, have been given the freedom to write off outstanding export dues and extend the normal period of realisation of export proceeds beyond 180 days on their own without the prior approval of the RBI.

 However, the discretion could be used if the aggregate value of such write off the dues and delay in realisation does not exceed 10 per cent of their export proceeds in a calendar year.

 Earlier for exporters, which are unable to realise the outstanding export dues within the stipulated 180 days of shipment, powers have been delegated to banks to permit write-off up to 10 per cent of export proceeds realised by the exporter during the preceding calendar year.

 In addition to this, status holder exporters are permitted on their own to write off outstanding export proceeds up to an annual limit of 5 per cent of their average annual realisation during the preceding three years.