Exporters were disappointment at the RBI failure to reduce the 13 per cent ceiling on interest rates of post-shipment credit upto 90 days. However, they welcomed the overall reduction of 1 per cent in the Prime Lending Rate and the new facility to make trade-related advances without the prior approval of the RBI.
The RBI has permitted corporate exporters to extend trade-related advances to their clients, provided such an advance is made out of Exchange Earners Foreign Currency accounts and the total outstanding of such advances in respect of an EEFC account does not exceed $3 million.
RBI governor C Rangarajan on Tuesday announced that as part of a move to give general operational freedom to banks and also taking into consideration the fact that some banks have shown a willingness to extend post-shipment export credit at lower interest rates if export proceeds are realised in shorter periods, it has been decided that from today the interest rates on post-shipment export credit up to 90 days be changed from the existing 13 per cent per annum to not exceeding 13 per cent per annum.
However, the interest rate on export credit beyond 90 days and upto 6 months from the date of shipment would remain unchanged at 15 per cent per annum. It has been clarified the higher rate of interest beyond 90 days will apply only for the period beyond 90 days and not from the date of advance.
In a move to further rationalise export credit refinance to banks, the RBI has also decided to provide export credit refinance only on the basis of their incremental export credit.
With effect from April 26, scheduled commercial banks will provide export credit refinance to the extent of 100 per cent of the increase in outstanding export credit eligible for refinance over the level of such credit as on February 16, 1996. The rate of interest on export credit refinance will be at the bank rate of 11 per cent per annum.
