Master Circular on Export Credit Refinance Facility

What changed

RBI issued a Master Circular consolidating all prior instructions on Export Credit Refinance issued up to June 30, 2005. The circular updates the definition of eligible export credit to include bills rediscounted with EXIM Bank/other banks/FIs and credit refinanced by NABARD/EXIM Bank, while excluding PCFC, EBR, overdue credit, and other ineligible items. The refinance limit remains at 15% of eligible outstanding export credit as at the end of the second preceding fortnight.

What it means for you

Banks can now access a single reference document for all ECR rules, reducing compliance ambiguity. The expanded eligible credit definition allows banks to rediscount export bills with EXIM Bank without losing refinance limits from RBI. The Repo Rate-linked pricing and zero margin/collateral requirements make this a low-cost liquidity source for banks supporting export credit.

What banks were required to do at the time

• Review and replace all previous ECR circulars with this Master Circular for internal compliance.
• Ensure eligible export credit calculations include rediscounted bills with EXIM Bank/other FIs and NABARD/EXIM Bank refinanced credit.
• Update systems to exclude PCFC, EBR, overdue credit, and other ineligible items from refinance limit computation.
• Maintain Demand Promissory Notes and declarations for each ECR availment as per collateral requirements.

Who it affects

All scheduled banks (excluding RRBs) authorized as ADs in foreign exchange, Treasury and credit departments handling export credit portfolios, Compliance teams managing RBI reporting and refinance operations