What changed
This Master Circular consolidates all ECR guidelines issued up to June 30, 2007, into a single document. It includes a separate appendix listing circulars from July 13, 2006, to June 30, 2007. No new policy changes were introduced; it is purely a compilation.
What it means for you
Banks now have a single reference for ECR terms, reducing confusion from multiple circulars. The 15% refinance limit, Repo Rate pricing, and 180-day repayment remain unchanged. Banks must ensure accurate reporting to avoid penal interest on irregular availment.
What you must do
- Review the consolidated ECR guidelines and update internal policies accordingly.
- Ensure accurate calculation and reporting of eligible export credit outstanding for refinance.
- Maintain proper documentation including DPN, agreement Form DAD 297, and Board Resolution Form DAD 298a.
- Monitor ECR utilization to avoid exceeding limits or delays in repayment beyond 180 days.
Who it affects
All scheduled banks (excluding RRBs) authorized as ADs in foreign exchange, Bank treasury and forex departments handling export credit, Compliance teams managing RBI reporting
What is the current refinance limit under ECR?
Banks can avail refinance up to 15% of their eligible outstanding export credit as at the end of the second preceding fortnight.
What happens if a bank irregularly avails ECR?
RBI charges a penal rate of interest on the outstanding loan for instances like exceeding the limit, wrong calculation, non-repayment within 180 days, or delay in reporting excess utilization.
Is collateral required for ECR?
No margin is required. RBI extends refinance against a Demand Promissory Note (DPN) supported by a declaration that eligible export credit outstanding is not less than the loan.