RBI Extends Export Credit Interest Rate Cap Till Oct 2008
Current · Source: Reserve Bank of India · RBI/2007-2008/297 · issued 25 Apr 2008 · ~2 min read
Quick answerRBI has extended the ceiling on interest rates for pre-shipment (up to 180 days) and post-shipment (up to 90 days) rupee export credit at BPLR minus 2.5% until October 31, 2008. Banks can charge below this ceiling.
The rule, in the simplest words
Banks must offer rupee export credit at a rate not exceeding BPLR minus 2.5% for pre-shipment credit up to 180 days and post-shipment credit up to 90 days.
The interest rate ceiling applies until October 31, 2008.
Banks can charge lower rates if they choose, but cannot exceed the ceiling.
How it plays out — a real example
Ava, a forex & trade-finance officer in Indore, ensures that her bank's interest rates for pre-shipment rupee export credit do not exceed BPLR minus 2.5% for clients like Rohan, who exports handicrafts. Ava updates her internal systems to reflect the extended validity period and communicates the change to her team to maintain compliance.
What changed
The earlier circular (MPD.BC.295/07.01.279/2007-08 dated October 25, 2007) had set the interest rate ceiling on pre-shipment rupee export credit up to 180 days and post-shipment rupee export credit up to 90 days at BPLR minus 2.5%, valid until April 30, 2008. This circular extends that validity to October 31, 2008, with the same ceiling rates continuing from May 1, 2008.
What it means for you
Banks must continue to offer rupee export credit at rates not exceeding BPLR minus 2.5% for the specified tenors until October 31, 2008. This ensures exporters get cheaper credit for working capital and post-shipment periods, but banks' margins on these loans remain capped. Lenders can still charge lower rates if they choose, but cannot exceed the ceiling.
What you must do
Update internal systems to apply the BPLR minus 2.5% ceiling on pre-shipment credit up to 180 days and post-shipment credit up to 90 days from May 1, 2008 to October 31, 2008.
Communicate the extended validity to all branches handling export credit to ensure compliance.
Monitor that no loan in these categories exceeds the ceiling rate, while allowing rates below it.
Acknowledge receipt of this circular as instructed.
Who it affects
All scheduled commercial banks offering rupee export credit, Exporters availing pre-shipment and post-shipment credit, Bank treasury and credit policy teams
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the exact interest rate ceiling for export credit under this circular?
For pre-shipment rupee export credit up to 180 days and post-shipment rupee export credit up to 90 days (including demand bills for transit period and usance bills up to 90 days), the ceiling is BPLR minus 2.5 percentage points. Banks can charge any rate below this ceiling.
Does this circular apply to export credit beyond the specified tenors?
No. For pre-shipment credit beyond 180 days and post-shipment credit beyond 90 days, interest rates are free from any ceiling, as per the note in the circular.
When does this extended dispensation take effect and until when?
The extended validity starts from May 1, 2008 and remains in place until October 31, 2008. The earlier dispensation ended on April 30, 2008.
📜 This document’s life story (1 recorded event, each backed by RBI’s own words)
RBI’s words: “extend the validity of the above dispensation up to April 30, 2009”
📜 Read the original circular — full text as issued by RBI
RBI/2007-2008/297
Ref.No.MPD.BC.298/07.01.279/2007-08
April
25, 2008
Vaishakha 5, 1930(S)
To,
All Scheduled Commercial Banks
Dear
Sir/Madam,
Interest Rate Ceiling on Rupee
Export Credit
Please refer to our circular
No.MPD.BC.295/07.01.279/2007-08 dated October 25, 2007 in terms of which the
ceiling on interest rates on pre-shipment rupee export credit up to 180 days and
post-shipment rupee export credit up to 90 days has been stipulated at BPLR minus
2.5 per cent, valid up to April 30, 2008.
2.
It has been decided to extend the validity of the above dispensation up to October
31, 2008 ( Annex ).
3. Kindly acknowledge
receipt.
Yours faithfully,
(M. D. Patra)
Adviser-in-Charge
Annex
Category
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-2008/297 · issued 25 Apr 2008. The plain-English explanation above is BankPulse’s own independent summary.
Communicate the extended validity to all branches handling export credit to ensure compliance.
💻 IT / Systems
Update internal systems to apply the BPLR minus 2.5% ceiling on pre-shipment credit up to 180 days and post-shipment credit up to 90 days from May 1, 2008 to October 31, 2008.
📜 Compliance
Monitor that no loan in these categories exceeds the ceiling rate, while allowing rates below it.
Acknowledge receipt of this circular as instructed.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (All scheduled commercial banks offering rupee export credit, Exporters availing pre-shipment and post-shipment credit, Bank treasury and credit policy teams), your first concrete step on “RBI Extends Export Credit Interest Rate Cap Till Oct 2008” is: “Update internal systems to apply the BPLR minus 2.5% ceiling on pre-shipment credit up to 180 days and post-shipment credit up to 90 days from May 1, 2008 to October 31, 2008.” (RBI issued this 25 Apr 2008).
Circular: RBI/2007-2008/297 -- RBI Extends Export Credit Interest Rate Cap Till Oct 2008
Issued: 25 Apr 2008
Action required: Update internal systems to apply the BPLR minus 2.5% ceiling on pre-shipment credit up to 180 days and post-shipment credit up to 90 days from May 1, 2008 to October 31, 2008.
Action required: Communicate the extended validity to all branches handling export credit to ensure compliance.
Action required: Monitor that no loan in these categories exceeds the ceiling rate, while allowing rates below it.
Action required: Acknowledge receipt of this circular as instructed.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4142&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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