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RBI Clarifies Export Credit Subvention Floor Rate and Eligibility

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2008-09/274 · issued 07 Nov 2008 · ~2 min read

Quick answerRBI clarifies that the 2% or 4% export credit subvention applies with a floor rate of 7% post-subvention, effective from earlier circular dates. Banks must ensure full pass-through to eligible exporters and verify or recast subvention claims accordingly.

What changed

RBI issued clarifications on subvention eligibility when banks charge variable BPLR-linked rates. The 2% or 4% subvention must be applied with a floor cap of 7% post-subvention, and the floor applies to all specified sectors from the original circular dates. Additional sectors announced on October 6, 2007, get subvention from that circular's issue date.

What it means for you

Banks must ensure that after applying the subvention, the interest rate does not fall below 7%, which is the agriculture sector rate. This floor applies to all eligible export sectors from July 13, 2007, and October 6, 2007, circulars. Banks need to verify past subvention claims and recast them if they didn't adhere to the floor, ensuring full benefit passes to exporters.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Verify all subvention claims submitted to RBI for the period April 1, 2007, to September 30, 2008, ensuring compliance with the 7% floor rate.
Recast any claims where the post-subvention rate fell below 7% and confirm revised claims to RBI.
Ensure full pass-through of the 2% or 4% subvention to eligible exporters, with no retention by the bank.
Apply the subvention to additional sectors from the date of the October 6, 2007, circular, not earlier.

Who it affects

All scheduled commercial banks (excluding RRBs) offering rupee export credit, Exporters in specified sectors eligible for subvention, RBI's export credit monitoring division

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-06-19 11:37 IST
Status change: withdrawn 05 Aug 2026, 04:00 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the floor rate for export credit after subvention?

The interest rate after applying the 2% or 4% subvention must not fall below 7% per annum. This floor applies to all eligible sectors from the original circular dates.

Do banks need to recalculate past subvention claims?

Yes, banks must verify their claims and recast them if the post-subvention rate went below 7%. If no change is needed, banks should confirm the position to RBI.

From when is the subvention applicable for additional sectors announced on October 6, 2007?

The subvention for those additional sectors applies from the date of issue of the October 6, 2007, circular, not retrospectively.

📜 Read the original circular — full text as issued by RBI

RBI/2008-09/274
DBOD.Dir.(Exp).BC.No.77/04.02.01/2008- 09
 November 07, 2008
 All Scheduled Commercial Banks
(excluding RRBs)
 Dear Sir,
 Rupee Export Credit Interest Rates Subvention
 Please refer to our circulars DBOD. Dir.(Exp.)Nos. 22 , 34B , 54 , 73 and 28/04.02.01/ 2007-08/2008-09 dated July 13, October 6, November 30, 2007, April 25 and August 1, 2008 respectively to all Scheduled Commercial Banks regarding Rupee Export Credit Interest Rates subvention to the specified categories of exporters, with effect from April 01, 2007 up to September 30, 2008.
 2. The banks and exporters' organizations have sought clarifications, inter alia, as to the eligibility of subvention either of 2 per cent or 4 per cent, in the context of variable Benchmark Prime Lending Rates (BPLR) leading to variable interest rates charged to the exporters by individual banks. The issue was examined in consultation with the Government and the clarifications are given in the Annex . The banks may verify the subvention claims submitted by them to RBI and if need be, recast them and confirm that the claims made are in conformity with the guidelines and the clarifications provided hereto. In case there is no change in the claims submitted earlier, banks may confirm the position to RBI. 
 Yours faithfully,
 ( P.Vijaya Bhaskar )
Chief General Manager
 Annex 
 Sl.No.

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/274 · issued 07 Nov 2008. The plain-English explanation above is BankPulse’s own independent summary.

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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=4622&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.