What changed
The eligible limit for export credit refinance (ECR) was raised from 15% to 50% of outstanding rupee export credit eligible for refinance as at the end of the second preceding fortnight. The interest rate on ECR continues to be the prevailing repo rate under LAF, which was 7.5% at the time. The reporting format in Annex III of the Master Circular was updated accordingly.
What it means for you
Banks can now access significantly more liquidity from RBI against their export credit portfolio, doubling their refinance capacity. This reduces funding costs for export lending and encourages banks to extend more credit to exporters. The unchanged repo rate ensures no additional interest burden on the increased facility.
What you must do
- Update internal systems to calculate ECR limit at 50% of eligible outstanding export credit as per the new formula.
- Use the revised reporting format (Part A of Annex III) for fortnightly ECR limit statements.
- Ensure export credit data excludes ineligible items like PCFC, bills rediscounted with other banks, and overdue credit.
- Monitor the repo rate for any changes, as it directly impacts ECR interest costs.
Who it affects
All scheduled banks (excluding RRBs) that offer export credit, Treasury and forex departments managing liquidity, Export finance teams and credit officers
What is the new ECR limit percentage?
The eligible limit has been increased from 15% to 50% of outstanding rupee export credit eligible for refinance as at the end of the second preceding fortnight.
What interest rate applies to the ECR facility?
The interest rate remains the prevailing repo rate under the Liquidity Adjustment Facility (LAF), which was 7.5% at the time of this circular.
Which export credits are excluded from the eligible limit calculation?
Exclusions include export bills rediscounted with other banks/Exim Bank/Financial Institutions, credit refinanced from NABARD/Exim Bank, PCFC, bills rediscounted abroad, overdue rupee export credit, and other ineligible export credit.