What changed
This master circular consolidates all ECR instructions issued up to June 30, 2008, into a single document. It updates and replaces previous circulars, with new guidelines from July 2, 2007 to June 30, 2008 listed separately in an appendix.
What it means for you
Banks get a clear, unified reference for ECR terms: 15% limit on eligible export credit, repo-linked interest, 180-day tenure, and no margin. Penalties apply for irregular availment like exceeding limits or late repayment. This simplifies compliance and reduces ambiguity for lenders.
What you must do
- Review your bank's ECR limit calculation using the 15% formula on eligible outstanding export credit as at end of second preceding fortnight.
- Ensure all ECR availments are backed by a Demand Promissory Note and stamped agreement (Form DAD 297/295A) with board resolution.
- Monitor repayment within 180 days and avoid irregular availment to prevent penal interest charges.
- Update internal reporting systems to capture correct refinance limits and report to RBI as per Annex formats.
Who it affects
All scheduled banks (excluding RRBs) that are authorised dealers in foreign exchange, Bank treasury and forex departments handling export credit, Compliance and risk management teams
What is the interest rate on export credit refinance?
The ECR facility is available at the Repo Rate under the Liquidity Adjustment Facility (LAF), as announced by RBI from time to time. Interest is calculated on daily balances and debited monthly.
What happens if a bank fails to repay ECR within 180 days?
Non-repayment within 180 days is considered irregular availment. RBI will charge a penal rate of interest on the outstanding loan, as decided from time to time.
Is any margin required for availing ECR?
No, the circular explicitly states that no margin is required to be maintained for the export credit refinance facility.