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RBI Hikes Ceiling on Foreign Currency Export Credit Rates

No longer current — withdrawn, no replacement on file yet

Source: Reserve Bank of India · RBI/2008-09/374 · issued 05 Feb 2009 · ~2 min read

Quick answerRBI raised the ceiling rate on foreign currency export credit from LIBOR + 100 bps to LIBOR + 350 bps, effective immediately for fresh advances. Lines of credit with overseas banks also saw a hike from LIBOR + 75 bps to LIBOR + 150 bps. No additional charges allowed.

What changed

The ceiling rate on export credit in foreign currency was increased from LIBOR plus 100 basis points to LIBOR plus 350 basis points. For lines of credit with overseas banks, the ceiling was raised from six-month LIBOR/EURO LIBOR/EURIBOR plus 75 basis points to plus 150 basis points. These changes apply only to fresh advances and took immediate effect.

What it means for you

Banks can now charge higher interest on foreign currency export loans, which may improve margins but could increase borrowing costs for exporters. The explicit ban on additional charges like service or management fees ensures transparency. This move likely aims to align with global rate conditions and support bank profitability.

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

Update loan sanction systems to apply the new ceiling of LIBOR + 350 bps for fresh foreign currency export credit.
Ensure no extra charges (service, management, etc.) are levied beyond out-of-pocket expenses on these loans.
Adjust pricing for lines of credit with overseas banks to the new ceiling of six-month LIBOR/EURO LIBOR/EURIBOR + 150 bps.
Communicate the revised rates to your export credit teams and update relevant master circulars and annexures.

Who it affects

Commercial banks offering foreign currency export credit, Exporters availing foreign currency loans, Banks with lines of credit from overseas banks

❓ Common questions

Regulatory timeline

Decoded by BankPulse 2026-06-19 11:03 IST
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn 05 Aug 2026, 04:00 IST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).

Does this revision apply to existing export credit advances?

No, the revision in interest rates is applicable only to fresh advances, not existing loans.

Can banks charge any additional fees on these loans?

No, banks cannot levy service charge, management charge, or similar fees. Only recovery of out-of-pocket expenses is permitted.

What benchmark rates are affected by this change?

The change applies to LIBOR, EURO LIBOR, and EURIBOR benchmarks. For lines of credit, the six-month versions of these benchmarks are used.

📜 This document’s life story (1 recorded event, each backed by RBI’s own words)

Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)

RBI’s words: “Official withdrawal register entry #1985: DBOD.DIR.(Exp).No.107/04.02.001/2008-09 — "Interest Rates on Export Credit in Foreign Currency" dated February 5, 2009”

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

Please refer to our circular DBOD.DIR.(Exp).No.78/04.02.01/2005-06 dated April 18,2006 as also paragraph 7 of master circular on Rupee / Foreign Currency Export Credit dated July 1, 2008 relating to export credit in foreign currency.
It has been decided in consultation with Government of India to raise the ceiling rate on export credit in foreign currency by banks to LIBOR plus 350 basis points from the present ceiling rate of LIBOR plus 100 basis points with immediate effect, subject to the express condition that the banks will not levy any other charges viz. service charge, management charge etc except for recovery towards out of pocket expenses incurred.  Similar changes may be effected in interest rates in cases where EURO LIBOR/EURIBOR has been used as the benchmark.  The rates of interest applicable have been incorporated in the Annex to the DBOD.DIR.(Exp).No.106/04.02.001/2008-09 dated February 5, 2009 enclosed to this circular.
The revision in the rates of interest would be applicable only to fresh advances.
Further, in modification of the instructions contained at para 5.1.3(iii)a of the above mentioned master circular dated July 1, 2008, the ceiling interest rate on the lines of credit with overseas banks has also been increased from six months LIBOR/EURO LIBOR/EURIBOR plus 75 basis points to six months LIBOR /EURO LIBOR/EURIBOR plus 150 basis points with immediate effect.

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/374 · issued 05 Feb 2009. 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=4825&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.