What changed
Government extended a 2% interest subvention on pre-shipment (up to 270 days) and post-shipment (up to 180 days) rupee export credit for seven employment-oriented sectors. Scheduled Primary (Urban) Cooperative Banks with AD Category I licences must reduce lending rates by 2 percentage points for eligible exporters during June 1 to Sept 30, 2009, with a floor of 7%.
What it means for you
UCBs must adjust their lending rates for eligible export credit to reflect the subvention, ensuring exporters pay 2% less than the rate for other export sectors. The subvention is capped so the effective rate does not fall below 7%. Banks need to track disbursements and repayments to calculate claims accurately.
What you must do
- Identify eligible export sectors: textiles, handicrafts, carpets, leather, gems & jewellery, marine products, and SMEs.
- Reduce interest rate by 2 percentage points on eligible pre/post-shipment credit for June 1 to Sept 30, 2009, ensuring floor of 7%.
- Pass full subvention benefit to exporters; maintain records for claim submission.
- Prepare claim in prescribed format with auditor's certificate and submit to RBI Urban Banks Department by Sept 30, 2009.
Who it affects
Scheduled Primary (Urban) Cooperative Banks holding AD Category I licences, Exporters in specified sectors (textiles, handicrafts, carpets, leather, gems & jewellery, marine products, SMEs)
What is the interest rate floor after subvention?
The effective interest rate after the 2% subvention cannot fall below 7% per annum.
Which export credit tenors are covered?
Pre-shipment credit up to 270 days and post-shipment credit up to 180 days are eligible for the subvention.
How do UCBs claim the subvention from RBI?
Submit a claim in the prescribed format along with an auditor's certificate to the Chief General Manager, Urban Banks Department, Reserve Bank of India, Central Office, Garment House, Worli, Mumbai-400 018, by September 30, 2009.