What changed
RBI modified paragraph 3.1.3 of the May 18, 2004 circular on the Gold Card Scheme for exporters. The requirement that overdue export bills should not exceed 10% of the previous year's export turnover has been dispensed with for one year, from April 1, 2009 to March 31, 2010.
What it means for you
Banks can now extend Gold Card benefits to exporters even if their overdue export bills exceed the earlier 10% threshold during this period. This temporary relaxation helps exporters facing delayed payments and weak external demand, reducing their working capital stress. Lenders should update their internal credit policies to reflect this waiver for the specified period.
What you must do
- Update internal guidelines for Gold Card Scheme to remove the 10% overdue bills condition for FY 2009-10.
- Communicate the relaxation to all branches handling export credit, ensuring consistent application.
- Monitor exporter accounts for overdue bills beyond the waiver period to revert to normal norms from April 1, 2010.
- Advise eligible exporters to apply for Gold Card benefits under the relaxed criteria before March 31, 2010.
Who it affects
Scheduled commercial banks (excluding RRBs) offering export credit, Exporters holding or applying for Gold Card status, Bank branches handling export finance and trade credit
Does this relaxation apply to all exporters or only Gold Card holders?
The relaxation specifically modifies the Gold Card Scheme's eligibility condition. It applies to exporters who are or wish to become Gold Card holders, temporarily waiving the overdue bills threshold.
Will the 10% overdue bills condition be reinstated after March 31, 2010?
Yes, the circular states the dispensation is only for one year from April 1, 2009 to March 31, 2010. Banks should expect to revert to the original condition from April 1, 2010 unless further instructions are issued.
What should banks do if an exporter's overdue bills exceed 10% after the waiver period?
Banks must revert to the original Gold Card Scheme norms after March 31, 2010. Exporters not meeting the 10% threshold at that point may lose Gold Card benefits unless RBI extends the relaxation.