RBI slashes export credit in foreign currency ceiling rates

RBI/2009-10/321 DBOD.DIR.(Exp).No. 76/04.02.001/2009-10 February 19, 2010 All Scheduled Commercial Banks Dear Sir/Madam, Interest Rates on Export Credit in Foreign Currency Please refer to our circular DBOD.DIR.(Exp).No.107/04.02.001/2008-09 dated February 5, 2009 as also paragraph 7 of Master Circular on Rupee / Foreign Currency Export Credit dated July 1, 2009 relating to export credit in foreign currency. 2. It has been decided, in consultation with the Government of India, to reduce the ceiling rate on export credit in foreign currency by banks to LIBOR plus 200 basis points from the present ceiling rate of LIBOR plus 350 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.75/04.02.001/2009-10 dated February 19, 2010 enclosed to this circular. 3. The revision in the rates of interest would be applicable only to fresh advances. 4. Further, in modification of the instructions contained at para 5.1.3(iii)a of the above mentioned Master Circular dated July 1, 2009, the ceiling interest rate on the lines of credit with overseas banks has also been reduced from six months LIBOR/EURO LIBOR/EURIBOR plus 150 basis points to six months LIBOR/ EURO LIBOR/EURIBOR plus 100 basis points with immediate effect . Yours faithfully, (P.Vijaya Bhaskar) Chief General Manager-in-Charge DBOD.DIR.(Exp).BC.No.75/04.02.001/2009-10 February 19, 2010 Interest Rates on Export Credit in Foreign Currency In exercise of the powers conferred by Sections 21 and 35A of the Banking Regulation Act, 1949, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest so to do, hereby directs that, with effect from February 19, 2010, the interest rates on export credit in foreign currency would be as indicated in the Annex enclosed to this Directive. ( C.Krishnan ) Executive Director Annex Schedule of Interest Rates on Export Credit in Foreign Currency of Scheduled Commercial Banks effective from February 19, 2010

Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2009-10/321 · issued 19 Feb 2010. The plain-English explanation above is BankPulse’s own independent summary.

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