What changed
The Government of India extended the 2% interest subvention on rupee export credit for specified sectors for one more year, from April 1, 2011 to March 31, 2012. This continues the scheme that was earlier set to expire on March 31, 2011. The terms and conditions remain unchanged from the previous circular dated January 11, 2011.
What it means for you
Scheduled Primary (Urban) Co-operative Banks holding AD Category I licence can continue offering concessional export credit to eligible sectors and claim reimbursement from RBI. Banks must ensure they charge interest at 2% below the rate for other exporters and maintain proper documentation. The subvention applies only until the loan becomes overdue or is repaid, whichever is earlier.
What you must do
- Apply the 2% interest subvention on rupee export credit for handicrafts, handlooms, carpet, and SMEs as per the SME definition in Annex I.
- Submit quarterly claims for reimbursement to RBI's Urban Banks Department, Central Office, Mumbai, starting from the quarter ended June 30, 2011.
- Include an External Auditor's Certificate with each claim certifying the subvention amount is correct.
- Calculate subvention on the outstanding export credit amount from disbursement date until repayment or overdue date, whichever is earlier.
- Round off subvention amounts to the nearest rupee in the claim format as per Annex II.
Who it affects
Scheduled Primary (Urban) Co-operative Banks with AD Category I licence, Exporters in handicrafts, handlooms, carpet, and SME sectors, RBI's Urban Banks Department
What is the interest subvention rate and which sectors are covered?
The subvention is 2% on rupee export credit for pre-shipment and post-shipment. Covered sectors: handicrafts, handlooms, carpet, and Small and Medium Enterprises (SMEs) as defined in Annex I of the circular.
How do UCBs claim reimbursement from RBI?
Submit quarterly claims to the Chief General Manager-in-Charge, Urban Banks Department, RBI, Central Office, Garment House, Worli, Mumbai 400 018. Claims must include an External Auditor's Certificate and use the format in Annex II. The first claim is for the quarter ended June 30, 2011.
What is the SME definition for this subvention?
Micro enterprise: investment in plant and machinery up to Rs. 25 lakh. Small enterprise: investment above Rs. 25 lakh but up to Rs. 5 crore. Medium enterprise: investment above Rs. 5 crore but up to Rs. 10 crore. Land and building are excluded from investment calculation.