What changed
RBI introduced a special export credit refinance facility for scheduled banks (excluding RRBs) that allows them to access rupee refinance equal to the amount swapped under the PCFC swap facility. The interest rate on this refinance is set at the prevailing repo rate under LAF, which was 8.0% at the time. The facility is available from January 21, 2013 to June 28, 2013.
What it means for you
Banks can now get rupee liquidity at the repo rate to support incremental pre-shipment export credit in foreign currency, making it cheaper to fund such exports. This encourages banks to expand export credit without straining their rupee resources. The existing Export Credit Refinance (ECR) facility remains unchanged, so banks have an additional tool.
What you must do
- Ensure promissory notes for refinance are fully backed by eligible PCFC export bills.
- Apply for the special refinance facility from January 21 to June 28, 2013.
- Continue using the existing ECR facility as before for other export credit needs.
Who it affects
All scheduled banks (excluding Regional Rural Banks), Exporters availing Pre-shipment Export Credit in Foreign Currency
What is the interest rate on this special refinance?
The rate is the prevailing repo rate under the Liquidity Adjustment Facility, which was 8.0% at the time of the circular.
Does this replace the existing Export Credit Refinance facility?
No, the existing rupee Export Credit Refinance (ECR) facility continues as before. This is an additional facility.
Which banks are eligible for this facility?
All scheduled banks except Regional Rural Banks (RRBs) are eligible.