What changed
This master circular updates and consolidates all prior instructions on export credit refinance up to June 30, 2013. The refinance limit remains at 50% of eligible outstanding export credit, effective from June 30, 2012. No new policy changes were introduced; it is a compilation exercise.
What it means for you
Banks can continue to access export credit refinance at the repo rate, supporting liquidity for export lending. The 50% limit helps boost credit flow to exporters. Banks must ensure accurate reporting and timely repayment to avoid penal rates.
What you must do
- Review and update internal procedures to align with the consolidated master circular.
- Ensure accurate calculation and reporting of eligible export credit outstanding for refinance.
- Maintain proper documentation including stamped agreement and Demand Promissory Note.
- Monitor repayment within 180 days to avoid penal interest charges.
- Train staff on the refinance facility terms, especially margin and collateral requirements.
Who it affects
All scheduled banks (excluding RRBs) authorized as foreign exchange dealers, Bank treasury and credit departments handling export credit, Compliance and reporting teams
What is the current refinance limit for export credit?
Banks can avail refinance up to 50% of their eligible outstanding export credit as at the end of the second preceding fortnight.
What is the interest rate on export credit refinance?
The facility is available at the Repo Rate under the Liquidity Adjustment Facility (LAF), as announced by RBI from time to time.
What happens if a bank fails to repay refinance within 180 days?
Non-repayment within 180 days is considered irregular availment, and a penal rate of interest as decided by RBI will be charged on the outstanding loan.