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Interest Rates on Export Credit in Foreign Currency
IECD No. 21/ 04.02.01/ 2001-02 dated 29th April 2002
Please refer to paragraph 63 of the statement on Monetary and Credit Policy for the year 2002-03
enclosed to the Governor's letter No. MPD / BC. 214/ 07.01.279/ 2001-02 dated April 29, 2002 relating to
export credit in foreign currency.
2.
In order to make the interest rate on export credit more competitive, it has been decided to revise the
ceiling rate on foreign currency loans for exports by banks to LIBOR plus 0.75 percentage point from the
present ceiling rate of LIBOR plus 1.00 percentage point. Accordingly, banks may extend export credit in
foreign currency to exporters at interest rates not exceeding 0.75 percentage points over LIBOR with immediate
effect. Similar changes may be effected in interest rates in cases where EURO LIBOR/ EURIBOR has been used as
the benchmark. The schedule of interest rates on export credit in foreign currency effective from April 29,
2002 is furnished in the Annexure.
3.
The revision in the rates of interest would be applicable not only to fresh advances but also to the
existing advances for the remaining period.
4.
Considering the competitive interest rate on foreign currency loans and to mitigate any possible
exchange risk, exporters need to be encouraged to make maximum use of export credit in foreign currency. Banks
located in areas with concentration of exporters should therefore give wide publicity to this important
facility and make it easily accessible to all exporters including small exporters.
5.
A copy of your internal instructions issued in this regard to your branches may be forwarded to us for
our information and record at the earliest.
6. Please acknowledge receipt.
Annexure
Schedule of Interest Rates on Export Credit in foreign currency of scheduled commercial
banks effective from April 29, 2002
Interest rates (per cent per annum)
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1. Pre-shipment Credit
(a) Upto 180 days
(b) Beyond 180 days and upto 360 days
2. Post-shipment Credit
(a) On demand bills for transit period (as specified by FEDAI)
(b) Usance bills (for total period comprising usance period of export bills,
transit period as specified by FEDAI and grace period wherever applicable)
Upto 6 months from the date of shipment.
(c) Export bills (demand or usance) realised after due date but upto date of
crystallisation
3. Export Credit Not Otherwise Specified (ECNOS)
(a) Pre-shipment credit
(b) Post-shipment credit
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Not exceeding 0.75% over LIBOR/ EURO LIBOR/ EURIBOR
Rate for initial period of 180 days prevailing at the time of extension plus 2.0
percentage points
Not exceeding 0.75% over LIBOR/ EURO LIBOR/ EURIBOR
Not exceeding 0.75% over LIBOR/ EURO LIBOR/ EURIBOR
Rate for 2(b) above plus 2.0 percentage points
Free @
Free @
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@ Banks are free to decide the rate of interest being rupee credit rate keeping in view the PLR
and spread guidelines.
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