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Export Credit in Foreign Currency - Sources of Funds
IECD.
No. 12 - 04.02.02 - dated 31st January 2003
Please
refer to paragraph 1.1.4 and 2.2.5 of our Master Circular on Export Credit in
Foreign Currency IECD. No. 5/ 04.02.02/2002-03 dated July 30, 2002.
2. With a view to providing further
flexibility to banks to source foreign currency funds for granting PCFC/ EBR to
exporters, it has been decided to permit banks to use foreign currency funds
borrowed in terms of paragraph 4 (2)(i) of Notification No. FEMA 3/ 2000 RB
dated May 3, 2000 as also foreign currency funds generated through buy-sell
swaps in the domestic forex market for granting such loans, subject to adherence
to Aggregate Gap Limit approved by the Reserve Bank of India (Exchange Control
Department)
3. Consequently, the following sub-para
(v) to para 1.1.4 and sub-para (iv) to para 2.2.5 may be added to our Master
Circular referred to above.
1.1.4(v)
Banks are also permitted to use foreign currency funds
borrowed in terms of paragraph 4.(2)(i) of Notification No. FEMA 3/2000 RB dated
May 3, 2000 as also foreign currency funds generated through buy-sell swaps in
the domestic forex market for granting Pre-shipment Credit in Foreign Currency (PCFC),
subject to adherence to Aggregate Gap Limit approved by the Reserve Bank of
India (Exchange Control Department).
2.2.5
(iv)
Banks are also permitted to use foreign currency funds
borrowed in terms of paragraph 4. (2)(i) of Notification No. FEMA 3/2000 RB
dated May 3, 2000 as also foreign currency funds generated through buy-sell
swaps in the domestic forex market for granting facility of Rediscounting of
Export Bills Abroad (EBR), subject to adherence to Aggregate Gap Limit approved
by the Reserve Bank of India (Exchange Control Department).
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