TaxTMI 
TaxTMI 
Master Circular on - RUPEE / FOREIGN CURRENCY EXPORT CREDIT & CUSTOMER SERVICE TO EXPORTERS
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....lso been placed on the RBI web-site (www.rbi.org.in.). A copy of the revised Master Circular is enclosed. Yours faithfully, (P. Vijaya Bhaskar) Chief General Manager-in Charge Click here to download Master Circular ============= Document 1 Master Circular RUPEE / FOREIGN CURRENCY EXPORT CREDIT & CUSTOMER SERVICE TO EXPORTERS CONTENTS Sr.No. Particulars Page No. A Purpose 3 B Classification 3 C Previous instructions consolidated 3 D Scope of Application 3 Structure 4 Introduction 5 Part -A Rupee Export Credit 1 Pre-shipment Rupee Export Credit 6 2 Post-shipment Rupee Export Credit 17 3 Deemed Exports - Concessive Rupee Export Credit 23 4 Interest on Rupee Export Credit 24 Part-B Export Credit in Foreign Currency 5 Pre-Shipment Export Credit in Foreign Currency 29 6 Post-Shipment Export Credit in Foreign Currency 36 7 Interest on Export Credit in Foreign Currency 41 Part-C Export Credit-Customer Service and Simplification of Procedures for Delivery and Reporting Requirements 8 Customer Service and Simplification of Procedures 42 9 Reporting Requirements 51 10 Pre-Shipment Credit ....
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....ntroduced the scheme Export Financing in 1967. The scheme is intended to make short-term working capital finance available to exporters at internationally comparable interest rates. RBI fixes only the ceiling rate of interest for export credit. However, banks may charge lesser rates of interest than the ceiling rates prescribed by RBI. Banks are free to decide the rates of interest within the ceiling rates keeping in view the BPLR and spread guidelines and taking into account track record of the borrowers and the risk perception. In order to enhance transparency in banks' pricing of their loan products, banks have been advised to fix their Benchmark Prime Lending Rate (BPLR) after taking into account (i) actual cost of funds, (ii) operating expenses and (iii) a minimum margin to cover regulatory requirement of provisioning / capital charge and profit margin. 4 DBOD - MC on Export Credit - 2009 PART - A RUPEE EXPORT CREDIT 1. PRE-SHIPMENT RUPEE EXPORT CREDIT 1.1 Rupee Pre-shipment Credit/Packing Credit 1.1.1 Definition 'Pre-shipment / Packing Credit' means any loan or advance granted or any other credit provided by a bank to an exporter for financing the purc....
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....t orders. 1.1.4 Liquidation of Packing Credit (i) General The packing credit / pre-shipment credit granted to an exporter may be liquidated out of proceeds of bills drawn for the exported commodities on its purchase, discount etc., thereby converting pre-shipment credit into post-shipment credit. Further, subject to mutual agreement between the exporter and the banker it can also be repaid / prepaid out of balances in Exchange Earners Foreign Currency A/c (EEFC A/c) as also from rupee resources of the exporter to the extent exports have actually taken place. If not so liquidated / repaid, banks are free to decide the rate of interest as indicated in paragraph 4.2.3 from the date of advance. (ii) Packing credit in excess of export value (a) Where by-product can be exported Where the exporter is unable to tender export bills of equivalent value for liquidating the packing credit due to the shortfall on account of wastage involved in the processing of agro products like raw cashew nuts, etc., banks may allow exporters, inter alia, to extinguish the excess packing credit by export bills drawn in respect of by-product like cashew shell oil, etc 6 DBOD - MC on Exp....
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....y extend such facility after ensuring that the exporter has not availed of packing credit from another bank against the documents submitted. If any packing credit 1. DBOD - MC on Export Credit - 2009 has been availed of from another bank, the bank to which the documents are submitted has to ensure that the proceeds are used to liquidate the packing credit obtained from the first bank. (c) These relaxations should not be extended to transactions of sister / associate / group concerns. 1.1.5 'Running Account' Facility (i) As stated earlier, pre-shipment credit to exporters is normally provided on lodgment of L/Cs or firm export orders. It is observed that the availability of raw materials is seasonal in some cases. In some other cases, the time taken for manufacture and shipment of goods is more than the delivery schedule as per export contracts. In many cases, the exporters have to procure raw material, manufacture the export product and keep the same ready for shipment, in anticipation of receipt of letters of credit / firm export orders from the overseas buyers. Having regard to difficulties being faced by the exporters in availing of adequate pre-shipment credit....
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....ent for Exports Where exporters receive direct remittances from abroad by means of cheques, drafts etc. in payment for exports, banks may grant export credit at concessive interest rate to exporters of good track record till the realisation of proceeds of the cheque, draft etc. received from abroad, after satisfying themselves that it is against an export order, is as per trade practices in respect of the goods in question and is an approved method of realisation of export proceeds as per extant rules. If, pending compliance with the above conditions, an exporter has been granted accommodation at normal commercial interest rate, banks may give effect to concessive export credit rate retrospectively once the aforesaid conditions have been complied with and refund the difference to the exporter. Rupee Pre-shipment Credit to Specific Sectors/Segments Rupee Export Packing Credit to Manufacturer Suppliers for Exports Routed through STC/MMTC/Other Export Houses, Agencies etc. (i) (ii) 1.2 (i) Banks may grant export packing credit to manufacturer suppliers who do not have export orders/letters of credit in their own name and goods are ....
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....Order Holder (EOH) and sub-supplier of raw materials, components etc. of the exported goods as in the case of EOH and manufacturer suppliers, subject to the following: (a) Running Account facility is not contemplated under the scheme. The scheme will cover the L/C or export order received in favour of Export Houses/Trading Houses/Star Trading Houses etc. or manufacturer exporters only. The scheme should be made available to the exporters with good track record. (b) Bankers to an EOH will open an inland L/C specifying the goods to be supplied by the sub-supplier to the EOH against the export order or L/C received by him as a part of the export transaction. On the basis of such a L/C, the sub-supplier's banker will grant EPC as working capital to enable the sub-supplier to manufacture the components required for the goods to be exported. On supplying the goods, the L/C opening bank will pay to the sub-supplier's banker against the inland documents received on the basis of inland L/C. Such payments will thereafter become the EPC of the EOH. (c) It is up to the EOH to open any number of L/Cs for the various components required with the approval of his banker/leader of consorti....
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....iquidation of packing credit by shipment of goods by EOH and will be eligible for refinance from RBI by the respective banks for the appropriate periods. It has to be ensured that no double financing of the same leg of the transaction is involved. 12 DBOD - MC on Export Credit - 2009 (h) Banks may approach the ECGC for availing suitable cover in respect of such advances. (i) The scheme does not envisage extending credit by a sub-supplier to the EOH/manufacturer and thus, the payment to sub-suppliers has to be made against submission of documents by L/C opening bank treating the payment as EPC of the EOH. 1.2.3 Rupee Pre-shipment Credit to Construction Contractors (i) The packing credit advances to the construction contractors to meet their initial working capital requirements for execution of contracts abroad may be made on the basis of a firm contract secured from abroad, in a separate account, on an undertaking obtained from them that the finance is required by them for incurring preliminary expenses in connection with the execution of the contract e.g., for transporting the necessary technical staff and purchase of consumable articles for the purpose of executi....
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....rt of the service . There is a time lag between the outlay of working capital expense and actual receipt of payment from the service consumer or his principal abroad. . There is a valid Working Capital gap i.e. service is provided first while the payment is received some time after an invoice is raised. · Banks should ensure that there is no double financing/excess financing. . The export credit granted does not exceed the foreign exchange earned less the margins if any required, advance payment/credit received. · Invoices are raised · Inward remittance is received in Foreign Exchange. . Company will raise the invoice as per the contract where payment is received from overseas party, the service exporter would utilize the funds to repay the export credit availed of from the bank. 1.2.5 Pre-shipment Credit to Floriculture, Grapes and Other Agro-based Products 14 DBOD - MC on Export Credit - 2009 (i) In the case of floriculture, pre-shipment credit is allowed to be extended by banks for purchase of cut-flowers etc. and all post-harvest expenses incurred for making shipment. (ii) However, with a view to promoting export of floriculture, gra....
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....s have to ensure that the exporters have made the required arrangements with the farmers and overseas buyers in respect of crops to be purchased and products to be exported respectively. The financing banks will also appraise the projects in agri export zones and ensure that the tie-up arrangements are feasible and projects would take off within a reasonable period of time.(iv) They are also to monitor the end-use of funds, viz. distribution of the inputs by the exporters to the farmers for raising the crops as per arrangements made by the exporter/main processor units. (v) They have to further ensure that the final products are exported by the processors/exporters as per the terms and conditions of the sanction in order to liquidate the pre-shipment credit as per extant instructions. 2. POST-SHIPMENT RUPEE EXPORT CREDIT 2.1 Definition: 'Post-shipment Credit' means any loan or advance granted or any other credit provided by a bank to an exporter of goods / services from India from the date of extending credit after shipment of goods / rendering of services to the date of realisation of export proceeds as per the period of realization prescribed by FED, and includes any ....
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....ure on post-shipment credit and instructions in regard thereto are detailed in paragraph 4. 17 DBOD - MC on Export Credit - 2009 2.4.3 Advances against Undrawn Balances on Export Bills In respect of export of certain commodities where exporters are required to draw the bills on the overseas buyer up to 90 to 98 percent of the FOB value of the contract, the residuary amount being 'undrawn balance' is payable by the overseas buyer after satisfying himself about the quality/ quantity of goods. Payment of undrawn balance is contingent in nature. Banks may consider granting advances against undrawn balances at concessional rate of interest based on their commercial judgement and the track record of the buyer. Such advances are, however, eligible for concessional rate of interest for a maximum period of 90 days only to the extent these are repaid by actual remittances from abroad and provided such remittances are received within 180 days after the expiry of NTP in the case of demand bills and due date in the case of usance bills. For the period beyond 90 days, the rate of interest specified for the category 'ECNOS' at post-shipment stage may be charged. 2.4.4 Advances a....
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....received from abroad relating to the retention money and provided such payments are received within 180 days from the due date of payment of the retention money, according to the terms of the contract 2.4.5 Export on Consignment Basis (i) General (a) Export on consignment basis lends scope for a lot of misuse in the matter of repatriation of export proceeds. (b) Therefore, export on consignment basis should be at par with exports on outright sale basis on cash terms in matters regarding the rate of interest to be charged by banks on post-shipment credit. Thus, in the case of exports on consignment basis, even if extension in the period beyond 365 days is 19 DBOD - MC on Export Credit - 2009 granted by the Foreign Exchange Department (FED) for repatriation of export proceeds, banks will charge appropriate concessive rate of interest only up to the notional due date (depending upon the tenor of the bills), subject to a maximum of 365 days. (ii) Export of precious and semi-precious stones Precious and semi-precious stones, etc. are exported mostly on consignment basis and the exporters are not in a position to liquidate pre-shipment credit account with remit....
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....I, up to a period of 180 days only each at pre-shipment and post-shipment stages. 2.4.6 Export of Goods for Exhibition and Sale Banks may provide finance to exporters against goods sent for exhibition and sale abroad in the normal course in the first instance, and after the sale is completed, allow the benefit of the concessive rate of interest on such advances, both at the pre-shipment stage and at the post-shipment stage, up to the stipulated periods, by way of a rebate. Such advances should be given in separate accounts. 2.4.7 Post-shipment Credit on Deferred Payment Terms Banks may grant post-shipment credit on deferred payment terms for a period exceeding one year, in respect of export of capital and producer goods as specified by RBI (FED) from time to time. 2.5 Post-shipment Advances against Duty Drawback Entitlements 2.5.1 Banks may grant post-shipment advances to exporters against their duty drawback entitlements and covered by ECGC guarantee as provisionally certified by Customs Authorities pending final sanction and payment. 2.5.2 The advance against duty drawback receivables can also be made available to exporters against export promotion copy of th....
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....dit - 2009 (ii) post-supply credit (for a maximum period of 30 days or up to the actual date of payment by the receiver of goods, whichever is earlier), for supply of goods specified as 'Deemed Exports' under the same Chapter of Foreign Trade Policy from time to time. 3.4 The post-supply advances would be treated as overdue after the period of 30 days. In cases where such overdue credits are liquidated within a period of 180 days from the notional due date (i.e. before 210 days from the date of advance), the banks are required to charge, for such extended period, interest prescribed for the category 'ECNOS' at post- shipment stage. If the bills are not paid within the aforesaid period of 210 days, banks should charge from the date of advance, the rate prescribed for 'ECNOS'-post-shipment. 3.5 Banks would be eligible for refinance from RBI for such rupee export credits extended both at pre-shipment and post-supply stages. 4. INTEREST ON RUPEE EXPORT CREDIT 4.1 General A ceiling rate has been prescribed for rupee export credit linked to Benchmark Prime Lending Rates (BPLRs) of individual banks available to their domestic borrowers. Banks have, therefore, freedom to ....
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....ing rate arrived at on the basis of BPLR relevant for the entire tenor of the export credit under the category. The period of credit is to be reckoned from the date of advance. (ii) If pre-shipment advances are not liquidated from proceeds of bills on purchase, discount, etc. on submission of export documents within 360 days from the date of advance, or as indicated at para 1.1.4 (i) ,the advances will cease to qualify for concessive rate of interest ab initio. (iii) In cases where packing credit is not extended beyond the original period of sanction and exports take place after the expiry of sanctioned period but within a period of 24 DBOD - MC on Export Credit - 2009 360 days from the date of advance, exporter would be eligible for concessional credit only up to the sanctioned period. For the balance period, interest rate prescribed for 'ECNOS' at the pre-shipment stage will apply. Further, the reasons for non-extension of the period need to be advised by banks to the exporter. (iv) In cases where exports do not take place within 360 days from the date of pre- shipment advance, such credits will be termed as 'ECNOS' and banks may charge interest rate prescribed ....
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....ys from the date of advance, till further notice. 4.2.6 Interest on Post-shipment Credit Adjusted from Rupee Resources Banks should adopt the following guidelines to ensure uniformity in charging interest on post-shipment advances which are not adjusted in an approved manner due to non- accrual of foreign exchange and advances have to be adjusted out of the funds received from the Export Credit Guarantee Corporation of India Ltd. (ECGC) in settlement of claims preferred on them on account of the relevant export consignment: (a) In case of exports to certain countries, exporters are unable to realise export proceeds due to non-expatriation of the foreign exchange by the Governments/Central Banking Authorities of the countries concerned as a result of their balance of payment problems even though payments have been made locally by the buyers. In these cases ECGC offer cover to exporters for transfer delays. Where ECGC have admitted the claims and paid the amount for transfer delay, banks may charge interest as applicable to 'ECNOS'-post-shipment even if the post- shipment advance may be outstanding beyond six months from the date of shipment. Such interest would be applicabl....
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....ffee and tea, solvent extracted de-oiled cake, plastics and linoleum. Further, in respect of leather and leather manufacturers, marine products, all categories of textiles under the existing scheme including RMG and carpets but excluding man- made fibre and handicrafts, the Govt. has provided additional subvention of 2 per cent (in 27 DBOD - MC on Export Credit - 2009 addition to the 2 per cent offered earlier) in pre-shipment credit for 180 days and post- shipment credit for 90 days from November 1, 2007 to September 30, 2008 (for carpet sector the pre-shipment credit would be available for 270 days). However, the total subvention will be subject to the condition that the interest rate, after subvention will not fall below 7 per cent which is the rate applicable to the agriculture sector under priority sector lending. Subsequently, in December 2008 the Govt. has again announced a scheme of subvention for certain employment oriented export sectors viz. Textiles (including Handloom), handicrafts, carpets, leather, gems & jewellery, marine products and Small and Medium Enterprises for a period December 1, 2008 to September 30, 2009. Accordingly, banks would charge inte....
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....y transaction will be that of the exporter. (c) Banks are permitted to extend PCFC for exports to ACU countries. (d) The applicable benefit to the exporters will accrue only after the realisation of the export bills or when the resultant export bills are rediscounted on 'without recourse' basis. 5.1.3 Source of Funds for Banks (i) The foreign currency balances available with the bank in Exchange Earners Foreign Currency (EEFC) Accounts, Resident Foreign Currency Accounts RFC(D) and Foreign Currency (Non-Resident) Accounts (Banks) Scheme could be utilised for financing the pre-shipment credit in foreign currency. (ii) Banks are also permitted to utilise the foreign currency balances available under Escrow Accounts and Exporters Foreign Currency Accounts for the purpose, subject to ensuring that the requirements of funds by the account holders for permissible transactions are met and the limit prescribed for maintaining maximum balance in the account under broad based facility is not exceeded. (iii) Foreign currency borrowings a. In addition, banks may arrange for borrowings from abroad. Banks may negotiate lines of credit with overseas banks for the purpose of ....
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....ensure that the rate quoted is below the next upper standard period rate. (iv) Banks may collect interest on PCFC at monthly intervals against sale of foreign currency or out of balances in EEFC accounts or out of discounted value of the export bills if PCFC is liquidated. 5.1.5 Period of Credit (i) The PCFC will be available for a maximum period of 360 days. Any extension of the credit will be subject to the same terms and conditions as applicable for extension of rupee packing credit and it will also have additional interest cost of 200 basis points above the rate for the initial period of 180 days prevailing at the time of extension. (ii) Further extension will be subject to the terms and conditions fixed by the bank concerned and if no export takes place within 360 days, the PCFC will be adjusted at T.T. selling rate for the currency concerned. In such cases, banks can arrange to remit foreign exchange to repay the loan or line of credit raised abroad and interest without prior permission of RBI. (iii) For extension of PCFC within 180 days, banks are permitted to extend on a fixed roll over basis of the principal amount at the applicable LIBOR/EURO LIBOR/EURIBOR ....
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....f cancellation of the export order for which the PCFC was availed of by the exporter from the bank, or if the exporter is unable to execute the export order for any reason, it will be in order for the exporter to repay the loan together with accrued interest thereon, by purchasing foreign exchange (principal + interest) from domestic market through the bank. In such cases, interest will be payable on the rupee equivalent of principal amount at the rate applicable to ECNOS at pre-shipment stage plus a penal rate of interest from the date of advance after adjustment of interest of PCFC already recovered. (ii) It will also be in order for the banks to remit the amount to the overseas bank, provided the PCFC was made available to exporter from the line of credit obtained from that bank. 32 DBOD - MC on Export Credit - 2009 (iii) Banks may extend PCFC to such exporters subsequently, after ensuring that the earlier cancellation of PCFC was due to genuine reasons. 5.1.9 Running Account Facility for All Commodities (i) Banks are permitted to extend the 'Running Account' facility under the PCFC Scheme to exporters for all commodities, on the lines of the facility available....
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....y ensure compliance of the basic Exchange Control requirement that the customer is exposed to an exchange risk in the underlying transaction at different stages of the export finance. 5.1.11 Sharing of EPC under PCFC (i) The rupee export packing credit is allowed to be shared between an export order holder and the manufacturer of the goods to be exported. (ii) Similarly, banks may extend PCFC also to the manufacturer on the basis of the disclaimer from the export order holder through his bank. PCFC granted to the manufacturer can be repaid by transfer of foreign currency from the export order holder by availing of PCFC or by discounting of bills. Banks should ensure that no double financing is involved in the transaction and the total period of packing credit is limited to the actual cycle of production of the exported goods. (iii) The facility may be extended where the banker or the leader of consortium of banks is the same for both the export order holder and the manufacturer or, the banks concerned agree to such an arrangement where the bankers are different for export order holder and manufacturer. The sharing of export benefits will be left to the mutual agreement ....
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.... when bills are discounted/ rediscounted 'without recourse'). (ii) Surplus of export proceeds available after adjusting relative export finance and credit to EEFC account should not be allowed for setting off of import bills. 35 DBOD - MC on Export Credit - 2009 (iii) ECGC cover will be available in rupees only, whereas PCFC is in foreign currency. (iv) For the purpose of reckoning banks' performance in extending export credit, the rupee equivalent of the PCFC may be taken into account. 5.2 Diamond Dollar Account (DDA) Scheme Under the Foreign Trade Policy 2004-2009, firms/companies dealing in purchase/sale of rough or cut and polished diamonds, diamond studded jewellery, with good track record of at least three years in import or export of diamonds with an annual average turnover of Rs. 5 crore or above during the preceding three licensing years (from April to March) are permitted to carry out their business through designated Diamond Dollar Accounts (DDAs). Under the DDA Scheme, it would be in order for banks to liquidate PCFC granted to a DDA holder by dollar proceeds from sale of rough, cut and polished diamonds by him to another DDA holder. (For details re....
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....s/discounting agencies under BAF will not be reckoned for the purpose of borrowing limits fixed by RBI (FED) for them. 6.1.3 Eligibility Criteria (i) The Scheme will cover mainly export bills with usance period up to 180 days from the date of shipment (inclusive of normal transit period and grace period, if any). There is, however, no bar to include demand bills if overseas institution has no objection to it. In case borrower is eligible to draw usance bills for periods exceeding 180 days as per the extant instructions of FED, Post-shipment Credit under the EBR may be provided beyond 180 days. (ii) The facility under the Scheme of Rediscounting may be offered in any convertible currency. (iii) Banks are permitted to extend the EBR facility for exports to ACU countries. (iv) For operational convenience, the BAF Scheme may be centralised at a branch designated by the bank. There will, however, be no bar for other branches of the bank to operate the scheme as per the bank's internal guidelines / instructions. 37 DBOD - MC on Export Credit - 2009 6.1.4 Source of On-shore Funds (i) In the case of demand bills [subject to what has been stated in paragraph 6.1.3....
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.... the discounting of bills/extension of foreign exchange loans (DP bills) will be in actual foreign exchange, banks may apply appropriate spot rate for the transactions. (iii) The Rupee equivalents of discounted amounts/foreign exchange loan may be held in the bank's books distinct from the existing post-shipment credit accounts. (iv) In case of overdue bills banks may charge 200 basis points above the rate of rediscounting of foreign exchange loan from the due date to the date of crystallisation. (v) Interest rate as per RBI interest rate directive for post-shipment credit in rupees will be applicable from the date of crystallisation. (vi) In the event of export bill not being paid, it will be in order for the bank to remit the amount equivalent to the value of the bill earlier discounted, to the overseas bank/agency which had discounted the bill, without the prior approval of the RBI. 6.1.7 Restoration of Limits and Availability of Export Benefits such as EEFC Account As stated in paragraph 6.1.5 above, 'Without Recourse' facility may not generally be available. Thus, the restoration of exporter's limits and the availability of export benefits, such as credit to ....
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....ond 180 days and up to 360 days Rate for initial period of 180 days prevailing at the time of extension plus 200 basis points i.e. (i)(a) above plus 200 basis points (ii) Post-shipment Credit (a) On demand bills for transit period (as specified by FEDAI) Not exceeding 350 basis points over LIBOR/EURO LIBOR/EURIBOR (b) Against usance bills (credit for total period comprising usance period of export bills, transit period as specified by FEDAI and grace period wherever applicable) Up to 6 months from the date of shipment Not exceeding 350 basis points over LIBOR/EURO LIBOR/EURIBOR (c) Export Bills (Demand or Usance) realized after due date but up to date of crystallization Rate for (ii) (b) above plus 200 basis points Note: i) Bank should not levy any other charges over and above the interest rate under any name viz. service charge, Management charge etc. except recovery towards out of pocket expenses incurred by banks as per IBA guidelines. ii) Interest rates for the above mentioned categories of export credit beyond the tenors as prescribed above are deregulated and banks are free to decide the rate of interest, keeping in view the BPLR and spread guidelines. PA....
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.... holders. 42 DBOD - MC on Export Credit - 2009 (vi) The charges schedule and fee-structure in respect of services provided by banks to exporters under the Scheme will be relatively lower than those provided to other exporters. (vii) The sanction and renewal of the limits under the Scheme will be based on a simplified procedure to be decided by the banks. Taking into account the anticipated export turnover and track record of the exporter the banks may determine need-based finance with a liberal approach. (viii) 'In-principle' limits will be sanctioned for a period of 3 years with a provision for automatic renewal subject to fulfillment of the terms and conditions of sanction. (ix) A stand-by limit of not less than 20 per cent of the assessed limit may be additionally made available to facilitate urgent credit needs for executing sudden orders. In the case of exporters of seasonal commodities, the peak and off-peak levels may be appropriately specified. (x) In case of unanticipated export orders, norms for inventory may be relaxed, taking into account the size and nature of the export order. (xi) Requests from card holders would be processed quickly by banks ....
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....ts enjoyed 44 DBOD - MC on Export Credit - 2009 by the exporters remain frozen till the actual date of credit of rupee equivalent to the account of the customer. There is, therefore, need to promptly restore the limit of the exporters on realisation of bills and pass on the rupee credit to the customer. 8.1.5 Payment of Compensation to Exporters for Delayed Credit of Export Bills (i) In respect of the delay in affording credit in respect of credit advices complete in all respects, the compensation stipulated by FEDAI should be paid to the exporter client, without waiting for a demand from the exporter. (ii) Banks should devise a system to monitor timely credit of the export proceeds to the exporter's account and payment of compensation as per FEDAI rules. (iii) The internal audit and inspection teams of the banks should specifically comment on these aspects in the reports. 8.2 Sanction of Export Credit Proposals 8.2.1 Time Limit for Sanction The sanction of fresh/enhanced export credit limits should be made within 45 days from the date of receipt of credit limit application with the required details/information supported by requisite financial/operatin....
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.... Simplification of Procedure for Delivery of Export Credit in Foreign Currency and in Rupees 8.3.1 General With a view to ensuring timely delivery of credit to exporters and removing procedural hassles, the following guidelines may be brought into effect. These guidelines are applicable to Rupee export credit as well as export credit in Foreign Currency. 8.3.2 Guidelines (i) Simplification of procedures Banks should simplify the application form and reduce data requirements from exporters for assessment of their credit needs, so that exporters do not have 46 DBOD - MC on Export Credit - 2009 to seek outside professional help to fill in the application form or to furnish data required by the banks. Banks should adopt any of the methods, viz. Projected Balance Sheet method, Turnover method or Cash Budget method, for assessment of working capital requirements of their exporter-customers, whichever is most suitable and appropriate to their business operations. In the case of consortium finance, once the consortium has approved the assessment, member banks should simultaneously initiate their respective sanction processes. (ii) 'On line' credit to export....
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....l of the appropriate authority, the same may be incorporated in the terms of sanction by way of amendments and communicated to ECGC. (iv) Handling of export documents Banks are required to obtain, among others, original sale contract/confirmed order / proforma invoice countersigned by overseas buyer / indent from authorized agent of overseas buyer for handling the export documents as per Exchange Control regulations. Submission of such documents need not be insisted upon at the time of handling the export documents, since the goods have already been valued and cleared by the Customs authorities, except in the case of transactions with Letters of Credit (L/C) where the terms of L/C require submission of the sale contract / other alternative documents. (v) Fast track clearance of export credit (a) At specialized branches and branches having sizeable export business, a facilitation mechanism for assisting exporter-customers should be put in place for quick initial scrutiny of credit application and for discussions for seeking additional information or clarifications. (b) Banks should streamline their internal systems and procedures to comply with the stipulated time lim....
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....y subjecting exporters to the risk of cancellation of export orders. (vii) Customer Education (d) Banks should bring out a Hand Book containing salient features of the simplified procedures for sanction of export credit in Foreign Currency at internationally competitive rates as well as in Rupees for the benefit of their exporter-clients. 49 DBOD - MC on Export Credit - 2009 (e) To facilitate interaction between banks and exporters, banks should periodically organise Exporters' Meet at centres with concentration of exporters. 8.3.3 Monitoring Implementation of Guidelines (i) Banks should ensure that exporters' credit requirements are met in full and promptly at competitive rates. The above referred guidelines must be implemented, both in letter and spirit, so as to bring about a perceptible improvement in credit delivery and related banking services to export sector. Banks should also address the deficiencies, if any, in the mechanism of deployment of staff in their organisations to eliminate the bottlenecks in the flow of credit to the export sector. (ii) Banks should set up an internal team to visit branches periodically, say, once in two months to gauge t....
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.... denied export credit from the banks. 9.1.3 Failure to achieve the stipulated level of export credit and or failure to show a distinct improvement in export credit performance could invite bank-specific policy responses which could include raising of reserve requirements and withdrawal of refinance facilities. The Directives Division, (Export Credit), Department of Banking Operations and Development, of the Reserve Bank of India would closely monitor the export credit performance of the banks. 9.2 Quarterly Data of Export Credit Disbursements Banks should submit the export credit disbursement data on a quarterly basis in the format given in Annex 2. Banks should ensure that the statement reaches Reserve Bank of India, Department of Banking Supervision, Central Office, OSMOS Division, Centre-1, World Trade Centre, Cuffe Parade, Mumbai 400005 positively by the end of the month following the quarter to which it relates. * ANBC is Net Bank Credit (NBC) plus investments made by banks in non-SLR bonds held in Held to Maturity (HTM) category. The achievement of the banks would be assessed in terms of ANBC or credit equivalent amount of Off-Balance Sheet Exposure (OBE), whichev....
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.... one shot in order to avoid delays in sanctioning credit. (iv) Small and Medium Exporters especially in the upcountry centers should be properly trained by SSI / export organizations with technical assistance from banks regarding correct filling up of forms. (v) Collateral security should not be insisted upon as far as possible. (vi) State Level Export Promotion Committees (SLEPCs) which have been reconstituted as sub-committees of the SLBCs should play a greater role in promoting coordination between banks and exporters. (b) Review of the Gold Card Scheme (i) Since the number of Gold Cards issued by banks was low, banks were advised to speed up the process of issue of the cards to all the eligible exporters especially the SME exporters and ensure that the process is completed within a period of three months. 53 DBOD - MC on Export Credit - 2009 (ii) Simplified procedure for issue of Gold Cards as envisaged under the scheme should be implemented by all banks. (iii) Banks may consider exempting all deserving Gold Card holder exporters from the Packing Credit Guarantee Sectoral Schemes of ECGC on the basis of their track record. (c) Review of export cred....
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....eporting Friday of the Quarter ( For Gold Card Holders ) Pre - shipment Credit Post - shipment Credit Pre - shipment Credit Post - shipment Credit Rupee Credit PCFC Rupee Credit EBR Deferr- ed pay- ments Other Govt. pay- ments Rupee Credit PCFC Rupee Credit EBR Deferr ed pay- ment Other Govt Pay- ments (a) The amount of bills discounted/rediscounted under EBR Scheme on 'without recourse' basis should be excluded from the balance outstanding. 55 DBOD - MC on Export Credit - 2009 (b) If the last Friday of the quarter happens to be not the last day of the particular month say March, June, etc., banks have to include the disbursement for the broken period in the next quarter. Illustration: last Friday of the quarter 25th March - the disbursement from 26th March to 31st March should be included in the June quarter. ANNEX 3 (vide paragraph 10) Annexure to Circular IECD No.13/04.02.02/2002-03 dated February 3, 2003 Undertaking from Diamond Clients Form of an undertaking to be obtained by banks from the clients who have been extended credit for doing any business relating to diamonds "I hereby undertake : (i) not to knowingly do any business in the co....
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..... DBOD.Dir.(Exp)BC No.41/04.02.01/2007-08 29.10.2007 Rupee Export Credit Interest Rates extension of period 12. DBOD.Dir.(Exp)BC No.34B/04.02.01/2007-08 6.10.2007 Rupee Export Credit Interest Rates Subvention 13. DBOD.Dir.(Exp)BC No.22/04.02.01/2007-08 13.07.2007 Rupee Export Credit Interest Rates Subvention 14. DBOD.Dir.(Exp)BC No.1/04.02.02/2007-08 02.07.2007 Master Circular on Rupee /Foreign Currency Export Credit & Customer Service to Exporters 15. DBOD.Dir.(Exp)BC No.80/04.02.01/2006-07 17.04.07 Rupee Export Credit Interest Rates 57 DBOD - MC on Export Credit - 2009 16. DBOD.Dir.(Exp)BC No.37 /04.02.01/2006-07 20.10.06 Rupee Export Credit Interest Rates 17. DBOD.Dir.(Exp) BC No.83/04.02.01/ 2005-06 28.04.06 Rupee Export Credit Interest Rates 18. DBOD.Dir.(Exp) BC No.41/04.02.01/ 2005-06 02.11.05 Rupee Export Credit Interest Rates 19. DBOD. Dir (Exp). No. 83/ 04.02.01/2004-05 29.04.05 Rupee Export Credit Interest Rates 20. IECD. No. 14/ 01.01.43/ 2003-04 30.06.04 Merger of functions of Industrial & Export Credit department of Reserve Bank of India with its other Departments 21. IECD No. 12/ 04.02.02/ 2003-04 18.05.04 Gold Card scheme for Expo....
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....47. IECD.No.31/04.02.01/ 97-98 31.12.97 Export Credit - Rate of Interest on Post- shipment Rupee Credit 48. IECD.No.29/04.02.01/ 97-98 29.12.97 Export Credit - Interest Rates on Post- shipment Rupee Credit - Clarifications 49. IECD.No.26/04.02.01/ 97-98 17.12.97 Export Credit - Interest Rates on Post- shipment Rupee Credit 50. IECD.No.19/04.02.01/ 97-98 29.11.97 Export Credit - Interest Rates on Post- shipment Rupee Credit 51. IECD.No.18/04.02.01/ 97-98 26.11.97 Export Credit - Interest Rates on Post- shipment Rupee Credit 52. IECD.No.11/04.02.01/ 97-98 21.10.97 Export Credit - Interest Rates 53. IECD.No.9/04.02.01/ 97-98 12.09.97 Export Credit - Interest Rates on Post- shipment Rupee Credit 54. IECD.No.1/04.02.01/ 97-98 05.07.97 Extension of Concessive Credit for Deemed Exports 55. IECD.No.32/04.02.01/ 96-97 25.06.97 Export Credit - Interest Rates 56. IECD.No.29/04.02.01/ 96-97 17.04.97 Post-shipment Finance in respect of Exports through the Warehouse-cum- Display Centre at Dubai 57. IECD.No.27/04.02.01/ 96-97 15.04.97 Export Credit - Interest Rates 58. IECD.No.16/04.02.01/ 96-97 22.11.96 Extension of Concessive Credit for Deemed Exports -List of M....
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....8.91 Interest Rates on Advances - Export Credit 60 DBOD - MC on Export Credit - 2009 80. IECD.No.2/EFD/BC/819- POL- ECR/91-92 09.07.91 Export Credit (Interest Subsidy) Scheme, 1968 - Interest on Post- shipment Credit Adjusted from Rupee Resources 81. IECD.No.EFD.BC.49/819- POL- ECR/90-91 22.04.91 Interest Rates on Advances - Export credit 82. IECD.No.EFD/BC/48/819/ POL- ECR/90-91 02.04.91 Interest Rates on Advances - Export Credit 83. IECD.No.EFD/BC/47/819/ POL- ECR/90-91 01.04.91 Interest Rates on Advances - Export Credit 84. IECD.No.EFD.BC.44/DDB (P)-91 26.03.91 Duty Drawback Credit Scheme, 1976 - Grant of Interest- free Advances against - Duty Drawback Entitlements under Brand Rate 85. IECD.No.EFD.BC.8/819- POL- ECR/89-90 28.09.89 Export Credit (Interest Subsidy) Scheme, 1968 - Normal Transit Period- Demands Bill bills 86. IECD.No.EFD.BC.253/819 -POL- ECR/89 27.05.89 Export Credit (Interest Subsidy) Scheme, 1968 - Interest on Post- shipment Credit Adjusted from Rupee Resources 87. IECD.No.EFD.BC.250/380 - DDB(P)-89 29.04.89 Duty Drawback Credit Scheme, 1976 88. IECD.No.EFD.BC.248/819 -POL- ECR-89 13.03.89 Packing Credit for Imports against Entitl....
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....o.EFD.BC.75/C.29 7(P) -- 83 06.12.83 Strategy for Exports to Africa - Extract from Report of Gen(Africa) Sub-Group of Standing Committee on Export Finance 106 IECD.No.EFD.BC.59 & 60/C.297 P-83 20.06.83 Packing Credit Advances to Exporters of Deoiled and Defatted Cakes - Revised Directive 107 DBOD.No.ECC.BC. 143, 14 4/C.297 P-80 09.12.80 Pre-shipment Credit - Ceiling Rate of Interest - Directive 108 DBOD.No.ECC.BC.172/C. 297P-79 04.12.79 Export Credit - Export Credit and Guarantee Corporation Whole Turnover Post-shipment Export Credit Guarantee Scheme 109 DBOD.No.ACC.BC.107/C. 297P(C)-79 23.07.79 Duty Drawback Credit Scheme, 1976 - Adjustments in the Loan Accounts in the Prescribed Time 110 DBOD.No.ECC.BC.104/C. 297P- 14.07.79 Export Credit - Export Credit and Guarantee Corporation- Whole Turnover Post-shipment Guarantee Scheme 111 DBOD.No.ECC.BC.81/C.2 97P-79 05.06.79 Export Credit (Interest Subsidy) Scheme, 1968 – Repatriation of Proceeds to Cover Export Bills 62 DBOD - MC on Export Credit - 2009 112 DBOD.No.ECC.BC.73/C.2 97(O) (12)-79 02.06.79 Export Credit - Export of Diamonds 113 DBOD.No.ACC.BC.118/C. 297P(C)-79 07.04.79 Duty Drawback Credit....
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.... Advances 130 DBOD.ACC.BC.25/C.297 P (C)-76 21.02.76 Duty Drawbacks Credit Scheme, 1976- Advice to Banks to Verify the Bill of Lading, etc. at the time of Sanctioning Advances Under the Scheme 131 DBOD.ECC.BC.20/ C.297P-76 09.02.76 Pre- Shipment Credit -Advice to Banks to Grant Packing Credit Facilities to Jute Mills on the Basis of Cable Advices from Foreign Buyers 132 DBOD.ECC.BC.19/ C.297P-76 09.02.76 Pre-Shipment Credit Operational Flexibility Relaxation in regard to the Substitution of Contracts and Financing of Export through Export Houses /Agencies 133 DBOD.ECC.BC.16/ C.297L(LF)-76 06.02.76 Export Credit-Financing of Carpet Exporters - Advice to Banks to give Adequate Powers to Branch Managers/Regional Managers to Dispose of the Export Credit Proposals Promptly 134 DBOD.ECC.BC.12/ C.297(L-11)-76 27.01.76 Export Credit - Export of Consultancy Services -Advice to Banks to Extend Necessary Support 135 DBOD.ECC.BC.2/C.297L( 16)-76 07.01.76 Duty Drawback Credit Scheme, 1976 136 DBOD.ECC.BC.91/C.297 P-75 23.10.75 Export Credit - Export of Goods for Exhibition-cum-Sale - Concessional Rate of Interest to be Charged by Banks for Manufacture of Products for Sale a....
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....97P-70 12.01.70 Pre-shipment Credit Scheme - Export of Precious, Semi-precious Stones, Pearls and Synthetic Stones 65 DBOD - MC on Export Credit - 2009 149 DBOD.BM.1152/C.297(M) -69 11.07.69 Advances to Scheduled Banks under Section 17(3A) of RBI Act - Advances to Exporters who do not have Letters of Credit or Export Orders in their Own Name and who Route their Exports through State Trading Corporation, Minerals and Metals Trading Corporation and other Export Houses - Clarification 150 DBOD.BM.1064/C.297P- 69 01.07.69 Pre-shipment Credit Scheme in respect of Export of Diamonds 151 DBOD.BM.1040/C.297P- 69 27.06.69 Pre-shipment Credit Scheme-Advances to Tanners who Supply Leather Good to State Trading Corporation for Feeding Leather Articles to be Exported-To be treated as Packing Credit 152 DBOD.BM.984/C.297P-69 19.06.69 Pre-shipment Credit Scheme-Certain Advances to Construction Contractors to be treated as Packing Credit 153 DBOD.BM.682/C.297K-69 07.04.69 Export Credit -Charging of Interest 154 DBOD.BM.588/C.297A-69 26.03.69 Refinancing of Packing Credit Advances relating to Export of Ores through Minerals and Metals Trading Corporation 155 DBOD.BM.254/C....
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....gn Currency under Pre-shipment Credit in Foreign Currency (PCFC), and Export Bills Rediscounting Scheme (EBR) 14 IECD.No.EFD.40/04. 02.15/94-95 18.04.95 Pre-shipment Credit in Foreign Currency(PCFC) - Forward Exchange Cover 15 IECD.No.30/04.02.02/94 -95 14.12.94 Relaxations in the Area of Export Packing Credit 16 IECD.No.27/04.02.15/94 -95 14.11.94 Sharing of Packing Credit under PCFC IECD.No.21/04.02.01/20 01-02 67 DBOD - MC on Export Credit - 2009 17 IECD.No.13/04.02.02/94 -95 26.09.94 Pre-shipment Credit in Foreign Currency(PCFC) Scheme - Supplies from one EOU/EPZ Unit to another EOU/EPZ Unit 18 IECD.No.10/04.02.15/94 -95 03.09.94 Export Financing in Foreign Currencies 19 IECD.No.EFD.43/04. 02.15/93-94 18.05.94 Pre-shipment Credit in Foreign Currency(PCFC) - Extension of 'Running Account' Facility 20 IECD.No.EFD.37/04. 02.15/93-94 30.03.94 Pre-shipment Credit in Foreign Currency(PCFC) - Clarifications/ Relaxations 21 IECD.No.EFD.32/04. 02.11/93-94 03.03.94 Rediscount of Export Bills Abroad and Pre- shipment Credit in Foreign Currency (PCFC) - Withholding Tax 22 IECD.No.EFD.31/04. 02.15/93-94 03.03.94 Pre-shipment Credit in Foreign Currenc....
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....istics relating to Export Credit 16. IECD.No.EFD.27/04.02.02/95 -96 05.06.96 Statistics relating to Export Credit - Submission of Returns/Statements by Banks 17. ECD.No.EFD.48/04.02.02/94 -95 22.05.95 Statistics relating to Export Credit 18. IECD.No.9/04.02.02/94-95 29.08.94 Export Credit - Performance Indicator for Banks 69 DBOD - MC on Export Credit - 2009 19. IECD.No.EFD.45/04.02.02/93 -94 23.05.94 Statistics relating to Export Credit 20 IECD.No.EFD.22/04.02.02/93 -94 08.12.93 Report of the Committee on Structure of Export Credit - Streamlining of Sanctioning Procedure for Loans and Advances with Particular Reference to Export Credit 21. IECD.No.EFD.18/04.02.02/93 -94 20.10.93 Payment of Compensation to the Exporters in respect of Delayed Credit of Export Bills 22. IECD.No.EFD.18/819-POL/ ECR/92-93 26.12.92 Export Credit Target 23. IECD.No.8/EFD/819-POL- ECR/92-93 05.11.92 Delay in Sanction of Loan Limits to Borrowers with Particular Reference to Exporters 24. IECD.No.3/EFD/BC/819/POL- ECR/92-93 24.08.92 Statistics relating to Export Credit 25. DBOD.No.BP.BC.58/C.469- 91 07.12.91 Delays Experienced by the Exporters at Banks 26. IECD.No.EFD.....