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Master Circular - Rupee / Foreign Currency Export Credit and Customer Service to Exporters
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....oted that the Master Circular consolidates and updates all the instructions contained in the circulars listed in the Appendices, in so far they relate to providing export credit by banks to the exporters. This Master Circular also incorporates instructions contained in certain clarifications issued by RBI to banks / exporters / export organizations during the course of the year. The Master Circular has also been placed on the RBI web-site (www.rbi.org.in.). A copy of the revised Master Circular is enclosed. Yours faithfully, (A.K.Khound) Chief General Manager Encls: As above Department of Banking Operations and Development, Central Office, Centre 1, Cuffe Parade, Colaba, Mumbai - 400005 Tel No: 91-22-22189131 Fax No: 91-22-22150663 Email ID:[email protected] Master Circular RUPEE FOREIGN CURRENCY EXPORT CREDIT & CUSTOMER SERVICE TO EXPORTERS Sr.No. CONTENTS Particulars Page No. A Purpose 3 B C Classification Previous instructions consolidated 3 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 18 3 - Deemed Exports – Pres....
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....ds 11. ANNEX 1-Recommendations of the Working Group to Review Export Credit 12. ANNEX 2- Export Credit Data (Disbursement/ Outstandings) 13. ANNEX 3- Undertaking from Diamond Clients 14. Appendix I - Rupee Export Credit-Circulars 15. Appendix II - Export Credit in Foreign Currency-Circulars 16. Appendix III- Export Credit-Customer Service-Circulars DBOD - MC on Export Credit - 2010 INTRODUCTION Export Credit Scheme The RBI first introduced the scheme of Export Financing in 1967. The scheme is intended to make short-term working capital finance available to exporters at internationally comparable interest rates. Under the earlier scheme in force upto June 30, 2010, RBI fixed only the ceiling rate of interest for export credit while banks were 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 were 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 ma....
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....ted by submission of export documents within 360 days from the date of advance, the advances will cease to qualify for prescribed rate of interest for export credit to the exporter ab initio. RBI would provide refinance only for a period not exceeding 180 days as per instructions issued by RBI (MPD). 6 DBOD - MC on Export Credit - 2010 1.1.3 Disbursement of Packing Credit (i) Ordinarily, each packing credit sanctioned should be maintained as separate (ii) account for the purpose of monitoring period of sanction and end-use of funds. Banks may release the packing credit in one lump sum or in stages as per the requirement for executing the orders / LC. (iii) Banks may also maintain different accounts at various stages of processing, manufacturing etc. depending on the types of goods / services to be exported e.g. hypothecation, pledge, etc., accounts and may ensure that the outstanding balance in accounts are adjusted by transfer from one account to the other and finally by proceeds of relative export documents on purchase, discount etc. (iv) Banks should continue to keep a close watch on the end-use of the funds and ensure that credit at lower rates of interes....
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....sh or by sale of residual by-product oil within a period not exceeding 30 days from the date of advance to be eligible for concessional rate of interest. (iii) Banks have, however, operational flexibility to extend the following relaxations to their exporter clients who have a good track record: 8 DBOD - MC on Export Credit - 2010 a) Repayment / liquidation of packing credit with proceeds of export documents will continue; however, this could be with export documents relating to any other order covering the same or any other commodity exported by the exporter. While allowing substitution of contract in this way, banks should ensure that it is commercially necessary and unavoidable. Banks should also satisfy themselves about the valid reasons as to why packing credit extended for shipment of a particular commodity cannot be liquidated in the normal method. As far as possible, the substitution of contract should be allowed if the exporter maintains account with the same bank or it has the approval of the members of the consortium, if any. b) The existing packing credit may also be marked-off with proceeds of export documents against which no packing credit has been ....
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....marking off the pre-shipment credit in the manner indicated above, banks should ensure that export credit available in respect of individual pre-shipment credit does not go beyond the period of sanction or 360 days from the date of advance, whichever is earlier. (d) Packing credit can also be marked-off with proceeds of export documents against which no packing credit has been drawn by the exporter. (ii) If it is noticed that the exporter is found to be abusing the facility, the facility should be withdrawn forthwith. (iii) In cases where exporters have not complied with the terms and conditions, the advance will attract commercial lending rate ab initio. In such cases, banks will be required to pay higher rate of interest on the portion of refinance availed of by them from the RBI in respect of the relative pre-shipment credit. All such cases should be reported to the Monetary Policy Department, Reserve Bank of India, Central Office, Mumbai 400 001 which will decide the rate of interest to be charged on the refinance amount. 10 DBOD - MC on Export Credit - 2010 (iv) Running account facility should not be granted to sub-suppliers. 1.1.6 Interest on Packing Credit....
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....the supplier put together. (c) The export house should open inland L/Cs in favour of the supplier giving relevant particulars of the export L/Cs or orders and the outstandings in the packing credit account should be extinguished by negotiation of bills under such inland L/Cs. If it is inconvenient for the export house to open such inland L/Cs in favour of the supplier, the latter should draw bills on the export house in respect of the goods supplied for export and adjust packing credit advances from the proceeds of such bills. In case the bills drawn under such arrangement are not accompanied by bills of lading or other export documents, the bank should obtain through the supplier a certificate from the export house at the end of every quarter that the goods supplied under this arrangement have in fact been exported. The certificate should give particulars of the relative bills such as date, amount and the name of the bank through which the bills have been negotiated. (d) Banks should obtain an undertaking from the supplier that the advance payment, if any, received from the export house against the export order would be credited to the packing credit account. 1.2....
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.... (e) The scheme is an additional window besides the existing system of sharing of packing credit between EOH and manufacturer in respect of exported goods as detailed in paragraph 1.2.1 above. The scheme will cover only the first stage of production cycle. For example, a manufacturer exporter will be allowed to open domestic L/C in favour of his immediate suppliers of components etc. that are required for manufacture of exportable goods. The scheme will not be extended to cover suppliers of raw materials/components etc. to such immediate suppliers. In case the EOH is merely a trading house, the facility will be available commencing from the manufacturer to whom the order has been passed on by the Trading House. (f) EOUS/EPZ/SEZ units supplying goods to another EOU/EPZ/SEZ unit for export purposes are also eligible for rupee pre-shipment export credit under this scheme. However, the supplier EOU/EPZ/SEZ unit will not be eligible for any post-shipment facility as the scheme does not cover sale of goods on credit terms. (g) The scheme does not envisage any change in the total quantum of advance or period. Accordingly, the credit extended under the system will be treat....
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....s they apply to export of goods unless otherwise specified. A list of services is given in Appendix 10 of HBPv1. The financing bank should ensure that there is no double financing and the export credit is liquidated with remittances from abroad. 15 Banks may take into DBOD - MC on Export Credit - 2010 account the track record of the exporter/overseas counter party while sanctioning the export credit. The statement of export receivables from such service providers may be tallied with the statement of payables received from the overseas party. In view of the large number of categories of service exports with varied nature of business as well as in the environment of progressive deregulation where the matters with regard to micro management are left to be decided by the individual financing banks, the banks may formulate their own parameters to finance the service exporters. Exporters of services qualify for working capital export credit (pre and post shipment) for consumables, wages, supplies etc. Banks may ensure that – • The proposal is a genuine case of export of services. ◠◠• ◠• The item of service export is c....
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....he country to promote Agri Exports. Agri- Export Oriented Units (processing) are set up in Agri- Export zones as well as outside the zones and to promote such units, production and processing are to be integrated. The producer has to enter into contract farming with farmers and has to ensure supply of quality seeds, pesticides, micro-nutrients and other material to the group of farmers from whom the exporter would be purchasing the products as raw material for production of the final products for export. The Government, therefore, suggested that such export processing units may be provided packing credit under the extant guidelines for the purpose of procuring and supplying inputs to the farmers so that quality inputs are available to them which in turn will ensure that only good quality crops are raised. The exporters will be able to 17 DBOD - MC on Export Credit - 2010 ii. iii. iv. V. purchase / import such inputs in bulk, which will have the advantages of economies of scale. Banks may treat the inputs supplied to farmers by exporters as raw material for export and consider sanctioning the lines of credit/export credit to processors/exporters to cover the co....
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.... from proceeds of any other unfinanced (collection) bills. Such adjusted export bills should however continue to be followed up for realization of the export proceeds and will continue to be reported in the XOS statement. 2.4 Rupee Post-shipment Export Credit 2.4.1 Period i. ii. iii. In the case of demand bills, the period of advance shall be the Normal Transit Period (NTP) as specified by FEDAI. In case of usance bills, credit can be granted for a maximum duration of 365 days from date of shipment inclusive of Normal Transit Period (NTP) and grace period, if any. However, banks should closely monitor the need for extending post-shipment credit up to the permissible period of 365 days and they should persuade the exporters to realise the export proceeds within a shorter period. 'Normal transit period' means the average period normally involved from the date of negotiation / purchase / discount till the receipt of bill proceeds in the Nostro account of the bank concerned, as prescribed by FEDAI from time to 19 DBOD - MC on Export Credit - 2010 iv. time. It is not to be confused with the time taken for the arrival of goods at overseas destination. An overdue ....
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.... advised to arrange, as far as possible, provision of suitable guarantees, instead of retention money. c. Banks may consider, on a selective basis, granting of advances against retention money relating to the supplies portion of the contract taking into account, among others, the size of the retention money accumulated, its impact on the liquid funds position of the exporter and the past performance regarding the timely receipt of retention money. d. The payment of retention money may be secured by L/C or Bank Guarantee where possible. e. Where the retention money is payable within a period of one year from the date of shipment, according to the terms of the contract, banks should charge prescribed rate of interest up to a maximum period of 90 days. The rate of interest prescribed for the category 'ECNOS' at post-shipment stage may be charged for the period beyond 90 days. f. Where the retention money is payable after a period of one year from the date of shipment, according to the terms of the contract and the corresponding advance is extended for a period exceeding one year, it will be treated as post-shipment credit given on deferred payment terms exceeding one ....
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.... exporters: a. Consignments Exports to CIS and East European Countries b. Consignment exports to Russian Federation against repayment of State Credit in rupees. c. Exporters who have been certified as 'Status Holder' in terms of Foreign Trade Policy. d. 100 per cent Export Oriented Units and units set up under Electronic Hardware Technology Park, Software Technology Park and Bio-Technology Park Schemes. FED vide AP (DIR series) circular No.70 dated June 30, 2009 has extended the period of realization and repatriation of export proceeds from 6 months to 12 months, from the date of export, for a further period of one year i.e. upto June 30, 2010 subject to review. Further in case of Exports through the Warehouse-cum-Display Centres abroad realisation of export proceeds has been fixed upto 15 months from the date of shipment. Banks may extend post-shipment credit to such exporters for a longer period ab initio. Accordingly, the interest rate up to 180 days from the date of advance will be the rate applicable for usance bills for period up to 180 days. Beyond 180 days from the date of shipment, the banks are free to decide on the rate of interest. In case the sale ....
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....pting for the Whole Turnover Post-shipment Policy. The salient features of the scheme may be obtained from ECGC. As the post-shipment guarantee is mainly intended to benefit the banks, the cost of premium in respect of the Whole Turnover Post-shipment Guarantee taken out by banks may be absorbed by the banks and not passed on to the exporters. Where the risks are covered by the ECGC, banks should not slacken their efforts towards realisation of their dues against long outstanding export bills. 3. DEEMED EXPORTS - RUPEE EXPORT CREDIT AT PRESCRIBED RATES 3.1 Banks are permitted to extend rupee pre-shipment and post-supply rupee export credit at prescribed rate of interest to parties against orders for supplies in respect of projects aided/financed by bilateral or multilateral agencies/funds (including World Bank, IBRD, IDA), as notified from time to time by Department of Economic Affairs, Ministry of Finance under the Chapter "Deemed Exports" in Foreign Trade Policy, which are eligible for grant of normal export benefits by Government of India. 3.2 3.3 Packing Credit provided should be adjusted from free foreign exchange representing payment for the suppliers of g....
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....ble with effect from July 1, 2010. Accordingly, interest rates applicable for all tenors of rupee export credit advances sanctioned on or after July 01, 2010 will be at or above Base Rate. Interest Rates under the BPLR system effective upto June 30, 2010 will be 'not exceeding BPLR minus 2.5 percentage points per annum' for the following categories of Export Credit: 1. 2. Categories of Export Credit Pre-shipment Credit (from the date of advance) (a) Up to 270 days (b)Against incentives receivable from Government covered by ECGC Guarantee up to 90 days Post-shipment Credit (from the date of advance) (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) i) Up to 180 days ii) Up to 365 days for exporters under the Gold Card Scheme. (c) Against incentives receivable from Govt. (covered by ECGC Guarantee) up to 90 days (d) Against undrawn balances (up to 90 days) (e) Against retention money (for supplies portion only) payable within one year from the date of shipment (up to 90 days) 27 DBOD - MC on ....
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....n relative packing credit domestic lending rate plus penal rate of interest, if any, to be decided by the banks on the basis of a transparent policy approved by their Board. 4.2.4 Interest on Post-shipment Credit Early payment of export bills Ä°. ii. In the case of advances against demand bills, if the bills are realised before the expiry of the normal transit period (NTP), interest at the prescribed rate shall be charged from the date of advance till the date of realisation of such bills. The date of realisation of demand bills for this purpose would be the date on which the proceeds get credited to the banks' Nostro accounts. In the case of advance/credit against usance export bills, interest at prescribed rate may be charged only up to the notional/actual due date or the date on which export proceeds get credited to the bank's Nostro account abroad, whichever is earlier, irrespective of the date of credit to the borrower's/exporter's account in India. In cases where the correct due date can be established before/immediately after availment of credit due to acceptance by overseas buyer or otherwise, prescribed interest can be applied only up to the actual due....
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....hat the ECGC admit the claims to the extent of 90 percent/75 percent and the exporters have to bring the balance 10 percent/25 percent from their own rupee resources. b. In a case where interest has been charged at commercial rate or 'ECNOS', if export proceeds are realised in an approved manner subsequently, the bank may refund to the borrower the excess amount representing difference between the quantum of interest already charged and interest that is chargeable taking into account the said realisation after ensuring the fact of such realisation with satisfactory evidence. While making adjustments of accounts it would be better if the possibility of refund of excess interest is brought to the notice of the borrower. 4.2.7 Change of Tenor of Bill Ä°. ii. Banks have been permitted by RBI (FED) on request from exporters, to allow change of the tenor of the original buyer/ consignee, provided inter alia, the revised due date of payment does not fall beyond the maximum period prescribed by FED for realization of export proceeds. In such cases as well as where change of tenor up to twelve months from the date of shipment has been allowed, it would be in order for ba....
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....dit up to 180 days on the outstanding amount for the period December 1, 2008 to September 30, 2009. This scheme was subsequently extended upto March 31, 2010. In April 2010, the Government of India has announced the third scheme of subvention of 2 percentage points for certain employment oriented export sectors viz. Handicrafts, Carpets, Handlooms and Small & Medium Enterprises (SME) for the period April 1, 2010 to March 31, 2011, subject to the condition that banks will charge interest rate not exceeding BPLR minus 4.5 percentage points on pre- shipment credit up to 270 days and post-shipment credit up to 180 days on the outstanding amount for the above period to these sectors. However, the total subvention is subject to the condition that the interest rate, after subvention will not 32 DBOD - MC on Export Credit - 2010 fall below 7 per cent, which is the rate applicable to the short term crop loan under priority sector lending. With the change over to the Base Rate System, the interest rates applicable for all tenors of rupee export credit advances with effect from July 1, 2010 will be at or above Base Rate in respect of all fresh/renewed advances as advised vide....
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.... an export order invoiced in another convertible currency. For example, an exporter can avail of PCFC in US Dollar against an export order invoiced in Euro. The risk and cost of cross currency 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. ii. 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. 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 34 DBOD - MC on Export Credit - 2010 iii. iv. V. maintaining maximum ....
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.... 3, 6 and 12 months. Banks may quote rates on the basis of standard period if PCFC is required for periods less than 6 months. However, while quoting rates for non-standard period, banks should ensure that the rate quoted is below the next upper standard period rate. anks 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 Ä°. he 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. urther extension will be subject to the terms and conditions fixed by the bank 30 DBOD - MC on Export Credit - 2010 T B T F iii. 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 ....
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....cannot be liquidated in the normal method. As far as possible, the substitution of contract should be allowed if the exporter maintains account with the same bank or it has the approval of the members of the consortium, if any. 5.1.8 Cancellation/Non-execution of Export Order i. In case of 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 38 DBOD - MC on Export Credit - 2010 ii. (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. 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. iii. Ba nks may extend PCFC to such exporters subsequently....
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....re permitted to allow customers to seek cover in any permitted currency of their choice which is actively traded in the market, subject to ensuring that 40 DBOD - MC on Export Credit - 2010 iii. the customer is exposed to exchange risk in a permitted currency in the underlying transaction. Wh ile allowing forward contracts under the scheme, banks may 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 Ä°. T he rupee export packing credit is allowed to be shared between an export order holder and the manufacturer of the goods to be exported. Similarly, banks may extend PCFC also to the manufacturer on the basis of the disclaimer from the export order holder through his bank. ii. P iii. CFC 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 ....
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....f PCFC should be shown separately from the export credit figures reported for the purpose of drawing export credit refinance. 5.1.15 Other Aspects Ä°. ii. iii. iv. The applicable benefits such as credit of eligible percentage of export proceeds to EEFC Account etc. to the exporters will accrue only after realisation of the export bills and not at the stage of conversion of pre- shipment credit to post-shipment credit (except when bills are discounted/ rediscounted 'without recourse'). 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. ECGC cover will be available in rupees only, whereas PCFC is in foreign currency. 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 2009-2014, firms/companies dealing in purchase/sale of rough or cut and polished diamonds, diamond studded jewellery, with good track record of at least two years in import or export of diamonds with an annual average turnover of Rs. 3 ....
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....by him for this purpose. Discounting of export bills will be routed through designated bank / authorized dealer from whom the packing credit facility has been availed of. In case, these are routed through any other bank, the latter will first arrange to adjust the amount outstanding under packing credit with the concerned bank out of the proceeds of the rediscounted bills. The limits granted to banks by overseas banks/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 Ä°. ii. he 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. T iii. iv. he facility under the Scheme of Rediscounting may be offered in any convertible currency. anks are permitted to extend the EBR facility fo....
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....acility. Therefore, the bills may be rediscounted 'with recourse'. However, if an AD is in a position to arrange 'without recourse' facility on competitive terms, it is permitted to avail itself of such a facility. 6.1.6 Accounting Aspects i. Th e Rupee equivalent of the discounted value of the export bills will be payable to the exporter and the same should be utilised to liquidate the outstanding export packing credit. ii. As iii. iv. V. 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. Th e Rupee equivalents of discounted amounts/foreign exchange loan may be held in the bank's books distinct from the existing post-shipment credit accounts. 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. Int erest rate as per RBI interest rate directive for post-shipment credit in rupees will be applicable from the date of crystallisation. 47 DBOD - MC on Export Credit - 2010 vi. In the event of export bill not being paid, it will b....
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.... the schemes of 'Pre-shipment Credit in Foreign Currency' (PCFC) and 'Rediscounting of Export Bills Abroad' (EBR), banks are permitted to fix the rates of interest with reference to ruling LIBOR, EURO LIBOR or EURIBOR, wherever applicable, as under: Type of Credit (i) Pre-shipment Credit (a) Up to 180 days (ii) (b) Beyond 180 days and up to 360 days Post-shipment Credit Interest Rate (Percent Per annum) Not exceeding 200 basis points over LIBOR/EURO LIBOR/EURIBOR 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 (a) On demand bills for transit period (as Not exceeding 200 basis specified by FEDAI) points over LIBOR/EURO LIBOR/EURIBOR (b) Against usance bills (credit for total Not exceeding 200 basis 49 DBOD - MC on Export Credit - 2010 8. period comprising usance period of points over LIBOR/EURO export bills, transit period as specified LIBOR/EURIBOR by FEDAI and grace period wherever applicable) Up to 6 months from the date of shipment (c) Export Bills (Demand or Usance) realized after due date but up to date of crystallization Rate for (ii) (b) above plus ....
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....ncluding those in the small and medium sectors who satisfy the laid down conditions. The scheme will not be applicable for exporters blacklisted by ECGC or having overdue bills in excess of 10% of the previous year's turnover. Gold Card holder exporters, depending on their track record and credit worthiness, will be granted better terms of credit including rates of interest than those extended to other exporters by the banks. Applications for credit will be processed at norms simpler and under a process faster than for other exporters. Banks would clearly specify the benefits they would be offering to Gold Card holders. 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. 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 51 DBOD - MC on Export Credit - 2010 ix. X. xi. xii. xiii. xiv. XV. xvi. anticipated export turnover and track record of the exporter the banks may determine need-based finance with a liberal approach. 'In-principle' limi....
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....5 per cent window of overseas borrowings.) 8.1.4 Delay in crediting the Proceeds of Export Bills Drawn in Foreign Currency Delays are observed in passing on the credit of export bills drawn in foreign currency to the exporters after the foreign currency amounts are credited to the 'Nostro' accounts of the banks. Although there are instructions that the prescribed post-shipment interest rate will cease from the date of credit to the 'Nostro' account, the credit limits enjoyed 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 Ä°. 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. 53 DBOD - MC on Export Credit - 2010 ii. iii. Banks should devise a system to monitor timely credit of the export proceeds to the expor....
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....n departments/specialized branches to ensure prompt and timely disposal of cases pertaining to exporters. It is necessary to submit a review note at quarterly intervals to the Board on the position of sanction of credit limits to exporters. The note may cover among other things, number of applications (with quantum of credit) sanctioned within the prescribed time-frame, number of cases sanctioned with delay and pending sanction explaining reasons therefor. 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, applicable to Rupee export credit as well as export credit in Foreign Currency, may be brought into effect. 8.3.2 Guidelines Ä°. a. 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 to seek outside professional help to fill in the application form or to furnish data required by the banks. 55 DBOD - MC on Export Credit - 2010 b. Banks should adopt an....
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....nitio, submission of order/LC in respect of exporters with good track record and put in place the system of obtaining periodical statement of outstanding orders/LCs on hand. The same may be incorporated in the sanction proposals as well as in the sanction letters issued to exporters and appropriately brought to the notice of ECGC. Further, if such waivers are permitted at a time subsequent to sanction of export credit limits with the approval of the appropriate authority, the same may be incorporated in the terms of sanction by way of amendments and communicated to ECGC. 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 altern....
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....est rates being available for deemed exports and ensure that operating staff are adequately sensitized in this regard. Officers at operating level should be provided with adequate training. In the matter of transfer of officials from critical branches dealing in export credit, banks should ensure that the new incumbents posted possess adequate knowledge/exposure in the areas of forex as well as export credit to avoid delays in processing/sanctioning of export credit limits and thereby subjecting exporters to the risk of cancellation of export orders. vii. Customer Education a. 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. b. 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 impleme....
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....sis of the quarterly data submitted by the banks to Reserve Bank of India, Department of Banking Supervision, Central Office, OSMOS Division, Mumbai. 9.1.2 Banks should endeavour to reach a level of export credit equivalent to 12 percent of the bank's Adjusted Net Bank Credit (ANBC). Where banks have already provided export credit to the extent of 12 percent, endeavour should be made to increase the same to a higher level and ensure that there is no fall in the ratio. No worthwhile export order should be denied export credit from the banks. * (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), whichever is higher. The OBE for a number of banks (most of them foreign banks) was at a much higher level. Further, FCNR (B) deposits and NRNR deposits are not deducted from NBC.) 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 rais....
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.... Review of the existing procedure for export credit (i) (ii) (iii) (iv) (V) There is a need for attitudinal change in the approach of banks' officials in dealing with small and medium exporters. Banks may take suitable steps in this regard. Banks should put in place a control and reporting mechanism to ensure that the applications for export credit especially from Small and Medium Exporters are disposed of within the prescribed time frame. While processing applications for Export Credit, banks should raise all queries in one shot in order to avoid delays in sanctioning credit. 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. 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 pr....
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.... (last reporting Friday of the quarter ended March/June/September/December) for all Exporters : Disbursement during the Quarter ( Amount in Rs. crore) Balance outstanding as on the last reporting Friday of the Quarter Pre-shipment Pre-shipment Post shipment Credit Post - shipment Credit Credit Credit Rupee Rupe Deferred Other EBR Rupe PCFC Rupee Defer Other EB Credit PCFC e pay- Govt. e Credit red Govt R Credit ments Pay- ments Credit paym Pay- ents ments Out of above, disbursals and balance outstanding in respect of Gold Card Holders : Total No. of gold cards issued till the end of the Quarter : Disbursement during the Quarter (for Gold Card Holders) (Amount in Rs. crore) Balance outstanding as on the last reporting Friday of the Quarter (For Gold Card Holders) Pre- Pre- shipment Post shipment Credit shipment Post - shipment Credit Credit Credit Rupe PCFC Rupe EB Deferr- e Credit e Credit R ed Other Govt. Rupe PCF e C Rupee Credit EBR Deferr Other ed Govt pay- pay- Credit pay- Pay- ments ment ment ments S (a) The amount of bills discounted/rediscounted under EBR Scheme on 'without recourse' basis sho....
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....ir.(Exp) 28.04.2009 No.131/04.02.01/2008-09 7. DBOD.Dir.(Exp) 16.12.2008 No.10/04.02.01/2008-09 8. DBOD.Dir.(Exp) 08.12.2008 No.95/04.02.01/2008-09 9. DBOD.Dir.(Exp) 28.11.2008 No.88/04.02.01/2008-09 10. DBOD.Dir.(Exp) 15.11.2008 No.80/04.02.01/2008-09 11. DBOD.Dir.(Exp) 07.11.2008 24.10.2008 No.77/04.02.01/2008-09 12. DBOD.Dir.(Exp) No.68/04.02.01/2008-09 13. DBOD.Dir.(Exp)BC No.77/04.02.01/2007-08 14. DBOD.Dir.(Exp)BC No.73/04.02.01/2007-08 15. DBOD.Dir.(Exp)BC No.54/04.02.01/2007-08 16. DBOD.Dir.(Exp)BC No.41/04.02.01/2007-08 17. DBOD.Dir.(Exp)BC No.34B/04.02.01/2007-08 18. DBOD.Dir.(Exp)BC No.22/04.02.01/2007-08 28.04.2008 25.04.2008 30.11.2007 29.10.2007 06.10.2007 13.07.2007 Rupee Export Credit Interest Rates Subvention Rupee Export Credit Interest Rates Extension of period Master Circular on Rupee /Foreign Currency Export Credit & Customer Service to Exporters Rupee Export Credit Interest Rates Extension of period Rupee Export Credit Interest Rates Subvention Rupee Export Credit Interest Rates Interest on overdue Export bills Rupee Export Credit Interest Rates Extension of post-shipment period of credit Rupee Export C....
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....st Rates 2000 39. IECD.No.14/04.02.02/ 17.05.2000 1999-2000 Consignment Exports to Russian Federation against Repayment of State Credits - Interest Rates shipment Credit in Rupees on Post- 68 DBOD - MC on Export Credit - 2010 Sr. No. Circular No. Date Subject 41. IECD.No.6/04.02.01/ 40. IECD.No. 12/04.02.01/ 1999-2000 99-2000 15.03.2000 Export Credit Interest Rate - Clarifications 29.10.99 Export Credit - Interest Rates 42. IECD.No.23/04.02.01/ 12.04.99 98-99 Change of Tenor of Bill - Applicability of Concessional Rate of Interest 43. IECD.No. 19/04.02.01/ 03.03.99 Export Credit - Interest Rates 98-99 44. IECD.No.16/04.02.01/ 25.02.99 98-99 45. IECD.No.11/04.02.01/ 13.01.99 98-99 46. IECD.No.6/08.12.01/ 08.08.98 98-99 Advance against Duty Drawback Claims Export Credit - Floriculture, Grapes and Other Agro Products Guidelines for Sanction of Working Capital Finance to Information Technology (IT) and Software Industry 47. IECD.No.5/04.02.01/ 06.08.98 Export Credit - Interest Rates 98-99 48. IECD.No.41/04.02.01/ 29.04.98 Export Credit - Interest Rates 97-98 49. IECD.No.38/04.02.02/ 02.03.98 97-98 50. IECD.No.32/04.02.01/ ....
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....C/819/ 29.02.92 POL-ECR/91-92 Interest Rates for Post-shipment Export Credit on Medium and Long Term Basis (Deferred Credit for the Period beyond 180 days) Interest Rates on Advances Post- shipment Export Rupee Credit Relaxations in the Area of Export Packing Credit Inland Export L/C System Covering the Sub-suppliers to an Export Order Export Packing Credit - Relaxations in Interest Rates Liquidation of Export Packing Credit Extension of Concessive Credit for Deemed Exports-List of Multilateral/ Bilateral Agencies/Funds Consignment Exports to CIS and East European Countries - Interest Rates on Post-shipment Credit Extension of Concessive Export Credit for Deemed Exports - List of Multilateral or Bilateral Agencies/ Funds Extension of Concessive Export Credit for Deemed Exports Export Finance for Storing and Sale through Warehouses Abroad Extension of Pre-shipment Credit Running Account ECR/91-92 Facility Pre-shipment Credit for Periods Beyond 180 Days Interest Rates on Export Credit 70 DBOD - MC on Export Credit - 2010 Sr. No. 79. Circular No. Date Subject 25.01.92 Packing Credit - Running Account Facility IECD.No.47/EFD/BC/819/ POL-E....
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....r.BC.23/C.96- 28.02.86 86 102 IECD.No.EFD.BC.133/015 21.11.85 -EOU-85 103 IECD.No.EFD.BC.127/819 08.10.85 -POL- ECR-85 104 IECD.No.EFD.BC.109/819 27.03.85 -POL- ECR-85 105 IECD.No. EFD.BC.103/819 04.02.85 -POL-ECR-85 106 IECD.No.EFD.BC.102/819 28.01.85 -POL-ECR-85 107 IECD.No. EFD.BC.86/C.81 15.03.84 9-POL-ECR-84 108 IECD.No.EFD.BC.80/015. EOU.84 19.01.84 109 IECD.No.EFD.BC.75/C.29 06.12.83 7(P)--83 110 IECD.No.EFD.BC.59 60/C.297 P-83 & 20.06.83 111 DBOD.No. ECC.BC.143,14 09.12.80 4/C.297 P-80 Subject Export Credit (Interest Subsidy) Scheme, 1968 -Packing Credit relating to the Export of Cashew nuts and Other Agro-based Products Export Credit Guarantee Corporation of India Ltd. (ECGC) - Realisation of Long Outstanding Export Bills - Recovery Efforts by Banks Export Credit (Interest Subsidy) Scheme, 1968 - Clarification regarding 'Normal Transit Period' Export Credit (Interest Subsidy) - Scheme, 1968 – Pre-shipment Advance - Concessive Rate of Interest Export Credit (Interest Subsidy) Scheme, 1968 -Interest on Advances against Demand Bills Pre-shipment Finance for Exports Export Credit to 100 percent Export Oriented Units (EOUS) ....
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....n Zones Duty Drawback Credit Scheme, 1976- Credit to Loan Account of Borrowing Bank by way of Adjustment towards Repayment of Advances made by RBI Export Credit- Banks Advised to Obtain Clearance for Issuing Bid Bonds / Guarantees from Working Group- Overseas Construction Contracts Export Credit- Regarding Bank Finance for Export Of Diamonds Export Credit-Ceiling Rate on Interest- Directives Export Credit- Guidelines for Financing Overseas Construction Contracts Post-shipment Credit Given on Deferred Payment Terms- Export Of Capital and Producer Goods-High Value Engineering and Equipment Goods 73 DBOD - MC on Export Credit - 2010 Sr. No. Circular No. Date 128 DBOD.ACC.BC.52/C.297 25.05.77 P(C)-77 129 DBOD.ECC.BC.31/C297M 29.03.77 -77. 130 DBOD.ECC.BC.8/ C.297M-77 13.01.77 131 DBOD.ECC.BC.154/C.297 27.12.76 P-76 132 DBOD.ACC.BC.66/ 23.06.76 C.297P (C)-76 133 DBOD.ECC.BC.38/C.297 22.03.76 P-76 134 DBOD.ACC.BC.25/C.297 21.02.76 P (C)-76 135 DBOD.ECC.BC.20/ 09.02.76 C.297P-76 136 DBOD.ECC.BC.19/ C.297P-76 137 DBOD.ECC.BC.16/ C.297L(LF)-76 09.02.76 06.02.76 74 Subject Duty Drawbacks Credit Scheme, 1976- Advice to Banks to Fix Limits....
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....terest at a Concessional Ceiling Rate of 8 percent p.a. for a Period Exceeding One Year Export Credit - Advice to Banks to Keep a Close Watch On the Utilisation of Export Credit with Reference to both the Quantum and the Period Pre-shipment Credit Scheme and Export Credit (Interest Subsidy) Scheme, 1968 Packing Credit Facilities against Supplies to IBRD/IDA/ UNICEF aided Projects/Programmes in India Eligible for both for Refinance and Interest Subsidy - Pre-shipment Credit Scheme - Export of Precious and Semi-precious Stones, Pearls and Synthetic Stones Clarification that Packing Credit Advances may be Adjusted by Transfer of the Outstanding Balance to a Special (Post-shipment) Account Packing Credit Advances to Miners of Iron Ore in Goa who Supply Ore to Exporters for Export Pre-shipment Credit Scheme and Export Credit (Interest Subsidy) Scheme, 1968 - Cash Incentives, Duty Drawbacks, etc. - regarding ECGC Scheme Clarification 15 75 DBOD - MC on Export Credit - 2010 Sr. No. Circular No. Date 148 DBOD.BM.BC.74/C.297 30.08.72 (M)-72 149 DBOD.BM.BC.70/C.297P- 09.08.72 72 150 DBOD.BM.BC.62/C.297 (M)-71 21.05.71 151 DBOD.Sch.BC.51/C.96-71 ....
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....it Advances relating to Export of Cashew nuts-Stage from which Maximum Rate Interest applicable-Further of Clarification Packing Credit Facilities relating to Export of Cashew nuts Packing Credit Facilities relating to Export of Cashew nuts 27.06.68 C.297A- 18.05.68 BM.558/C.297A- 06.04.68 13.03.63 Export Bills Packing Credit Facilities to Exporters Credit Scheme-Salient Features of the Scheme-Procedure 77 14 DBOD - MC on Export Credit - 2010 List of Circulars consolidated by the Master Circular on EXPORT CREDIT IN FOREIGN CURRENCY No. Circular No. 1. DBOD.DIR.(Exp).No. 76/04.02.001/2009-10 Date 19.2.2010 2. DBOD.DIR.(Exp).BC.No. 1.07.2009 07/04.02.02/2009-10 3. DBOD.Dir (Exp)No107/ 05.02.09 04.02.01/2008-09 Subject Appendix II Interest Rates on Export Credit in Foreign Currency Master Circular on Rupee /Foreign Currency Export Credit & Customer Service to Exporters Interest Rates on Export Credit in Foreign Currency Interest Rates on Export Credit in Foreign Currency Foreign Currency loans to Exporters- |Periodicity of charging interest Gold Card Scheme for Exporters 4. DBOD.Dir (Exp)No78/ 18.04.06 04.02.01/2005-06 5. DBOD.IECS.No.66....
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....C) - Withholding Tax Credit in Foreign Extension of 'Running Foreign Account' Facility for Export of Diamonds Credit in Currency (PCFC) - Clarifications |Pre-shipment Credit in Foreign Currency Rediscounting of Export Bills Abroad 02.11/93-94 12 79 DBOD - MC on Export Credit - 2010 No. Appendix III List of Circulars consolidated by the Master Circular on EXPORT CREDIT - CUSTOMER SERVICE Circular No. Date 1.07.2009 DBOD.DIR.(Exp).BC.No. 1. 07/04.02.02/2009-10 DBOD.Dir.(Exp)BC.No.38/04. 2. 14.11.06 02.01/ (WG)/2006-07 DBOD.Dir.(Exp)BC.No.61/04. 3. 07.02.06 02.01/ (WG)/2005-06 DBOD.IECS.No.43/04.02.10/2 4. 17.09.04 004-05 IECD. No. 14/01.01.43/2003- 5. 30.06.04 04 6. IECD No. 12/04.02.02/2003- 04 18.05.04 IECD No. 13/04.02.01/2003- 7. 18.05.04 04 8. ECD.No.23/04.02.02/2001-02 07.05.02 9. IECD No.21/04.02.01/2001-02 29.04.02 10. IECD.No.3/04.02.02/2001-02 30.08.01 05.12.2000 |IECD.No.7/04.02.02/2000- 11. 2001 |IECD.No.4/04.02.02/2000- 12. 10.10.2000 2001 IECD.No.1/04.02.02/2000- 13. 13.07.2000 2001 14. IECD.No.3/04.02.01/99-2000 07.09.99 15. IECD.No.17/04.02.01/98-99 28.02.99 Subject Master Circular on Rupee /Foreign ....