TaxTMI 
TaxTMI 
Master Circular - Rupee / Foreign Currency Export Credit and Customer Service to Exporters
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....ed July 1, 2009 on the captioned subject which is now updated up to 30th June 2010. It may be noted 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....
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....redit in Foreign Currency 7. Interest on Export Credit in Foreign Currency PART - C Export Credit Customer Service, Simplification of Procedures for Delivery and Reporting Requirements 8. Customer service and simplification of procedures 9. Reporting requirements 10. Pre-shipment credit to diamond exporters- conflict diamonds 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 r....
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....the individual case, such as the time required for procuring, manufacturing or processing (where necessary) and shipping the relative goods / rendering of services. It is primarily for the banks to decide the period for which a packing credit advance may be given, having regard to the various relevant factors so that the period is sufficient to enable the exporter to ship the goods / render the services. If pre-shipment advances are not adjusted 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 di....
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....red to charge commercial rate of interest applicable to the domestic advance from the date of advance of packing credit and that portion of the packing credit would not be eligible for any refinance from RBI. c) Export of deoiled/defatted cakes Banks are permitted to grant packing credit advance to exporters of HPS groundnut and deoiled / defatted cakes to the extent of the value of raw materials required even though the value thereof exceeds the value of the export order. The advance in excess of the export order is required to be adjusted either in cash 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 su....
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.... extend the 'Running Account' facility only to those exporters whose track record has been good as also to Export Oriented Units (EOUS)/ Units in Free Trade Zones / Export Processing Zones (EPZs) and Special Economic Zones (SEZS) (b) In all cases where Pre-shipment Credit 'Running Account' facility has been extended, letters of credit / firm orders should be produced within a reasonable period of time to be decided by the banks. (c) Banks should mark off individual export bills, as and when they are received for negotiation / collection, against the earliest outstanding pre-shipment credit on 'First In First Out' (FIFO) basis. Needless to add that, while 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 facil....
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.... on Export Credit - 2010 (a) Banks should obtain from the export house a letter setting out the details of the export order and the portion thereof to be executed by the supplier and also certifying that the export house has not obtained and will not ask for packing credit in respect of such portion of the order as is to be executed by the supplier. (b) Banks should, after mutual consultations and taking into account the export requirements of the two parties, apportion between the two i.e. the Export House and the Supplier, the period of packing credit for which the concessionary rate of interest is to be charged. The concessionary rates of interest on the pre-shipment credit will be available up to the stipulated periods in respect of the export house/agency and 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, th....
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....x the minimum amount for opening such L/Cs. The total period of packing credit availed by the sub-supplier (s), individually or severally and the EOH should be within normal cycle of production required for the exported goods. Normally, the total period will be computed from the date of first drawal of packing credit by any one of the sub-suppliers to the date of submission of export documents by EOH. (d) The EOH will be responsible for exporting the goods as per export order or overseas L/C and any delay in the process will subject him to the penal provisions issued from time to time. Once the sub-supplier makes available the goods as per inland L/C terms to the EOH, his obligation of performance under 13 DBOD - MC on Export Credit - 2010 the scheme will be treated as complied with and the penal provisions will not be applicable to him for delay by EOH, if any. (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 man....
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....tc. The advances should be adjusted within 365 days of the date of advance by negotiation of bills relating to the contract or by remittances received from abroad in respect of the contract executed abroad. To the extent the outstandings in the account are not adjusted in the stipulated manner, banks may charge normal rate of interest on such advance. The exporters undertaking project export contracts including export of services may comply with the guidelines/instructions issued by Reserve Bank of India, Foreign Exchange Department, Central Office, Mumbai from time to time. 1.2.4 Export of Services Pre-shipment and post-shipment finance may be provided to exporters of all the 161 tradable services covered under the General Agreement on Trade in Services (GATS) where payment for such services is received in free foreign exchange as stated at Chapter 3 of the Foreign Trade Policy 2009-14. All provisions of this circular shall apply mutatis mutandis to export of services as 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 d....
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....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, grapes and other agro-based products, banks are allowed to extend concessional credit for working capital purposes in respect of export-related activities of all agro- based products including purchase of fertilizers, pesticides and other inputs for growing of flowers, grapes etc., provided banks are in a position to clearly identify such activities as export-related and satisfy themselves of the export potential thereof, and that the activities are not covered by direct/indirect finance schemes of NABARD or any other agency, subject to the normal terms & conditions relating to packing credit such as period, quantum, liquidation etc. iii. Export credit should not be extended for investments, such as, import of foreign technology, equipment, land development etc. or any other item which cannot be regarded as working capital. 1.2.6 Export Credit to Processors/Exporters-Agri-Export Zones i. Government of India has set up Agri- Export Zones in the country to promote Agri Export....
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....ranted 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 loan or advance granted to an exporter, in consideration of, or on the security of any duty drawback allowed by the Government from time to time. As 18 DBOD - MC on Export Credit - 2010 per the current instructions of FED, the period prescribed for realisation of export proceeds is 12 months from the date of shipment. 2.2 Types of Post-shipment Credits: Post-shipment advance can mainly take the form of - (i) Export bills purchased/discounted/negotiated. (ii) Advances against bills for collection. (iii) Advances against duty drawback receivable from Government. 2.3 Liquidation of Post-shipment Credit: Post-shipment credit is to be liquidated by the proceeds of export bills received from abroad in respect of goods exported / services rendered. Further, subject to mutual agreement between the exporter and the banker it can also be repaid / prepaid ....
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....m 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 against Retention Money (i) In the case of turnkey projects/construction contracts, progressive payments are made by the overseas employer in respect of services segment of the 20 DBOD - MC on Export Credit - 2010 (ii) (iii) contract, retaining a small percentage of the progressive payments as retention money which is payable after expiry of the stipulated period from the date of the completion of the contract, subject to obtention of certificate(s) from the specified authority. Retention money may also be sometimes stipulated against the supplies portion in the case of turn-key projects. It may like-wise arise in the case of sub-contracts. The payment of retention money is contingent in nature as it is a defect liability. The following gui....
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....ays is granted by the Foreign Exchange Department (FED) for repatriation of export proceeds, banks will charge appropriate prescribed 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 remittances received from abroad within a period of 365 days from the date of advance. Banks may, therefore, adjust packing credit advances in the case of consignment exports, as soon as export takes place, by transfer of the outstanding balance to a special (post-shipment) account which in turn, should be adjusted as soon as the relative proceeds are received from abroad but not later than 365 days from the date of export or such extended period as may be permitted by Foreign Exchange Department, 22 DBOD - MC on Export Credit - 2010 Reserve Bank of India. Balance in the special (post-shipment) account will not be eligible for refinance from RBI. (iii) Extensi....
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....d 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 2.5.1 2.5.2 2.5.3 2.6 Post-shipment Advances against Duty Drawback Entitlements 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. The advance against duty drawback receivables can also be made available to exporters against export promotion copy of the shipping bill containing the EGM Number issued by the Customs Department. Where necessary, the financing bank may have its lien noted with the designated bank and arrangements may be made with the designated bank to transfer funds to the financing bank as and when duty drawback is credited by the Customs. These advances granted against duty drawback entitlements would be eligible for concessional rate of interest and refinance from RBI ....
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.... 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. 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 For the period upto June 30, 2010, a ceiling rate had been prescribed for rupee export credit linked to Benchmark Prime Lending Rates (BPLRs) of individual banks available to their domestic borrowers. Banks had, therefore, freedom to decide the actual rates to be charged within the specified ceilings. Further, the ceiling interest rates for different time buckets under any category of export credit should be on the basis of the BPLR relevant for the entire tenor of export credit. The Base Rate System will be app....
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....g advances for the remaining period of credit, unless otherwise specified. 4.2.3 Interest on Pre-shipment Credit Ä°. Banks should charge interest on pre-shipment credit up to 270 days at the rate to be decided by the bank within the ceiling 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. This guideline is applicable upto June 30, 2010. The Base Rate System will be applicable from July 1, 2010 and 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. ii. iii. 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 prescribed rate of interest for export credit ab initio. 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 wi....
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....interest collected for the period from the date of realisation to the last date of NTP/notional due date/actual due date should be refunded to the borrowers. 4.2.5 Overdue Export Bills under the BPLR system i. ii. In case of export bills, the rate of interest decided by the bank within the ceiling rate stipulated by RBI will apply up to the due date of the bill (up to NTP in case of demand bill and specified period in case of usance bills). For the period beyond the due date viz. for the overdue period, the prescribed interest rate as applicable to post-shipment rupee export credit (not exceeding BPLR minus 2.5 percentage points) may be applied up to 180 days 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....
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.... per annum on rupee export credit availed of by exporters in nine specified categories of exports, viz., textiles 31 DBOD - MC on Export Credit - 2010 (including handlooms), readymade garments, leather products, handicrafts, engineering products, processed agricultural products, marine products, sports goods and toys and to all exporters from the SME sector defined as micro enterprises, small enterprises and medium enterprises for a period from April 1, 2007 to September 30, 2008. The coverage was extended to include jute and carpets, processed cashew, coffee and tea, solvent extracted de-oiled cake, plastics and linoleum. Further, in respect of leather and leather manufactures, 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 addition to the 2 per cent offered earlier) in pre-shipment credit for 180 days and post-shipment credit for 90 days (for carpet sector, the pre-shipment credit would be available for 270 days). Accordingly, banks would charge interest rate not exceeding BPLR....
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....e amount of subvention available. If, as a consequence, the interest rate charged to exporters goes below the Base Rate, such lending will not be construed to be violative of the Base Rate guidelines. Banks are required to completely pass on the benefit of interest subvention, as applicable, to the eligible exporters upfront and submit the claims to RBI for reimbursement duly certified by the external auditor. The subvention would be reimbursed by RBI on the basis of quarterly claims submitted by the banks. PART-B EXPORT CREDIT IN FOREIGN CURRENCY 5.1 Pre-shipment Credit in Foreign Currency (PCFC) 5.1.1 General With a view to making credit available to exporters at internationally competitive rates, authorised dealers have been permitted to extend pre-shipment Credit in Foreign Currency (PCFC) to exporters for domestic and imported inputs of exported goods at LIBOR/EURO LIBOR/EURIBOR related rates of interest as detailed below: 5.1.2 Scheme Ä°. The scheme is an additional window for providing pre-shipment credit to Indian exporters at internationally competitive rates of interest. It will be applicable to only cash exports.....
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....rrowings a. b. In addition, banks may arrange for borrowings from abroad. Banks may negotiate lines of credit with overseas banks for the purpose of grant of PCFC to exporters without the prior approval of the RBI, provided the rate of interest on the borrowing does not exceed 100 basis points over six months LIBOR/EURO LIBOR/EURIBOR. Banks should draw on the line of credit arranged only to the extent of loans granted by them to the exporters under the PCFC. However, where the overseas bank making available the line of credit stipulates a minimum amount for drawals which should not be very large, the small unutilised portion may be managed by the bank within its foreign exchange position and Aggregate Gap Limit (AGL) limit. Similarly, any pre-payment by the exporter may also be taken within the foreign exchange position and AGL limits. c. Banks may avail of lines of credit from other banks in India if they are not in a position to raise loans from abroad on their own, subject to the condition that ultimate cost to the exporter should not exceed 200 basis points above LIBOR/ EURO LIBOR / EURIBOR, provided the bank does not ....
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....range to remit foreign exchange to repay the loan or line of credit raised abroad and interest without prior permission of RBI. or 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 rate for extended period plus permitted margin of 200 basis points (upto February 18, 2010, 350 basis points) over LIBOR/EURO LIBOR/ EURIBOR). 5.1.6 Disbursement of PCFC i. In case full amount of PCFC or part thereof is utilised to finance domestic input, banks may apply appropriate spot rate for the transaction. ii. iii. Is regards the minimum lots of transactions, it is left to the operational convenience of banks to stipulate the minimum lots taking into account the availability of their own resources. However, while fixing the minimum lot, banks may take into account the needs of their small customers also. anks should take steps to streamline their procedures so that no separate sanction is needed for PCFC once the packing credit limit has been authorised and the disbursement is not delayed at the branches. 5.1.7 Liquidation of PCFC ....
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.... 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, after ensuring that the earlier cancellation of PCFC was due to genuine reasons. 5.1.9 Running Account Facility for All Commodities Ä°. 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 under rupee credit, subject to the following conditions: a. Th e facility may be extended provided the need for 'Running Account' facility has been established by the exporters to the satisfaction of the bank. b. C. d. Ba nks may extend the facility only to those exporters whose track record has been good. In all cases, where pre-shipment credit 'Running Account' facility has been extended, the L/Cs or firm orders should be produced within a reasonable period of time. e PCFC will be marked-off on the 'First-in-First-Out' basis. Th 39 DBOD - MC on Export Credit - 2010 PC e. FC can also be marked-off with proceeds of export....
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....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 of the exported goods. T he 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 between the export order holder and the manufacturer. 5.1.12 Supplies from One EOU/EPZ/SEZ Unit to another EOU/EPZ/SEZ Unit 41 DBOD - MC on Export Credit - 2010 i. ii. iii. iv. V. PCFC may be made available to both the supplier EOU/EPZ/ SEZ unit and the receiver EOU/EPZ/ SEZ. The PCFC for supplier EOU/EPZ/SEZ unit will be for supply of raw materials/ components of goods which will be further processed and fin....
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....eas 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 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 regarding the Diamond Dollar Accounts, 43 DBOD - MC on Export Credit - 2010 bank may refer to AP (DIR series) circular No. 13 dated October 29, 2009 issued by Foreign Exchange Department of RBI) 6. Post-shipment Export Credit in Foreign Currency 6.1 Rediscounting of Export Bills Abroad S....
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....i. 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 for exports to ACU countries. 45 DBOD - MC on Export Credit - 2010 T B V. F or 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. 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 (i) above], these may have to be routed through the existing post-shipment credit facility ....
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.... 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 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 restora....
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....(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 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 guideline....
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.... 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' limits will be sanctioned for period of 3 years with a provision for automatic renewal subject to fulfi....
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....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 ....
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.... cash credit components. Banks should nominate suitable officers as compliance officers in their foreign 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 professiona....
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.... disbursement of pre-shipment credit, from exporters with consistently good track-record. Instead, a system of periodical submission of a statement of L/Cs or export orders in hand should be introduced. b. Banks may waive, ab initio, 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 ti....
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....redit - 2010 b. C. therefore, give wide publicity to this important facility and make it easily accessible to all exporters including small exporters and ensure that more number of branches are designated for making available export credit in foreign currency. Banks may also arrange to publicise widely the facility of prescribed interest 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 thei....
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....NTS 9.1 Export Credit Performance Indicator for Banks 9.1.1 Banks are required to reach a level of outstanding export credit equivalent of 12% of each bank's Adjusted Net Bank Credit. (ANBC)* Accordingly, the performance of banks is being reviewed by the RBI, DBOD, Directives Division, 60 DBOD - MC on Export Credit - 2010 (Export Credit) at half yearly intervals. The performance of the banks in extending export credit will be assessed on the basis 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 wou....
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.... Kimberley Process Certification Scheme, banks should obtain an undertaking in the format given in Annex 3 from such of the clients who have been extended credit for doing any business relating to diamonds. 62 29 DBOD - MC on Export Credit - 2010 ANNEX 1 (vide paragraph 8.1.2) Recommendations of the Working Group to Review Export Credit The Working Group to Review Export Credit has recommended several measures to improve customer service. The recommendations which have been accepted and communicated to the banks are given below: (a) The 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.....
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....very towards out of pocket expenses incurred by banks. Subsequently, the ceiling rate of interest on export credit in foreign currency by banks was revised to LIBOR plus 350 basis points w.e.f. February 5, 2009. However with the gradual easing of the conditions in the overseas market, the ceiling rate of interest on export credit in foreign currency by banks was revised to LIBOR plus 200 basis points w.e.f. February 19, 2010. 64 DBOD - MC on Export Credit - 2010 (Export Credit Data (Disbursement/Outstandings) Name of Authorised Dealer Bank : ANNEX 2 (vide paragraph 9.2) Year Month Bank FI Code Statement showing total disbursals and balance outstanding as on (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 ....
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....of all rough diamonds from Sierra Leone and UN Security Council Resolution No.1343(2001) which prevents such import from Liberia. to follow Kimberley Process Certification Scheme for dealing in diamonds. I am also giving my consent to the withdrawal of all my credit entitlements, if at any time, I am found guilty of knowingly having conducted business in such diamonds". 60 66 DBOD - MC on Export Credit - 2010 Appendix I List of Circulars consolidated by the Master Circular on Rupee Export Credit Sr. No. Circular No. 1. DBOD.Dir.(Exp).BC.No. 115/04.02.001/2009-10 2. Date Subject 29.06.2010 Rupee Export Credit Interest Rates DBOD.Dir.(Exp).BC.No. 06.05.2010 Rupee Export Credit Interest Rates 102/04.02.001/2009-10 3. DBOD.Dir.(Exp).BC.No. 94/04.02.001/2009-10 23.04.2010 4. DBOD.Dir.(Exp).BC.No. 29.10.2009 54/04.02.01/2009-10 5. DBOD.DIR.(Exp).BC.No. 01.07.2009 07/04.02.02/2009-10 6. DBOD.Dir.(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. DBO....
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....IECD. No. 14/ 01.01.43/ 30.06.04 2003-04 No. 12/ 04.02.02/ 18.05.04 Merger of functions of Industrial & Export Credit department of Reserve Bank of India with its other Departments Gold Card scheme for Exporters Rupee Export credit Interest Rates for gold card holder Exporters Rupee Export Credit Interest Rates 2003-04 28. IECD No. 5/04.02.01/ 2003-04 31.10.03 Rupee Export Credit Interest Rates 29. IECD No. 18/04.02.01/ 2002-03 30.04.03 Rupee Export Credit Interest rates 30. IECD No. 16/04.02.02/ 2002-03 01.04.03 31. IECD No.8/04.02.01/ 28.09.02 2002-03 Export Credit - SEZ Units Special Financial Package for Large value Exports 32. IECD No.7/04.02.01/ 2002-03 23.09.02 Rupee Export Credit Interest rates 33. IECD.No.17/04.02.01/ 15.03.02 Rupee Export Credit Interest Rates 2001-02 34. IECD.No.15/04.02.02/ 03.01.02 2001-02 Export Credit to Processors/ Exporters- Agri-Export Zones 35. IECD.No.4/04.02.01/ 24.09.01 Rupee Export Credit Interest Rates 2001-02 36. IECD.No.13/04.02.01/ 19.04.01 Rupee Export Credit Interest Rates 2000-01 37. IECD....
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.... 97-98 Export Credit - Interest Rates on Post- shipment Rupee Credit 58. IECD.No. 1/04.02.01/ 05.07.97 97-98 Extension of Concessive Credit for Deemed Exports 59. IECD.No.32/04.02.01/ 25.06.97 96-97 60. IECD.No.29/04.02.01/ 17.04.97 96-97 Export Credit - Interest Rates Post-shipment Finance in respect of Exports through the Warehouse-cum- Display Centre at Dubai 69 DBOD - MC on Export Credit - 2010 Sr. Circular No. Date Subject No. 61. IECD.No.27/04.02.01/ 15.04.97 Export Credit - Interest Rates 96-97 62. IECD.No.16/04.02.01/ 22.11.96 96-97 Exports Extension of Concessive Credit for Deemed Multilateral/Bilateral agencies/funds -List of 63. IECD.No.15/04.02.01/ 19.11.96 Export Credit - Export Credit and 96-97 Guarantee Corporation Whole Turnover Post-shipment Guarantee Scheme 64. IECD.No.10/04.02.01/ 19.10.96 96-97 Interest Rates on Advances Post- shipment Rupee Credit 65. IECD.No.2/04.02.01/ 03.07.96 96-97 66. IECD.No.20/04.02.01/ 07.02.96 95-96 67. IECD.No.30/04.02.02/ 14.12.94 94-95 68. IECD.N....
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....dit Adjusted from Rupee Resources 85. IECD.No. EFD.BC.49/819- 22.04.91 POL-ECR/90-91 Interest Rates on Advances - Export credit 86. IECD.No.EFD/BC/48/819/ 02.04.91 POL-ECR/90-91 Interest Rates on Advances - Export Credit 87. IECD.No. EFD/BC/47/819/ 01.04.91 POL-ECR/90-91 Interest Rates on Advances - Export Credit 88. IECD.No.EFD.BC.44/DDB 26.03.91 (P)-91 Duty Drawback Credit Scheme, 1976 - Grant of Interest- free Advances against Duty Drawback Entitlements under Brand Rate 89. IECD.No. EFD.BC.8/819- POL- ECR/89-90 28.09.89 Export Credit (Interest Subsidy) 90. IECD.No.EFD.BC.253/819 27.05.89 -POL-ECR/89 91. IECD.No.EFD.BC.250/380 29.04.89 - DDB(P)-89 92. IECD.No.EFD.BC.248/819 13.03.89 -POL-ECR-89 93. IECD.No.EFD.BC.240/819 03.03.89 -POL- ECR-89 94. IECD.No.EFD.215/822- WGM-NOD-88 12.08.88 Scheme, 1968 - Normal Transit Period- Demands Bill bills Export Credit (Interest Subsidy) Scheme, 1968 - Interest on Post- shipment Credit Adjusted from Rupee Resources Duty Drawback Credit Scheme, 1976 Packing Credit for Imports against Entitlements under....
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....-shipment Credit Substitution of Contract, etc. Export Credit - Export of Commodities on Consignment Basis Export Credit (Interest Subsidy) Scheme, 1968 - Repatriation of Proceeds of Export Bills – Clarification Export Credit to 100 percent Export Oriented Units (EOUS) Strategy for Exports to Africa - Extract from Report of Gen(Africa)Sub-Group of Standing Committee on Export Finance Packing Credit Advances to Exporters of Deoiled and Defatted Cakes Revised Directive Pre-shipment Credit - Ceiling Rate of Interest - Directive 72 DBOD - MC on Export Credit - 2010 Sr. No. Circular No. Date 112 DBOD.No.ECC.BC.172/C. 04.12.79 297P-79 23.07.79 113 DBOD.No.ACC.BC.107/C. 297P(C)-79 114 DBOD.No. ECC.BC.104/C. 297P- 14.07.79 115 DBOD.No. ECC.BC.81/C.2 05.06.79 97P-79 119 DBOD.No.ACC.BC.38/C.2 06.03.79 116 DBOD.No. ECC.BC.73/C.2 97(0) (12)-79 02.06.79 117 DBOD.No.ACC.BC.118/C. 07.04.79 297P(C)-79 118 DBOD.No.ACC.BC.55/C.2 07.04.79 97P(C)- 79 97P(C)- 79 120 DBOD.No.ECC.BC.14,15/ 22.01.79 C.297P-79 121 DBOD.No. ECC.BC.9/C.29 7P-79 15.01.79 ....
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....- Advice to Banks to Fix Limits in a Realistic Manner Export Credit (Interest Subsidy) Scheme, 1968-Packing Credit Advances to Exporters of HPS Groundnut and of Deoiled and Defatted Cakes- Clarification regarding interest subsidy Claims and Concessional Rate of Interest Export Credit (Interest Subsidy) Scheme, 1968-Advances Against Undrawn Balances and Retention Money Export Credit Clarification Regarding Interest @ 8 percent p.a. on Post shipment Credit only on Credit Extended for the Periods Exceeding One Year Duty Drawbacks Credit Scheme, 1976- Minimum Amount to be Borrowed by Banks from RBI at One Time Being Reduced to Rs. 20, 000/- from Rs.1 lakh. Export Credit (Interest Subsidy) Scheme, 1968-Packing Credit Advances Duty Drawbacks Credit Scheme, 1976- Advice to Banks to Verify the Bill of Lading, etc. at the time of Sanctioning Advances Under the Scheme Pre-Shipment Credit -Advice to Banks to Grant Packing Credit Facilities to Jute Mills on the Basis of Cable Advices from Foreign Buyers Pre-Shipment Credit Operational Flexibility Relaxation in regard to the Substituti....
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....tc. - 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 16.04.71 152 DBOD.BM.64/C.297P-70 12.01.70 153 DBOD.BM.1152/C.297(M) 11.07.69 -69 154 DBOD.BM.1064/C.297P- 01.07.69 69 155 DBOD.BM.1040/C.297P- 27.06.69 69 156 DBOD.BM.984/C.297P-69 19.06.69 157 DBOD.BM.682/C.297K-69 07.04.69 Subject Pre-shipment Credit Scheme and Export Credit (Interest Subsidy) Scheme, 1968 - Cash Incentives, Duty Drawbacks, etc Packing Credit Advances relating to Export of Mineral Ores Pre-shipment Credit Scheme and Export Credit (Interest Subsidy) Scheme, 1968 - Advice to Banks to keep a close watch not only on the end- use of the finance but also for the timely fulfilment of Export Orders and to Scrutinise Applications for Extension of time carefully - Packing Credit and Post-shipment Credit Interest Rates Structure Ceiling of 7 percent per annum for Packing Credit and P....
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....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/ 31.12.04 04.02.02/2004-05 6. IECD No.12/04.02.02/ 18.05.04 2003-04 7. IECD No. 12/04.02.02/ 2002-03 31.01.03 Export Credit in Foreign Currency-Sources of funds 8. IECD No.9/04.02.02/ 2002-03 31.10.02 9. IECD.No.21/04.02.01/20 29.04.02 01-02 10 IECD.No.14/04.02.01/20|19.04.01 00-01 99-2000 Export Credit - Liquidation of Packing Credit and conversion of drawals under rupee packing credit into PCFC. Interest Rates on Export Credit in Foreign Currency Interest Rates on Export Credit in Foreign Currency 11 IECD.No.13/04.02.02/19 17.0....
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....olidated 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 Currency Export Credit & Customer Service to Exporters Recommendations of the Working Group to Review Export Credit Recommendations of the Working Group to Review Export Credit Winding up of the State Level Export Promot....