Lower interest rates for 6 items

MUMBAI, SEPT. 24. A special financial package including concessional interest rate was today announced by the Reserve Bank of India for six select export items including pharmaceuticals and cement in a bid to reverse sagging exports. Announcing the package, the RBI said in a statement that the other four export items eligible are iron and steel, agro- chemicals, transport equipment and electrical machinery.

The package will be applicable only for export contracts over Rs. 100 crores annually, the RBI said, adding it would be operative from October 1 this year for one year.

As part of this package, the interest rates for pre and post- shipment export credits, has now been reduced to a maximum of prime lending rate (PLR) plus 0.5 per cent as against the present maximum rate of PLR plus 4 per cent. The RBI said this measure would result in substantial reduction in interest cost to exporters and was in addition to the across the board reduction by one per cent in ceiling rates on export credit announced earlier.

Indian exporters would also be permitted to import raw material on credit terms for period beyond 180 days at the rate of interest up to LIBOR plus one per cent under the special package against the current stipulation of LIBOR plus 0.75 per cent (ceiling).

The apex bank said Exim Bank would be permitted to extend buyers' credit of Rs. 200 crores without reference to TBI. Similar permission would also be granted to the participating banks, the statement said.

Exim Bank, while approving export contracts, will have the freedom to decide minimum advance/down payment, security and availability of ECGC cover subject to post facto report to the bank.

Exporters covered under this package would be extended credit at concessional rate of interest for an extended period up to 365 days at pre-shipment as well as post-shipment stages as against the maximum periods of 270 days and 180 days respectively applicable for normal export credits.

Further, the rate of interest of export credit for beyond 270 days and up to 365 days at pre-shipment stage would be the same as for normal pre-shipment credit for beyond 180 days and up to 270 days.

Similarly, post-shipment credit would be extended for periods beyond 180 days and up to 365 days at the same rate of interest as applicable for normal post-shipment credit for the period beyond 90 days and up to 180 days, the RBI added.

- PTI

Send this article to Friends by E-Mail

Section  : Business
Previous : Bullion rates
Next     : Interest rates on export credit cut across the
           board