Interest rates on export credit cut across the board

MUMBAI, SEPT. 24. The Reserve Bank of India has lowered the interest rates for export credit by 0.5 per cent to one percentage point across the board, effective from September 26.

This would be applicable to both pre-shipment and post-shipment credits, the apex bank said in a release here today.

According to RBI, the maximum rate that the bank should charge to exporters would be 2.5 percentage points below its prime lending rate (PLR) for pre-shipment credit up to 180 days and for post- shipment credit up to 90 days.

Earlier, the ceiling rate was 1.5 percentage point below the PLR. This concession would apply in respect of all export credit granted by banks up to March 31, 2002, RBI said.In addition to the above facility for rupee credit, exporters would continue to have the facility of foreign currency loans in the currency of their choice at highly internationally competitive rates, according to an RBI spokesperson.

The RBI said the rate of these loans to exporters would continue to be LIBOR plus a maximum of one percentage point.

Thus, dollar denominated foreign currency loans can be availed of by exporters at no higher than three per cent (LIBOR rate) plus one per cent.

The spokesman further said that even in regard to rupee loans, the exporter while availing of the confessional credit, could sell the export proceeds in the forward market.Assuming a PLR of 10.5 per cent, the ceiling for interest rate on export credit would be eight per cent and adjusting for forward premia, which are currently over five per cent, the effective interest rates to exporters on rupee loans could also come down to as low as three per cent, the spokesperson added.

- PTI

Send this article to Friends by E-Mail

Section  : Business
Previous : Lower interest rates for 6 items
Next     : 'Limited impact' on industry