RBI notifies banks on interest equalisation scheme for rupee export credit

Mumbai: The Reserve Bank of India (RBI) on Thursday issued a notification to all the banks, stating that the government has allowed the extension of the Interest Equalisation Scheme for Pre and Post Shipment Rupee Export Credit (Scheme) up to June 30, 2024.

The rate of interest equalisation shall be 2 pert cent for manufacturers and merchant exporters exporting under specified 410 HS lines and 3 per cent for MSME manufacturers exporting under any HS line.

The notification also stated that with effect from FY 2023-24, the banks which have priced the loans covered under this scheme at an average interest rate of greater than repo rate + 4 per cent prior to subvention would be subjected to certain restrictions under the scheme.

Based on an assessment undertaken for FY 2023-24, the Director General of Foreign Trade (DGFT) will identify the banks which are in breach of the above provision.

Such banks shall be restricted from participating in the scheme till they furnish an undertaking in the specified format to the DGFT. Any further breach as assessed by the DGFT thereafter may lead to debarment from the scheme.

The notification further said that the annual net subvention amount has been already capped at Rs 10 crore per Importer-Exporter Code (IEC) in a given financial year, and the same has been communicated to the trade & industry and banks vide DGFT Trade Notice No. 05 dated May 25, 2023.

Accordingly, all disbursement from April 1, 2023 shall be reckoned for this purpose.