Explain Export Credit in India? in English...................

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Export Credit in India

In India, export credit is available both in Indian rupees and foreign currency.

Export credit in Indian rupees: The Reserve Bank of India (RBI) prescribes a ceiling rate for the rupee export credit linked to Benchmark Prime Lending Rates (BPLRS) of individual banks available to their domestic borrowers. However, the banks have the freedom to decide the actual rates to be charged with specified ceilings.

Generally, the interest rates do not exceed BPLR minus 2.5 percentage points per annum for the specified categories of exports as under :

1. Pre-shipment credit (from the date of advance)

(a) Up to 180 days

(b) Against incentives receivable from the government covered by Export Credit and Guarantee Corporation (ECGC) guarantee up to 90 days –

2. Post-shipment credit (from the date of advance)

(a) On demand bills for transit period, as specified by FEDAI (Foreign Exchange Dealers Association of India)

(b) Usance bills (for total period comprising usance period of export bills, transit period as specified by FEDAI, and grace period, wherever applicable)

Up to 90 days
Up to 365 days for exporters under the Gold Card Scheme

(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)

Export credit in foreign currency: In order to make credit available to the exporters at internationally competitive rates, banks (authorized dealers) also extend credit in foreign currency’ (Exhibit 15.3) at LIBOR (London Interbank Offered Rates), EURO LIBOR (London Interbank Offered Rates dominated in Euro), or EURIBOR (Euro Interbank Offered Rates).

LIBOR is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale (or ‘interbank’) money market. The rate paid by one bank to another for a deposit is known as London Interbank Bid Rate (LIBID).

Export Credit in Foreign Currency

Type of credit	Interest rate (percent per annum)
i. Pre-shipment credit
(a) Up to 180 days	Not exceeding 1% over LIBOR/EURO LIBOR/EURIBOR
(b) Beyond 180 days and up to 360 days.	Rate for initial period of 180 days prevailing at the time of extension plus 2 percentage points (i) (a) above + 2%
ii. Post-shipment credit
(a) On demand bills for transit period (as specified by FEDAI)	Not exceeding 1% over LIBOR/EURO LIBOR/EURIBOR
(b) Against usance bills (credit for total period comparising usance period of export bills, transit period as specified by FEDAI and grace period wherever applicable) Up to 6 months from the date of shipment	Not exceeding 1% over LIBOR/EURO LIBOR/EURIBOR
(c) Export bills (demand or usance) realised after due date but up to date of crystallization	Rate applicable up to the due date plus 2 percentage points

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