Rediff Logo
Channels: Astrology | Broadband | Contests | E-cards | Money | Movies | Romance | Search | Women
Partner Channels: Auctions | Bill Pay | Health | Home & Decor | IT Education | Jobs | Travel
Home > Money > PTI > Report
September 24, 2001
  Money Matters

 -  Business Special
 -  Business Headlines
 -  Corporate Headlines
 -  Columns
 -  IPO Center
 -  Message Boards
 -  Mutual Funds
 -  Personal Finance
 -  Stocks
 -  Tutorials
 -  Search rediff


 Search the Internet
 Sites: Finance, Investment
E-Mail this report to a friend
Print this page Best Printed on  HP Laserjets

RBI reduces interest rates on export credit

The Reserve Bank of India has announced the reduction in interest rates for export credit by 1.0 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 media release in Bombay on Monday.

According to RBI, the maximum rate that the bank cna charge exporters would be 2.5 percentage points below its prime lending rate for pre-shipment credit upto 180 days and for post-shipment credit upto 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 upto March 31, 2002, the 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 a RBI spokesperson.

The rate for foreign currency loans to exporters will continue to be LIBOR plus a maximum of one percentage point. Thus, the present dollar-denominated foreign currency loans can be availed of by exporters at no higher than 4 per cent -- 3 per cent (LIBOR rate) plus 1 per cent.

The spokesperson also added that even in regard to rupee loans, the exporter, while availing the concessional credit, can 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 5 per cent, the effective interest rates to exporters on rupee loans can also come down to as low as 3 per cent.

Back to top
(c) Copyright 2000 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.

Tell us what you think of this report