Rupee Credit Circular

No.CLE/POL/CIRCULAR/2007                                                             Dec. 6, 2007

Members of the Council 

Sub : Interest Rate Subvention on Rupee Export Credit

Dear Member,  

As members are aware, the Reserve Bank of India (RBI) announced reduction of interest rates on pre-shipment and post-shipment Rupee Export Credit for exporters of 9 product sectors including leather products by 2 percentage for the period Apr. 1 – Dec 31, 2007, vide RBI vide Notification dated July 13, 2007. Subsequently, the RBI issued another notification dated Oct. 6, 2007 extending the 2% interest reduction benefit to exporters of various products including leather products upto March 31,2008. 

However, as Finished Leather was not specifically mentioned as a beneficiary product sector in the aforesaid Notifications, the Council took-up the issue with the Government of India with a request to issue necessary amendment Notification to make Finished Leather exporters also eligible for availing this interest reduction.  

We are pleased to inform you that the Reserve Bank of India has now issued a Notification dated Nov. 30,2007 (copy enclosed) providing an additional interest subvention of 2 percentage points to 4 sectors including Leather and Leather Manufactures for the period Nov. 1- Mar. 31, 2008.

Banks will now charge interest rates not exceeding BPLR minus 6.5% to exporters of leather and leather products on pre-shipment credit upto 180 days and post-shipment credit upto 90 days on the outstanding amount. The terms of credit will be 180 days for pre-shipment and 90 days for post-shipment.

On account of the above Notification, exporters of leather sector, including finished leather exporters, will be able to avail the interest reduction on Rupee Export Credit.  

Members may kindly note the above and avail the benefit accordingly. 

With regards

Dr. K. Elangovan
Executive Director