RBI lowers export refinance rate to 7%

MUMBAI, Aug 6: The Reserve Bank of India on Thursday lowered the refinance rate -- the rate at which the RBI funds banks -- for export cr...

MUMBAI, Aug 6: The Reserve Bank of India on Thursday lowered the refinance rate — the rate at which the RBI funds banks — for export credit to 7 per cent from 9 per cent. This follows commerce minister Ramakrishna Hegde’s announcement of a two percentage-point cut in export credit to 9 per cent as part of the measures to boost exports.

The new refinance rate, which is lower by 2 per cent to the central bank’s 9 per cent bank rate, will be effective from Thursday and valid up to March 31, 1999. "The new interest rates will be applicable up to March 31, 1999 after which status quo ante will be restored automatically, unless otherwise notified," stated a central bank release.

In keeping with the centre announcement on Wednesday, the Reserve Bank has effected concommitment changes in interest rates of various other export-finance schemes of commercial banks. The pre-shipment credit up to 180 days has been brought down to 9 per cent from 11 per cent. Beyond 180 days and up to 270 days it has been cut to 12per cent from 14 per cent and against incentives receivable from government covered by ECGC guarantee up to 90 days from 11 to 9 per cent.

Interest rates for all other export-credit schemes have also been lowered by an identical margin — two percentage points. The 7 per cent refinance rate will be temporary in nature in tandem with the new export-credit rate which is effective only till March 31, 1999.

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