RBI slaps 20% levy on overdue export bills

MUMBAI, December 17: In a bid to boost inflow of dollars and strengthen the rupee, the Reserve Bank of India (RBI) on Wednesday clamped a m...

MUMBAI, December 17: In a bid to boost inflow of dollars and strengthen the rupee, the Reserve Bank of India (RBI) on Wednesday clamped a minimum levy of a 20 per cent interest surcharge on overdue export bills and a 15 per cent interest surcharge on bank credit (excluding interest tax) for imports. The new measures will come into force from December 18.

The Reserve Bank said that the surcharge on overdue export bills of 20 per cent will be calculated from the date of advance. The central bank has clarified that in the case of demand bills and usance bills, the higher rate of interest will not be applicable where the total period of credit including the overdue period is less than one month from the date of the bill or negotiation.

The RBI move will not be welcomed by the exporters who were till recently making a killing by keeping their dollar earnings abroad.

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This is the fourth tranche of the rupee-support package worked out by the central bank over the last three weeks. The Reserve Bank has already raised the interest rate on export credit between 90 and 180 days from 13 per cent to 15 per cent, made it effective from the date of advance, decided to monitor all cancellations of forward contracts for more than $5 million and barred re-booking of cancelled forwards for entities without underlying exposure besides increasing the CRR by 0.5 percentage points.

Bankers interpreted the RBI move as a strategy to smoothen the receipts and outflow of the greenback. “Importers will now find it dearer now to bunch together their imports while it will no longer be remunerative for exporters to hold to their receivables,” said a banker.

He said the RBI had slapped the 15 per cent interest rate surcharge on bank credit for imports to ensure that only essential imports take place. The RBI has exempted essential goods and revenue earning export-related imports from this levy. The central bank also said that its interest surcharge of 15 per cent on bank credit for imports will continue to hold good until further notice.

The Reserve Bank has, however, clarified that the 15 per cent interest rate surcharge on bank credit for imports will not be extended to bank credit for export-related imports.

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These include export packing credit to meet the cost of imported inputs, import of capital goods under the export promotion capital goods scheme, imports by export oriented units , units in the export processing zones and those under advance licenses.

The RBI has also exempted bulk imports of crude oil, petroleum products, fertlisers, edible oils and other essential commodities canalised through government agencies from the 15 per cent interest rate surcharge on bank credit for imports.