RBI withdraws export credit sops

The RBI will also do away with thespecial liquidity support facility (at bank rate) for banks which participated in the Resurgent India Bond (RIB) scheme. This facility was available against the collateral of treasury bills and government of India securities acquired from the open market operation (OMO) sale list of the RBI. The total refinance available in this scheme was about Rs 3,200 crore as at the end of January 1999.

With the cut in the repo rate to 6 per cent, and the export credit refinance rate at 7 per cent, banks are unlikely to use any export credit refinance that is available now, industry sources said. Banks had — between August 1998 and February 1999 — availed of export credit refinance at 7 per cent and deployed it in the 8 per cent fixed-rate repo conducted by the RBI to make a risk free 1 per cent spread.

This resulted in about 80 per cent of the Rs 6,400 crore refinance limit being utilised. The large amount of refinance at 7 per cent also resulted in this rate becoming a resistance level for call money rates.

Atpresent, banks are offering pre-shipment credit up to 180 days at 9 per cent and between 180 days and 270 days at 12 per cent. From April 1, pre-shipment credit will be available to exporters at 10 per cent while beyond 180 days to 270 days, the rate applicable is 13 per cent. Credit against incentives receivable from the government covered under the ECGC guarantee up to 90 days will be revised to 10 per cent from 9 per cent on April 1.

As far as post-shipment credit goes, the rate on demand bills for the period for post-shipment credit will not exceed 10 per cent instead of 11 per cent. For issuance bills, exporters will get credit at rates not exceeding 10 per cent — up from 9 per cent up to March 31, 1999, while for the bills beyond 90 days and up to six months from the date of shipment the rate has been fixed at 12 per cent from April 1 — up from 11 per cent on March 31, 1999.