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RBI asks UCBs to charge 2% less from seven specified sectors
22
Jun '09
The Government of India has decided to extend Interest Subvention of 2 percentage points w.e.f. June 01, 2009 till September 30, 2009 on pre and post shipment rupee export credit extended by scheduled UCBs holding AD category I licences, for certain employment oriented export sectors as under:

• Textiles (including Handloom)
• Handicrafts
• Carpets
• Leather
• Gems and Jewellery
• Marine Products, and
• Small & Medium Enterprises (as defined in the Annex)

As per the existing guidelines, UCBs are permitted to determine their own lending rates taking into account their cost of funds, transaction costs etc., with the approval of their Boards. In view of the interest subvention facility extended by the Government of India in respect of rupee pre-shipment credit up to 270 days and post-shipment credit up to 180 days extended for export sectors specified above (para 1), scheduled UCBs holding AD category I licences will now charge interest at 2 percentage points below the interest rates charged from exporters in other categories of export sectors for the same period, on the outstanding amount of credit for the period June 01, 2009 to September 30, 2009.
However, the total subvention will be subject to the condition that the interest rate, after subvention will not fall below 7 per cent. The banks may ensure that the benefit of the 2 per cent interest subvention is passed on completely to the eligible exporters.

A directive No. UBD.BPD.Dir.(Exp).No. 1/13.05.000/2008-09 dated June 11, 2009 issued in this regard is enclosed.

The procedure for claiming subvention is as follows:
i) The amount of subvention would be reimbursed on the basis of claim submitted as at September 30, 2009 in the format enclosed.

ii) The amount of subvention will be calculated on the amount of export credit from the date of disbursement up to the date of repayment or up to the date beyond which the outstanding export credit becomes overdue i.e. for preshipment credit up to 270 days and post-shipment credit up to 180 days, whichever is earlier.

iii) The claims should be accompanied by an Auditor's Certificate certifying the claims for subvention of Rs…………….for the period June 01, 2009 to September 30, 2009, as true and correct. Settlement of the claim will be done only on receipt of this certificate.

iv) Claims may be submitted to the Chief General Manager, Urban Banks Department, Reserve Bank of India, Central Office, Garment House, Worli, Mumbai-400 018

Reserve Bank of India

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