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| Rs 5,000 cr refinance window for Exim Bank |
| BS Reporter / Kolkata Dec 12, 2008, 00:14 IST |
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After announcing refinance facilities for the National Housing Bank (NHB) and the Small Industries Development Bank of India (Sidbi), the Reserve Bank of India (RBI) today decided to provide a refinance facility of Rs 5,000 crore to the Export-Import Bank of India (Exim Bank) to on-lend to exporters to tide over their liquidity problems.
The central board of RBI, which met in Kolkata on Thursday, also approved the Rs 4,000-crore refinance facility for NHB.
The repo rate, the rate at which RBI lends to banks, was lowered last week to 6.50 per cent, the lowest since June 2006. Similarly, the reverse repo rate, the rate at which the central bank absorbs surplus liquidity, was also reduced from 6 per cent to 5 per cent last week, the lowest since April 2005.
In a statement today, RBI said the refinance facility for Exim Bank will be available up to March 31, 2010. The facility is aimed mitigating the pressure on exporters, who have been hit by banks that are dithering to extend them credit, fearing default in payments by their importers.
The facility, under the provisions of the RBI Act, will be available at the prevailing repo rate under the Liquidity Adjustment Facility (LAF) for a period of 90 days. During this 90-day period, the amount can be withdrawn and repaid.
At the end of the period, the money can also be rolled over. “The utilisation of funds will be governed by the policy approved by the board of the Exim Bank,” the statement added.
“The Reserve Bank will continue to monitor the developments in the global and domestic financial markets closely and will take swift and effective action as appropriate. The Reserve Bank will endeavour to minimise the stress on various sectors of the economy on account of the international financial crisis and the global slowdown. The policy objective is to ensure adequate availability of liquidity in the system and to maintain conditions conducive for flow of credit for all productive purposes, particularly to housing, export and small and medium industry sectors,” the statement added.
Recently, the government also announced a slew of measures for export units like providing an interest subvention of 2 per cent up to March 2009 for pre- and post-shipment export credit for exports for textile, leather, marine products and for the SME sector. It has also decided to provide an additional Rs 1,100 crore for full refund of terminal excise duty, Rs 350 crore for export incentive schemes and a back-up guarantee of Rs 350 crore to ECGC (Export Credit and Guarantee Corporation of India).
On December 6, RBI had announced a Rs 7,000-crore refinance facility to Sidbi.
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