RBI issues norm for extended interest equalisation scheme for export credit

The Reserve Bank of India (RBI) on Tuesday issued modified norms on Interest Equalization Scheme for export credit after the extension of the scheme till March 2024 by the government.

Earlier, the government approved the extension of the Interest Equalization Scheme for pre and post-shipment rupee export credit up to March 31, 2024. The extension takes effect from October 1, 2021, and ends on March 31, 2024, the RBI said in a notification.

As per the modifications made by the government to the scheme, the telecom instrument sector having six HS (Harmonised System) lines shall be out of the purview of the plan, except for MSME manufacturer exporters.

Revised interest equalisation rates under the scheme will now be three per cent for MSME manufacturer exporters exporting under any HS lines and two per cent for manufacturer exporters and merchant exporters exporting under 410 HS lines (after excluding 6 HS lines of the telecom sector), the notification said.

Banks, while issuing approval to the exporter, will necessarily furnish - the prevailing interest rate, the interest subvention being provided and the net rate being charged to each exporter. This is to ensure transparency and greater accountability in the operation of the scheme, it added.

The RBI notification further said the extended scheme will not be available to those beneficiaries, who are availing the benefit under any production linked incentive (PLI) scheme of the government.

From October 1, 2021, to March 31, 2022, banks shall identify the eligible exporters as per the scheme, credit their accounts with the eligible amount of interest equalisation and submit a sector-wise consolidated reimbursement claim for the said period to the RBI by April 30, 2022, according to the notification.

With effect from April 1, 2022, banks shall reduce the interest rate charged to the eligible exporters upfront as per the guidelines and submit the claims in original within 15 days from the end of the respective month, with the bank's seal, and signed by the authorised person, in the prescribed format, it added.