What changed
The earlier subvention scheme that expired on March 31, 2010 has been extended for another year. The new circular covers the period April 1, 2010 to March 31, 2011 and specifies the same eligible sectors and sub-sectors as before.
What it means for you
UCBs can now offer export credit at 2% below their normal lending rates to eligible exporters in specified sectors and claim the subvention from RBI. This reduces the interest burden on exporters and encourages export financing by UCBs. Banks must maintain proper documentation and submit quarterly claims with auditor certification to get reimbursed.
What you must do
- Identify eligible exporters in the specified sectors (handicrafts, carpets, handlooms, SMEs, leather, jute, engineering goods, textiles) and offer them export credit at 2% below normal rates.
- Ensure pre-shipment credit does not exceed 270 days and post-shipment credit does not exceed 180 days; subvention applies only up to these limits.
- Submit quarterly claims to RBI's Urban Banks Department, Central Office, Mumbai, starting from quarter ended June 30, 2010, using the format in Annex III.
- Attach an auditor's certificate with each claim certifying the subvention amount is correct; no settlement without it.
- Round off subvention amounts to the nearest rupee as per the annex instructions.
Who it affects
Scheduled Primary (Urban) Co-operative Banks holding AD Category I licence, Exporters in specified sectors (handicrafts, carpets, handlooms, SMEs, leather, jute, engineering goods, textiles)
What is the interest subvention rate and period?
The subvention is 2% on rupee export credit for pre-shipment up to 270 days and post-shipment up to 180 days, effective from April 1, 2010 to March 31, 2011.
How do UCBs claim reimbursement?
Submit quarterly claims to RBI's Urban Banks Department, Central Office, Mumbai, using the format in Annex III, along with an auditor's certificate certifying the subvention amount.
Which sectors are eligible for this subvention?
Handicrafts, carpets, handlooms, SMEs (as defined in Annex I), leather and leather manufactures, jute manufacturing, engineering goods, and textiles (with specified sub-sectors).