What changed
This master circular supersedes the previous one dated July 1, 2009, consolidating all instructions on export credit refinance issued up to June 30, 2010. No new policy changes were introduced; it merely updates and streamlines existing guidelines into a single reference document.
What it means for you
Banks now have a single, updated source for all ECR rules, reducing compliance ambiguity. The refinance limit remains at 15% of eligible export credit, and the interest rate continues to be linked to the Repo Rate, ensuring alignment with monetary policy. This consolidation simplifies operational procedures for banks availing ECR.
What you must do
- Review the master circular to ensure your bank's ECR processes align with the consolidated guidelines.
- Update internal documentation and training materials to reference this circular as the single source for ECR instructions.
- Verify that your bank's ECR limit calculations and reporting follow the definitions in Annex I of the circular.
- Ensure all loan documentation (DPN, agreement, board resolution) is executed as per the prescribed forms in Annex II.
Who it affects
All scheduled banks (excluding RRBs) that extend export credit, Authorised dealers in foreign exchange, Bank treasury and credit departments handling export credit refinance
What is the refinance limit under this facility?
Scheduled banks can avail export credit refinance up to 15% of their outstanding export credit eligible for refinance as at the end of the second preceding fortnight.
What interest rate applies to ECR?
The interest rate is the Repo Rate under the Liquidity Adjustment Facility (LAF), as announced by RBI from time to time. Interest is calculated on daily balances and debited monthly.
What happens if a bank irregularly avails ECR?
Penal interest as decided by RBI will be charged on the irregular portion. Examples include exceeding the limit, wrong calculation, non-repayment within 180 days, or delay in reporting excess utilisation.