The Reserve Bank of India (RBI) has issued modified norms on Interest Equalization Scheme for export credit after the extension of the scheme till March 2024.
The Government of India has approved the extension of the Interest Equalization Scheme for Pre and Post Shipment Rupee Export Credit (‘Scheme’) up to March 31, 2024, or till further review, whichever is earlier. The extension takes effect from October 1, 2021, and ends on March 31, 2024.
The modifications made by the Government to the Scheme are detailed below:
2.1 ‘Telecom Instruments’ sector having six HS lines1 shall be out of the purview of the Scheme, except for MSME manufacturer exporters.
2.2 Revised interest equalization rates under the Scheme will now be 3 percent for MSME manufacturer exporters exporting under any HS lines, and 2 percent for manufacturer exporters and merchant exporters exporting under 410 HS lines (after excluding 6 HS lines pertaining to Telecom Sector as mentioned above).
2.3 Banks, while issuing approval to the exporter, will necessarily furnish i) the prevailing interest rate, ii) the interest subvention being provided, and iii) the net rate being charged to each exporter, so as to ensure transparency and greater accountability in the operation of the Scheme.
2.4 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.
3. For the period 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 equalization, and submit a sector-wise consolidated reimbursement claim for the said period to the Reserve Bank by April 30, 2022.
4. 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 authorized person, in the prescribed format, as modified (Annex I).
5. Other provisions of the extant instructions issued by the Bank on the captioned Scheme shall remain unchanged.
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