RBI extends interest subvention of 2% on rupee export credit for small scale industries

With an aim to protect the small scale industries from slowdown, the Reserve Bank of India (RBI) has extended the 2% interest subsidy scheme by another year on rupee export credit to the labour-oriented sectors with effect from April 1, 2012 to March 31, 2013.

RBI has decided to extend the scheme for the seven specified category of exporters namely handicrafts, handlooms, readymade garments, processed agriculture products and carpets. Besides, sports goods and toys exporters would also be eligible for such benefit.

Consequently, banks may reduce the interest rate chargeable to the exporters as per base rate system in the above mentioned sectors eligible for export credit subvention by the amount of subvention available, subject to a floor rate of 7%.

The banks are likely to pass on the benefit of 2% to the eligible exporters and further exporters in the small and medium enterprises across all the sectors would also be permitted for cheaper bank credit, subject to a minimum interest rate of 7%. The government, last year had given interest subvention facility to exporters, which expired in March 2012.