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2012-06-19

RBI increases export credit flow to help MSME exporters

The Reserve Bank of India’s (RBI) decision to increase the limit of Export Credit Refinance (ECR) for banks would provide increased lending to exporters in the micro, small and medium enterprises (MSME) export sector.

The Reserve Bank of India’s (RBI) decision to increase the limit of Export Credit Refinance (ECR) for banks would provide increased lending to exporters in the micro, small and medium enterprises (MSME) export sector.

M Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO) said that the move would help banks to replenish the funds earmarked for the MSME export sector and ensure that funds are easily available to the sector in adequate measure.

RBI increased the limit of ECR facility for banks from 15 per cent of the outstanding export credit eligible for refinance to 50 per cent.

While relaxing norms to enhance credit flow to exporters, the Reserve Bank on Monday said the sliding rupee will benefit exports that have been hit by demand slowdown in developed nations.

Exports have been hit due to demand slowdown in the developed markets and contracted by 4.17 per cent in May.

The rate of interest charged on the ECR facility will continue to be the prevailing repo rate under the Liquidity Adjustment Facility (LAF), which is 8 per cent. The new limit will be effective from June 30.

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