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RBI permitted the banks to provide loans to exporters with 10 years tenure

May 23, 2014 16:28 IST

The Reserve Bank of India on 21 May 2014 allowed banks to provide loans to exporters with tenures of up to 10 years.
RBI gave the permission to banks to allow only those exporters who have a minimum of three years satisfactory track record to receive long term export advance up to a maximum tenure of ten years. It will be utilized for execution of long-term supply contracts for export of goods.

Conditions for availing the loan
• An interest rate limit of 200 basis points above the London interbank offered rate (Libor), a global benchmark, is put for availing the loan.
• RBI should be reported if exporter receives loans of 100 million US dollars or above transaction.  
• The contract of overseas party or buyer should be inspected and must clearly specify the nature, amount and delivery time-lines of products over the years and the penalty in case of non-performance or contract cancellation.
• These exports advances cannot be used to liquidate rupee loans, which are classified as non-performing assets as per RBI norms.
• The exporters should have the capacity, systems and processes in place to ensure that orders over the duration of the tenure can be executed.
This direction will help the exporters and ensure capital flows to fulfill long-term contracts.

Is this article important for exams ? Yes122 People Agreed
Read more Current Affairs on: RBI , banks , loans , 10 yrs tenure , exporters , capital flows

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