2% interest subvention scheme on Rupee Export Credit
August 11, 2010
All Members of the Council.
Sub : 2% interest subvention scheme on Rupee Export Credit
As you are kindly aware, the 2% interest subvention scheme on rupee export credit was extended only to the Small and Medium Enterprises (SME) for a further period of one year from April 1, 2010, in the Union Budget 2010-11. Considering that the leather sector has been adversely affected by the global crisis, the Council requested the Government of India to extend this facility to the entire leather sector.
We are pleased to inform you that the Government has favourably considered the Council’s request and has now extended the 2% interest subvention scheme facility to the Leather and Leather Manufactures sector for the period April 1, 2010 to March 31,2011. The Reserve Bank of India (RBI) has issued a Circular No. RBI/2010-11/165 dated August 9, 2010 in this regard, a copy of which is enclosed herewith.
The aforesaid RBI circular also states that with the change over to the Base Rate System, the interest rates applicable for all tenors of rupee export credit advances with effect from July 1, 2010 will be at or above Base Rate in respect of all fresh / renewed advances. Accordingly, banks may reduce the interest rate chargeable to the exporters as per Base Rate system for sectors eligible for export credit subvention by the amount of subvention available subject to a floor rate of 7%.
Members may kindly note the above.
Ali Ahmed Khan
COUNCIL FOR LEATHER EXPORTS