Mumbai: In a move that could restrict access to credit for exporters, the Reserve Bank of India, or RBI, on Friday lowered the ceiling rate on export credit in foreign currency by banks to Libor (London interbank offered rate) plus 200 basis points, or 2%, from the present ceiling of Libor plus 350 basis points with immediate effect.
The central bank also reduced the ceiling of interest rate on the lines of credit with overseas banks from six months Libor plus 150 basis points to six months Libor plus 100 basis points with immediate effect.
The ceilings were revised up in February 2009 to help exporters access credit from any source they can when there was a paucity of credit available globally. RBI now rolls back the facility at a time when the credit availability is improving.
The banking regulator said banks should not levy any other charges like service charge, management charge, etc., except for recovering out of pocket expenses to the customers of this loan. The rates are applicable only to fresh advances, RBI said in a notification.