New Delhi: The Reserve Bank of India’s (RBI) decision to raise the interest rates at which banks can raise export credit in the global market will help exporters to access foreign currency loans.
The apex bank has allowed banks to raise export credit in foreign currency at 350 basis points (bps) above the London Interbank Offered Rate (Libor) from 100 bps earlier.
Cost of acquisition of credit in international market had gone up significantly in the recent months in the backdrop of the global credit crisis.
Exporters said while banks were able to lend to them foreign currency debt at Libor-plus 100 basis points before the global meltdown.
Finance in international market is now available at not less than 200-250 bps above the benchmark.
The apex bank has also asked the banks not to levy any charges like service tax on the credit.
The new rules will be applicable where Euro- Libor, which is used as a benchmark.
Concerned over a sharp fall in exports since October this fiscal year, the government is working on different options to help exporters.