The Reserve Bank of India (RBI) on Friday announced a Rs 15,000-crore line of credit to the Export-Import Bank of India (EXIM), to help the sagging foreign trade.
The announcement is part of the RBI’s latest measures to help businesses and the economy tide over the coronavirus crisis.
The central bank said Export-Import Bank of India (EXIM Bank) depends on foreign currency borrowings for its operations and as a result of the COVID-19 pandemic, it is unable to raise the resources, due to which the facility is being extended.
“It has been decided to extend a line of credit of Rs 15,000 crore to the EXIM Bank for a period of 90 days from the date of availment with rollover up to a maximum period of one year so as to enable it to avail a US dollar swap facility to meet its foreign exchange requirements,” Reserve Bank of India Governor Shaktikanta Das said.
He said the country’s export-import trade has suffered because of external demand crippling owing to the pandemic and decline in import of essential goods and services.
Among other measures, the Reserve Bank of India (RBI) has also decided to increase the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks from the existing one year to 15 months, for disbursements made up to July 31, 2020, Das said.
On the imports front, it has been decided to extend the time period for completion of remittances against normal imports into India (except in cases where amounts are withheld towards guarantee of performance) from six months to 12 months from the date of shipment for imports made on or before July 31, 2020, Das said.
According to Das this will provide greater flexibility to importers in managing their operating cycles in a COVID-19 environment.
As part of the developmental and regulatory policies, the RBI also announced help to Small Industries Development Bank of India (SIDBI) on the refinance front through the roll over of a three month, Rs 15,000-crore facility announced earlier.
In order to provide greater flexibility to SIDBI in its operations, it has been decided to roll over the facility at the end of the 90th day for another period of 90 days,” Das said.
For the financial markets, in view of the difficulties reported by the Foreign Portfolio Investors and custodians for adhering to the condition of investing at least 75 per cent of allotted limits are invested in three months, the RBI granted an additional three months to fulfil this requirement.
The Export-Import Bank of India provides financial assistance to exporters and importers with a view to promoting the country’s international trade.
EXIM Bank predominantly relies on foreign currency resources raised from international financial markets for its operations and it is facing challenges to raise funds in international deb capital markets amid the coronavirus crisis.