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Credit flow to exports liberalised

With a view to encourage competition among banks and also to increase flow of credit to the export sector, Reserve Bank of India proposed to liberalise interest rates on export credit in rupee terms in two phases.

Announcing the mid-term review of the Monetary and Credit Policy for 2002-03, on Tuesday, RBI Governor Bimal Jalan said the ceiling rate of prime lending rate plus 0.5 per cent on pre-shipment credit beyond 180 days and up to 270 days and post-shipment credit beyond 90 days and up to 180 days will be deregulated with effect from May 1, 2003.

Banks would have freedom to charge PLR or sub-PLR rates subject to approval of their boards, Jalan said.

In the second phase, with effect from a date to be announced later, it will be considered whether the ceiling rates on pre-shipment credit up to 180 days and post-shipment credit up to 90 days should also be discontinued to encourage greater competition in the interest of exports.

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