The Reserve Bank on Tuesday extended the interest equalization scheme for pre-shipment and post-shipment rupee credit for MSME exporters until March 2024 in a bid to boost outbound shipments.
Exporters benefit from a subsidy under the “Interest Equalization Scheme for Pre-shipment and Post-shipment Rupee Export Credits”.
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In April last year, the program was first extended until the end of June and then until September 2021.
Interest equalization rates under the scheme have been revised to 2% and 3% for specific categories of exporting manufacturing MSMEs, the RBI said.
“The Government has approved the extension of the Interest Equalization Scheme for Pre-shipment and Post-shipment Rupee Export Credits until March 31, 2024 or until further review, whichever comes first. The extension takes effect from from October 1, 2021 and ends on March 31, 2024,” the RBI said in a notification.
The program will not apply to telecommunications instruments and entities receiving benefits under the government’s Production Linked Incentives (PLI) program.
When issuing the approval to the exporter, the bank will be required to provide the prevailing interest rate, the interest subsidy being provided and the net rate charged to each exporter, to ensure transparency and greater accountability in the operation of the regime, the RBI said.
He further said that from April 1, 2022, banks would reduce the interest rate charged to eligible exporters in advance as per the guidelines and submit applications in original within 15 days from the end of the month. respective in the prescribed format.
The RBI further stated that for the period of October 1, 2021 to March 31, 2022, banks must identify eligible exporters under the scheme, credit their accounts with the eligible amount of interest equalization and submit a consolidated refund claim by sector for the period at the Reserve Bank by April 30, 2022.
India’s merchandise exports in February 2022 stood at USD 33.81 billion, an increase of 22.36% from USD 27.63 billion in the same month of 2021.