This document discusses export credit refinance facilities provided by the Reserve Bank of India (RBI) to banks. It defines key terms like exporter and export credit. It describes two types of export credit refinance - pre-shipment and post-shipment financing. Banks can avail rupee or dollar refinance from RBI at the repo rate to provide export financing to exporters. The document outlines eligibility criteria, limits, documentation requirements and penalties for irregular usage of these refinance facilities.

1. EXPORT CREDIT
REFINANCE
(ECR)
BUVANA.H

2. AGENDA
2
GENERAL DEFINITIONS
INTRODUCTION
CLASSIFICATION
FACILITIES OFFERED BY EXIM BANK
RBI MASTER CIRCULAR ON–
 ECR FACILITY
SPECIAL ECR FACILITY

3. GENERAL DEFINITIONS
 Exporter:
A person who sends goods or commodities to a
foreign country.
 Export credit:
Loan facility extended to an exporter by a bank in
the exporter's country.

4.  Export Credit Refinancing (ECR) provides an
alternative short term pre- and post-shipment financing
to direct/indirect exporters to promote export of
manufactured products, agricultural products and
primary commodities.
 It is available to a manufacturer or trading company
with ECR credit line duly established with any
participating commercial bank.
INTRODUCTION

5. PROCESS FLOW
SELLER/EXPOR
TER
BUYER/IMPORT
ER
BANK
RBI
RECEIVE
ORDER
EXPORT
1
4
APPROACH 2
CREDIT
3
APPROACH
5
REFINANCE
6

6. ECR-CLASSIFICATION
Pre-shipment : Financing before exportation of goods.
After securing the purchase order for the goods, you can
proceed to finance working capital requirement for
production of merchandise
Post-shipment : Financing after the shipment of the
goods on credit or usance terms.

7. Contd….
METHOD OF
FINANCING
PRE-SHIPMENT
ECR
ORDER-BASED
CERTIFICATE OF
PERFORMANCE
POST- SHIPMENT
ECR
BILL
DISCOUNTING

8. Facility Pre-shipment ECR Post-Shipment ECR
Method of
Financing
Order-Based
Financing is against
the export order
received from
overseas buyer or
direct exporter.
Certificate of
Performance (CP)
Financing is against
certificate of
performance (CP)
issued by EXIM
Bank
Bill Discounting
Financing against
export documents
Margin of
Financing
Up to 95% on value
of export order.
Up to 95% of ECR,
DLC, ECR, DPO or
LPO
Up to a maximum
of 100% of export
bill value. Subject
to availability of
ECR credit limit
with the
commercial bank
and EXIM Bank’s
administrative limit.
Direct
Exporter
100% of
export
value of
proceeding
12 month
Indirect
Exporter
80% of
local sales
FACILITIES OFFERED BY EXIM BANK

9. Facility Pre-shipment ECR Post-Shipment ECR
Tenor Up to a maximum
of 120 days
120 days rollover
is allowed
Up to a maximum
183 days.
Repayment Upon:-
 Export proceeds; or
 Post-shipment proceeds
.
Upon: -
 receipt of
export
proceeds; or
 maturity of the
post-shipment
bill whichever
is earlier.

10. Master Circular on Export Credit
Refinance Facility

11. CONTD…
EXPORT CREDIT
REFINANCE
RUPEE
REFINANCE
(CIRCULAR DT
JULY 2,2012)
DOLLAR
REFINANCE
(CIRCULAR DT JAN
14,2013)

12. 1.INTRODUCTION :
 The Reserve Bank of India (RBI) provides export credit
refinance facility to banks under Section 17(3A) of the
Reserve Bank of India Act 1934.
 This facility is given on the basis of banks’ eligible
outstanding rupee export credit both at the pre-shipment
and post-shipment stages.
 The quantum of refinance is fixed from time to time
based on the stance of monetary policy of the RBI.
PART –A ( RUPEE REFINANCE )

13. 2.Eligible Institutions
All scheduled banks (excluding RRBs), which are
authorized dealers in foreign exchange.
3. Limit
At present, the scheduled banks are provided export
credit refinance to the extent of 50.0 per cent of the
outstanding export credit eligible for refinance.
 This limit has increased from 15.0 per cent to 50.0
per cent, effective fortnight beginning June 30, 2012, to
enhance credit flows to the export sector.

14. 4. Interest Rate
 Export credit refinance facility is available at the Repo
Rate under the Liquidity Adjustment Facility (LAF), as
announced from time to time.
 Interest shall be payable with monthly rests and the
amounts of such interest calculated on daily balances
would be debited to the current account of the banks at
the end of respective month or earlier when the balance
outstanding is wiped out.
5. Margin Requirement
No margin is required to be maintained.

15. 6. Duration
The ECR is repayable on demand or on the expiry of fixed
periods not exceeding one hundred and eighty days.
7. Collateral
RBI extends the export credit refinance against the Demand
Promissory Note (DPN) of banks supported by a declaration
that they have extended export credit and the outstanding
amount eligible for refinance is not less than the loan/advance
from the RBI.

16. 8. Minimum Amount of Availment
The minimum amount of availment under this
facility is Rupees one lakh and multiples thereof.
9. Place of Availment
This facility can be availed of at centres wherever
the Reserve Bank has a Banking Department.

17. 10. Penalties
10.1 In the event of a scheduled bank having irregular
availment of export credit refinance, a penal rate of interest as
decided by the Reserve Bank from time to time will be charged
on the outstanding loan or loans.
10.2 An illustrative (but not exhaustive) list of instances on
which penal rate would be applicable for irregular availment of
export credit refinance is set out below:
a) Utilisation of ECR exceeding the total limit.
b) Wrong calculation/reporting of refinance limit by banks.
c) Non-repayment of refinance within 180 days.
d) Delay in reporting excess utilisation by banks.

18. 11. Documentation
11.1 The banks have to execute the following documents for
availing of export credit refinance facility (AnnexII): finance
projECRCIRCULAR-1.doc
a) A stamped agreement in Form No. DAD 297
b) A Demand Promissory Note (DPN) in Form No. DAD 295 A.
c) Board Resolution in Form No. DAD 298
d) For enhancement of limit, a letter in Form No. DAD 299
and also a fortnightly declaration in form No.DAD.389

19. e) In terms of Para 7.30 of Banking Department Manual,
Agreements and letters of extension of limit need not be
renewed so long as there is no change in the terms thereof.
Promissory notes given by the borrowing banks should,
however, be renewed within three years of their dates of
execution notwithstanding their outstandings in loan account.

20. 12. Reporting Requirement
12.1 The availing banks are required to report their outstanding
export credit eligible for refinance within five days from the
relevant date in the format provided in Annex III.
13. Condition
13.1 It is essential that the outstanding borrowings at all times
are fully covered by the borrowing banks’ holding of export
bills/amount of eligible pre-shipment advances as reported in
their latest declaration. If at any time it is found that the total
amount of bills held by banks/amount of eligible pre-shipment
advances covered by the declaration fall below the amount
borrowed, the banks should forthwith adjust or repay excess
refinance from the RBI.

21. Special Export Credit Refinance
Facility

22. Swap Facility for Expansion of Export
Credit in Foreign Currency
INTRODUCTION:
 With a view to further enhancing the flow of credit to the
export sector, the Reserve Bank of India has introduced a US
Dollar-Rupee swap facility to support incremental Pre-
shipment Export Credit in Foreign Currency (PCFC) by
banks.
Scheduled banks (excluding Regional Rural Banks (RRBs))
will have the option to access rupee refinance to the extent of
the swap with the Reserve Bank under a special export credit
refinance facility.
PART-B ( DOLLAR REFINANCE )

23. INTEREST RATE:
 The rupee rate of interest charged on refinance
availed of under the special export refinance facility
will be the prevailing repo rate under the Liquidity
Adjustment Facility (LAF), currently at 7.75 per cent.
 The swap facility will be available to scheduled
banks (excluding RRBs) from January 21, 2013 till
June 28, 2013 for fixed tenor of 3/6 months. .

24.  The overall cap for the banking system works out to
US Dollar 6.5 billion.
Under the swap arrangement, a bank can buy US
Dollars up to its eligible swap limit from the Reserve
Bank and simultaneously sell the same amount of US
Dollars forward as per the term of the swap at the
prevailing market rates for swaps of similar tenor. At the
end of the swap term, the bank will exchange with the
Reserve Bank, the US Dollars against the rupees.

25. PROCESS FLOW
SELLER/EXPOR
TER
BUYER/IMPORT
ER
BANK
RBI
RECEIVE
ORDER
EXPORT
1
6
APPROACH 2
CREDIT
5
APPROACH
3
BUY US$
AGAINST
RUPEES
4
FORWARD
MARKET
SELL US$
7