Bonanza for exporters: RBI eases priority-sector lending norms to boost exports

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Updated: September 22, 2019 6:59:38 AM

Last week, finance minister Nirmala Sitharaman had announced that RBI would soon ease PSL norms for exports, which will release an extra Rs 36,000- Rs 68,000-crore loans to this sector that has witnessed a persistent contraction in credit flow.

import, export, RBI, Nirmala Sitharaman, priority sector, boost export, boost importBefore the RBI’s notification dated Friday, exporters with a turnover of up to Rs 100 crore each were eligible for credit under the PSL norms.

The Reserve Bank of India (RBI) has relaxed the priority-sector lending (PSL) rules for exporters, scrapping the turnover limit for an exporter to be eligible for such loans and increasing the sanction limit per borrower, to complement the government’s efforts to boost the flow of credit and reverse a slide in outbound shipments in recent months.

Last week, finance minister Nirmala Sitharaman had announced that RBI would soon ease PSL norms for exports, which will release an extra Rs 36,000- Rs 68,000-crore loans to this sector that has witnessed a persistent contraction in credit flow.

Before the RBI’s notification dated Friday, exporters with a turnover of up to Rs 100 crore each were eligible for credit under the PSL norms. With the abolition of this criterion, a larger number of exporters will benefit. Similarly, the maximum sanction limit of loan to exporters is now raised to Rs 40 crore per borrower from Rs 25 crore earlier.

However, the cap on export credit banks can disburse as part of their priority-sector lending portfolio remains unchanged. The RBI said: “The existing guidelines for domestic scheduled commercial banks to classify ‘Incremental export credit over corresponding date of the preceding year, up to 2% of ANBC (Adjusted Net Bank Credit) or Credit Equivalent Amount of Off-Balance Sheet Exposure, whichever is higher’ under PSL will continue to be applicable…” “There is no change in the present instructions in respect of foreign banks,” the central bank added.

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