RBI Export Credit in Foreign Currency – Benchmark Rate

Last updated: 07 August 2021

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The Reserve Bank of India (RBI) has issued a notification regarding the benchmark rate for export credit provided in foreign currency. Previously, this credit was linked to LIBOR/EURO LIBOR/EURIBOR. Due to the discontinuation of LIBOR, banks are now permitted to use any other widely accepted Alternative Reference Rate for the relevant currency.

RBI/2021-2022/79
DOR.DIR.REC.37/04.02.002/2021-22

August 6, 2021

All Scheduled Commercial Banks
(excluding Regional Rural Banks)
All Primary (Urban) Co-operative Banks¹
All Small Finance Banks

Dear Sir / Madam,

Export Credit in Foreign Currency – Benchmark Rate

Please refer to Master Circular DBR.No.DIR.BC.14/04.02.002/2015-16 dated July 1, 2015 on Rupee / Foreign Currency Export Credit and Customer Service to Exporters.

2. As per the extant guidelines, authorized dealers are permitted to extend Pre-shipment Credit in Foreign Currency (PCFC) to exporters for financing the purchase, processing, manufacturing or packing of goods prior to shipment at LIBOR/EURO LIBOR/EURIBOR related rates of interest.

3. In view of the impending discontinuance of LIBOR as a benchmark rate, it has been decided to permit banks to extend export credit using any other widely accepted Alternative Reference Rate in the currency concerned. All other instructions in this regard shall remain unchanged.

Yours faithfully,

(Manoranjan Mishra)
Chief General Manager

¹ Scheduled UCBs holding Authorized Dealer Category-I license

FAQ :

The RBI has updated the benchmark rate for export credit in foreign currency. Banks can now use Alternative Reference Rates (ARRs) instead of the soon-to-be discontinued LIBOR.

This change affects Pre-shipment Credit in Foreign Currency (PCFC) provided to exporters for financing goods before shipment.

Previously, export credit in foreign currency was linked to LIBOR, EURO LIBOR, or EURIBOR related rates of interest.

The change is being made because LIBOR is being phased out and discontinued as a benchmark rate.

No, all other instructions regarding export credit in foreign currency remain unchanged.

Notification No : RBI/2021-2022/79 DOR.DIR.REC.37/04.02.002/2021-22
Source : https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12139&Mode=0

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