RBI hikes rate ceilings on foreign trade credits

MUMBAI: In a relief to importers and exporters hit hard by Eurozone crisis, the Reserve Bank today revised the interest rate ceiling by 150 basis points for raising overseas trade credit.

The all-in-cost ceiling both for importers and exporters has been raised from 200 basis points (bps) to 350 bps over London Inter Bank Offer Rate (LIBOR).

"On a review of developments in the global financial markets and the fact that domestic importers are experiencing difficulties in raising trade credit within the existing all-in-cost ceiling, it has been decided to revise the ceiling," the Reserve Bank of India (RBI) said. This comes into immediate effect.

The enhancement in ceiling is applicable upto March 31, 2012, it said.

The limit includes different kind of fees like management fee, handling/processing charges, out of pocket and legal expenses.

Besides, the apex bank has directed the banks that they will not charge any other levy on raising export credit.