ANNOUNCEMENT 05 Feb 2009In February 2009, the government of India announced a change in its trade finance instruments.
NUMBER OF INTERVENTIONS
5 February 2009 - Circular DBOD.DIR (Exp).No.107/04.02.001/2008-09
On 5 February 2009, the Reserve Bank of India through Circular DBOD.DIR (Exp).No.107/04.02.001/2008-09 increased the interest ceiling rate on export credit in foreign currency.
The ceiling rates vary depending on the origin of the lender. For domestic banks, the ceiling has been raised from LIBOR/EURIBOR plus 100 basis points to LIBOR/EURIBOR plus 350 basis points. This rate is subject to the condition that the banks will not levy any other charges.
Further, the interest ceiling rate with overseas banks has been increased from LIBOR/EURIBOR plus 75 basis points to 150 basis points.
The interest rates have been periodically amended until being deregulated in May 2012 (see related measures)