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Interest subsidy for MSME sector exporters increased to 5 pc: RBI

PTI:  November 30, 2018

Mumbai: To boost MSME sector exports, the Reserve Bank said Thursday the interest subsidy on post and pre-shipment export credit has been increased to 5 per cent from 3 per cent.

The increased subsidy is applicable from November 2.

Exporters get the subsidy under the 'Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit'.

"It has been decided by the Government of India to increase w.e.f. November 02, 2018 Interest Equalisation rate from 3 per cent to 5 per cent in respect of exports by the Micro, Small & Medium Enterprises (MSME) sector manufacturers under the Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit," the RBI said in a notification.

The scheme (earlier called Interest Subvention Scheme) was announced by the government in November 2018 for all exports of MSME and 416 tariff lines. 

The scheme covers mostly labour intensive and employment generating sectors like processed agriculture/food items, handicrafts, readymade garments, glass and glassware, medical and scientific instruments, and auto components/parts, among others.

In another notification, the RBI said it has relaxed the guidelines for NBFCs on securitisation transactions in order to encourage them to securitise/assign their eligible assets.

"... it has been decided to relax the Minimum Holding Period (MHP) requirement for originating NBFCs, in respect of loans of original maturity above 5 years, to receipt of repayment of six monthly instalments or two quarterly instalments...," it said.

Another notification of the RBI said all participants, other than individuals, undertaking transactions in the markets regulated by it -- Government securities markets, money markets and non-derivative forex markets -- shall obtain Legal Entity Identifier (LEI) codes.

The RBI has given timelines for different types of participants to comply with the directions.

The LEI code has been conceived of as a key measure to improve the quality and accuracy of financial data systems for better risk management post the Global Financial Crisis. 

The LEI is a 20-character unique identity code assigned to entities who are parties to a financial transaction.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.