The Reserve Bank of India (RBI) on Tuesday announced cheaper credit for labour-intensive export-oriented units in a move aimed at helping exporters tide over an uncertain global market amid shrinking demand from two major markets - the US and Europe.
Handicrafts, handlooms and carpets exporters will be eligible for loans at 7%. The government will directly subsidise banks for these loans.
"Banks may reduce the interest rate chargeable to the exporters for export credit subject to a floor rate of 7%. Banks may ensure to pass on the benefit of 2% interest subvention completely to the eligible exporters," a RBI notification said.
The Centre provides an interest subsidy of 2% to banks to enable them to lend to exporters of leather, marine products, textiles and handicrafts at 7 %.
Exporters of handicrafts, handlooms, carpets and small and medium enterprises will be eligible for the interest subvention to be available up to March 31, 2012, the RBI said.
The decision to help exporters was announced on a day when the high-level Board of Trade (BoT) reviewed the situation arising out of renewed worries about the global economy.
The BoT, headed by commerce minister Anand Sharma and comprising industrialists, discussed issues such as currency volatility, availability of dollar credit and high cost of credit.