Exporters finding it difficult to access foreign currency loans need no longer despair, as the Reserve Bank has raised the interest rate ceiling at which banks can raise export credit in the global market.
RBI has allowed allowed banks to raise export credit in foreign currency at 350 basis points above the the London Interbank Offered Rate (LIBOR) from 100 basis points earlier.
Cost of acquistion of credit in international market had gone up significantly in the recent months in the backdrop of the global financial crunch.
Exporters said while banks were able to lend to them foreign currency debt at LIBOR plus 100 basis points before the global meltdown, the finance in international market is now available at not less than 200-250 basis point above the benchmark.
The central bank has also asked the banks not to levy any charges like service tax on the credit.
The new rules will be applicable where EURO-LIBOR, which is used as a benchmark.