RBI's HUGE Relief: Exporters Get 15 Months for Payments & Easier Loans!

Author

Simar Singh | Whalesbook News Team

Detailed Coverage:

The Reserve Bank of India (RBI) has significantly eased rules for exporters to help them navigate global trade challenges. The time frame for realizing export proceeds has been extended from nine months to 15 months. Additionally, the deadline for settling advance payments from overseas buyers is now three years, an increase from one year.

**Loan Relief**: Lenders have been instructed to support affected exporters. Eligible firms can receive a four-month moratorium on loan installments and interest from September 1 to December 31, 2023. Interest during this period will be simple interest, and the moratorium amount can be repaid between April and September 2026. Banks can also provide up to 450 days to repay pre-shipment and post-shipment credit. These relaxations are designed to prevent short-term trade disruptions from becoming defaults, improve exporter cash flows, and allow lenders to support viable businesses without compromising credit discipline. The RBI clarified that these measures will not be treated as loan restructuring and will not affect borrowers' credit histories. Banks will be required to maintain a 5% general provision against these accounts.

**Impact**: 7/10. This policy change offers substantial relief to the export sector, expected to improve liquidity and reduce financial stress for exporting companies, thereby positively influencing India's trade performance.

**Difficult Terms**: Fema: Foreign Exchange Management Act, a law governing foreign exchange transactions in India. Moratorium: A temporary suspension of loan payments. Simple Interest: Interest calculated only on the principal amount. Pre-shipment Credit: Loans for production before goods are shipped. Post-shipment Credit: Loans for exporters after goods are shipped until payment is received. Working Capital: Funds for daily business operations. Drawing Power: Maximum amount one can withdraw from a working capital facility. Prudential Buffer: A reserve held by financial institutions to absorb unexpected losses.