Under the swap arrangement, a bank can buy US dollars up to its eligible swap limit from the RBI and further sell the same amount of dollars at the prevailing market rates for swaps of a similar tenor
Mumbai: With an aim to help the country’s exporters get better credit, the Reserve Bank of India (RBI) announced a special scheme to allow banks refinance their export credit positions through a dollar-rupee swap facility of up to $6.5 billion, reports PTI.
While the individual limits of banks for availing this facility would be intimated to them separately, the RBI said that the swaps for rupee refinance of export credit of all the banks together would be capped at $6.5 billion (about Rs35,420 crore).
Announcing the facility, the RBI said “scheduled banks (excluding Regional Rural Banks—RRBs) will have the option to access rupee refinance to the extent of the swap with the Reserve Bank under a special export credit refinance facility”.
The special export credit refinance facility—US Dollar-Rupee swap—will support incremental pre-shipment export credit in foreign currency (PCFC) and would be available to all scheduled banks, excluding RRBs.
Banks can tap this facility for a period of over five months, from 21st January till 28 June 2013 for fixed tenor of three or six months.
Under the swap arrangement, a bank can buy US dollars up to its eligible swap limit from the RBI and further sell the same amount of dollars at the prevailing market rates for swaps of similar tenor.
“At the end of the swap term, the bank will exchange with the Reserve Bank, the US Dollars against the rupees,” the central bank said while adding that its decision on pricing of the swap would be final.
This swap facility, RBI said, has been done “with a view to further enhancing the flow of credit to the export sector”.
RBI said the banks have the option to access rupee refinance under the special export credit refinance facility for which promissory notes will need to be fully backed by eligible export bills under the PCFC.
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