All Commercial Banks

Dear Sir,

Please refer to paragraph 113 of the Annual Policy Statement for the year 2006-07 enclosed to the Governor's letter No. MPD.BC.279/07.01.279/2005-06 dated April 18, 2006 relating to export credit in foreign currency.

2.       On the basis of the recommendation of the Working Group to Review Export Credit, it has been decided to revise the ceiling rate on export credit in foreign currency by banks to LIBOR plus 100 basis points from the present ceiling rate of LIBOR plus 75 basis points with immediate effect . Similar changes may be effected in interest rates in cases where EURO LIBOR/EURIBOR have been used as the benchmark. The rates of interest applicable have been incorporated in the Annex to the DBOD.DIR. BC. No. 77/ 04.02.01/2005-06 dated April 18, 2006 enclosed to this circular.

3.    The revision in the rates of interest would be applicable not only to fresh advances but also to the existing advances for the remaining period.

4.     Please acknowledge receipt.

 Yours faithfully,

In exercise of the powers conferred by Sections 21 and 35A of the Banking Regulation Act, 1949, the Reserve Bank of India, being satisfied that it is necessary and expedient in the public interest so to do, hereby directs that, with effect from April 18, 2006, the interest rates on export credit in foreign currency would be as indicated in the Annex enclosed to this Directive.