(a) Banks should simplify the application form and reduce data requirements from exporters for assessment of their credit needs, so that exporters do not have to seek outside professional help to fill in the application form or to furnish data required by the banks.

(b) Banks should adopt any of the methods, viz. Projected Balance Sheet method, Turnover method or Cash Budget method, for assessment of working capital requirements of their exporter-customers, whichever is most suitable and appropriate to their business operations.

(c) In the case of consortium finance, once the consortium has approved the assessment, member banks should simultaneously initiate their respective sanction processes.

(a) Banks provide 'Line of Credit' normally for one year which is reviewed annually. In case of delay in renewal, the sanctioned limits should be allowed to continue uninterrupted and urgent requirements of exporters should be met on ad hoc basis.

(b) In case of established exporters having satisfactory track record, banks should consider sanctioning a 'Line of Credit' for a longer period, say, 3 years, with in-built flexibility to step-up/step-down the quantum of limits within the overall outer limits assessed. The step-up limits will become operative on attainment of pre-determined performance parameters by the exporters. Banks should obtain security documents covering the outer limit sanctioned to the exporters for such longer period.

(c) In case of export of seasonal commodities, agro-based products etc., banks should sanction Peak/Non-peak credit facilities to exporters.

(d) Banks should permit interchangeability of pre-shipment and post- shipment credit limits.

(e) Term Loan requirements for expansion of capacity, modernisation of machinery and upgradation of technology should also be met by banks at their normal rate of interest.

(f) Assessment of export credit limits should be 'need based' and not directly linked to the availability of collateral security. As long as the requirement of credit limit is justified on the basis of the exporter's performance and track record, the credit should not be denied merely on the grounds of non-availability of collateral security.

(a) Banks should not insist on submission of export order or L/C for every disbursement of pre-shipment credit, from exporters with consistently good track-record. Instead, a system of periodical submission of a Statement of L/Cs or export orders in hand, should be introduced.

(b) Banks may waive, ab initio, submission of order/LC in respect of exporters with good track record and put in place the system of obtaining periodical statement of outstanding orders/LCs on hand. However, the same may be incorporated in the sanction proposals as well as in the sanction letters issued to exporters and appropriately brought to the notice of ECGC. Further, if such waivers are permitted at a time subsequent to sanction of export credit limits with the approval of the appropriate authority, the same may be incorporated in the terms of sanction by way of amendments and communicated to ECGC.

Banks are required to obtain, among others, original sale contract/confirmed order/proforma invoice countersigned by overseas buyer/indent from authorised agent of overseas buyer for handling the export documents as per Exchange Control regulations. Submission of such documents need not be insisted upon at the time of handling the export documents, since the goods have already been valued and cleared by the Customs authorities, except in the case of transactions with Letters of Credit (L/C) where the terms of L/C require submission of the sale contract/other alternative documents.

(a) At specialised branches and branches having sizeable export business, a facilitation mechanism for assisting exporter-customers should be put in place for quick initial scrutiny of credit application and for discussions for seeking additional information or clarifications.

(b) Banks should streamline their internal systems and procedures to comply with the stipulated time limits for disposal of export credit proposals and also endeavour to dispose of export credit proposals ahead of the prescribed time schedule. A flow chart indicating chronological movement of credit application from the date of receipt till the date of sanction, should also accompany credit proposals.

(c) Banks should delegate higher sanctioning powers to their branches for export credit.

(d) Banks should consider reducing at least some of the intervening layers in the sanctioning process. It would be desirable to ensure that the total number of layers involved in decision-making in regard to export finance does not exceed three.

(e) Banks should introduce a system of 'Joint Appraisal' by officials at branches and administrative offices, to facilitate quicker processing of export credit proposals.

(f) Where feasible, banks should set up a 'Credit Committee' at specialised branches and at administrative offices, for sanctioning working capital facilities to exporters. The 'Credit Committee' should have sufficiently higher sanctioning powers.

(a) Generally, export credit at internationally competitive rates is made available in foreign currency at select branches of banks. In order to make the scheme more popular and considering the competitive interest rate on foreign currency loans and to mitigate any possible exchange risk, exporters needs to be encouraged to make maximum use of export credit in foreign currency. Banks located in areas with concentration of exporters should, therefore, give wide publicity to this important facility and make it easily accessible to all exporters including small exporters and ensure that more number of branches are designated for making available export credit in foreign currency.

(b) Banks may also arrange to publicise widely the concessionality available in the interest rates for deemed exports and ensure that operating staff are adequately sensitised in this regard.

(c) Officers at operating level should be provided with adequate training. In the matter of transfer of officials from critical branches dealing in export credit, banks should ensure that the new incumbents posted possess adequate knowledge/exposure in the areas of forex as well as export credit to avoid delays in processing/sanctioning of export credit limits and subjecting exporters to the risk of cancellation of export orders.

(a) Banks should bring out a Hand Book containing salient features of the simplified procedures for sanction of Export Credit in Foreign Currency at internationally competitive rates as well as in rupees for the benefit of their exporter-clients.

(b) To facilitate interaction between banks and exporters, banks should periodically organise Exporters' Meet at centres with concentration of exporters

2.1.1 Banks are required to reach a level of outstanding export credit equivalent of 12% of each bank's net bank credit. Accordingly, the performance of banks is being reviewed by the RBI, IECD at quarterly intervals. The performance of the banks in extending export credit will be assessed on the basis of the average export credit outstanding reported in the fortnightly statement of Export Credit Refinance Limits submitted on reporting Fridays to RBI, MPD, Central Office, Mumbai, a copy of which is to be forwarded to RBI, IECD, Central Office, Mumbai.

2.1.2 Banks should endeavour to reach a level of export credit equivalent to 12 percent of the bank’s net bank credit. Where banks have already provided export credit to the extent of 12 percent, endeavour should be made to increase the same to a higher level and ensure that there is no fall in the ratio. No worthwhile export order should be denied export credit from the banks.

2.1.3 Failure to achieve the stipulated level of export credit and or failure to show a distinct improvement in export credit performance could invite bank-specific policy responses which could include raising of reserve requirements and withdrawal of refinance facilities. The Industrial & Export Credit Department of the Reserve Bank of India would closely monitor the export credit performance of the banks.

Banks should submit the export credit disbursement data on a quarterly basis in the format given in Annexure 1. Banks should ensure that the statement reaches Reserve Bank of India, Industrial & Export Credit Department, Central Office, Mumbai positively by the end of the month following the quarter to which it relates.

Trading in conflict diamonds has been banned by U.N. Resolution Nos. 1173 and 1176 as the conflict diamonds play a large role in funding the rebels in the civil torn areas of Sierra Leone, Angola and Congo. There is also a prohibition on the direct/indirect import of all rough diamonds from Sierra Leone and Liberia in terms of the UN Resolution No. 1306 (2000) and 1343(2001) respectively. In view of this, the banks should obtain an undertaking in the format given in Annexure 2 from such of the clients who have been extended credit for doing any business relating to diamonds. Any violation of these UN Regulations as and when noticed may be reported to RBI, IECD.