Special measures by RBI for exporters, importers and drawing power

Special measures by RBI on 22nd May, 2020 in respect of importers,

exporters and in respect of drawing power:

1. Export Credit:

Exporters have been facing genuine difficulties such as delay/

postponement of orders and delay in realisation of bills, which are

adversely affecting their production and realisation cycles.

It is in this context that the RBI has already permitted an increase

in the period of realization and repatriation of export proceeds to

India from nine months to 15 months from the date of export in respect

of exports made up to or on July 31, 2020.

It has now been decided to increase the maximum permissible period of

pre-shipment and post-shipment export credit sanctioned by banks from

the existing one year to 15 months, for disbursements made up to July

31, 2020.

2. Extension of Time for Payment for Imports:

Units are finding it difficult to pay for their imports within the

time stipulated under the Foreign Exchange Management Act (FEMA).

At present, remittances for normal imports (excluding import of

gold/diamonds and precious stones/jewellery) into India are required

to be completed within a period of six months from the date of

shipment by the overseas supplier, except in cases where amounts are

withheld towards guarantee of performance.

It has been decided to extend the time period for completion of

remittances against normal imports into India (except in cases where

amounts are withheld towards guarantee of performance) from six months

to twelve months from the date of shipment for such imports made on or

before July 31, 2020.

3. Recalculation of the drawing power in case of working capital limits:

In respect of working capital facilities sanctioned in the form of

cash credit/overdraft, lending institutions are permitted to

recalculate the ‘drawing power’ by reducing the margins till the

extended period, i.e., August 31, 2020. In order to smoothen the

impact for the borrowers, lending institutions are permitted to

restore the margins to the original levels by March 31, 2021.

Further, lending institutions are permitted to reassess the working

capital cycle of a borrowing entity up to an extended period till

March 31, 2021. This will provide necessary leeway to the lenders to

make an informed assessment about the impact of the pandemic on the

entity concerned.

CA Aniket Kulkarni