Indian central bank eases repayment rules for exporters

The decision follows the recent announcement by the government about the 'export promotion mission' and easier loan flow.

A gazette notification announced the amendments to the regulations of the Foreign Exchange Management Act, 1999, (FEMA).

The deadline for realisation of export payments was extended to 15 months from nine months and several loan conditions were relaxed to help companies hit by global trade disruptions.

The deadline to settle or adjust advance payments received from overseas buyers has been extended to three years from one year.

Exporters dispatching their goods to the United States are facing pressure after Washington imposed tariffs and additional sanction-linked duties on Russian oil imports.

The central bank’s relaxation of timelines and credit conditions aims at cushioning exporters dealing with delayed payments, squeezed margins and rising compliance checks in their key markets.

A separate circular to banks, cooperatives and non-banking finance corporations (NBFCs) outlines how lenders should support affected exporters. Firms in specified sectors that held standard export credit as of August 31 may be offered a four-month moratorium on loan installments and interest from September 1 to December 31.

Interest will continue to accrue, but only as simple interest. Lenders may convert this into a separate loan, which can be repaid between April and September 2026.

Banks have also been allowed to ease working-capital rules by reducing margins and recalculating drawing power. They may offer exporters up to 450 days to repay pre-shipment and post-shipment credit.

Exporters who have produced goods but cannot ship them may repay packing credit using domestic sales or proceeds from other export orders.

These relaxations will not be treated as restructuring, and lenders must ensure borrowers' credit histories are not affected, the central bank said. Banks will, however, need to create a 5-per cent general provision against such accounts as a prudential buffer.

The measures are aimed at preventing short-term trade disruptions from turning into defaults and allow lenders to support viable firms without weakening credit discipline, RBI added.

ALCHEMPro News Desk (DS)