MUMBAI, AUG 8: The Export-Import Bank of India has effected a substantial 2 per cent cut in its interest rate for post-shipment export credit upto 2 years to 12.5 per cent. Interest rates for export credits above two years and upto five years has been fixed at 13.5 per cent and for credits above 5 years the rate will be 14 per cent. This is also the first time Exim Bank has linked interest rate to the period of credit. Earlier it was a flat 14.5 per cent rate for all the tenure.

Interest rate for the rupee pre-shipment credit above 6 months which the Exim Bank provides in participation with the commercial banks has also been reduced by 2 per centage points to 12.5 per cent.

The bank has also reduced interest rates for post-shipment credit in dollars to LIBOR+75 bps for one year maturity. Longer maturities will attract higher interest rates depending on the period of credit and cost of funds. For longer term dollar credit of 5-7 year maturity, the interest rate will be around 150 bps above Libor, said Exim Bank, executive director - Desai.

He said the overall maturity of post shipment credit is shrinking. "The profile of the market has undergone a sea change. There is no longer the 7-8 year defererd payment credit.

Unlike earlier, the exporters are able to sell on cash. Quality and pricing has become more important now," said Desai.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.