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RBI Raises Interest Subsidy For MSME Sector Exporters To 5%

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To boost exports from the micro, small and medium enterprises sector, the Reserve Bank of India on Thursday said that the interest subsidy on post- and pre-shipment export credit has been increased to 5 percent from 3 percent.

The increased subsidy was applicable from Nov. 2. Exporters get the subsidy under the "Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit".

"It has been decided by the Government of India to increase with effect from Nov.2, Interest Equalisation rate from 3 percent to 5 percent in respect of exports by the MSME sector manufacturers under the Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit." - Reserve Bank of India

The scheme (earlier called Interest Subvention Scheme) was announced by the government in November for all exports of MSME and 416 tariff lines.

The scheme mostly covers labour intensive and employment generating sectors like processed agriculture/food items, handicrafts, ready-made garments, glass and glassware, medical and scientific instruments and auto components/parts, among others.

In another notification, the central bank said that it has relaxed the guidelines for non-banking lenders on securitisation transactions in order to encourage them to securitise/assign their eligible assets.

"... it has been decided to relax the minimum holding period requirement for originating NBFCs, in respect of loans of original maturity above five years, to receipt of repayment of six monthly installments or two quarterly installments...," according to the notification.

Another notification of the RBI said that all participants, other than individuals, undertaking transactions in the markets regulated by it—government securities markets, money markets and non-derivative forex markets—shall obtain Legal Entity Identifier codes.

Also Read: RBI Reduces Minimum Holding Period For Securitisation Of Loan Portfolios

The central bank has given timelines for different types of participants to comply with the directions.

The LEI code has been conceived as a key measure to improve the quality and accuracy of financial data systems for better risk management post the Global Financial Crisis. The LEI is a 20-character unique identity code assigned to entities who are parties to a financial transaction.

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