On February 28, 1999 the Reserve Bank of India had announced a scheme for revamping and major simplification of procedures for sanctioning of export credit in foreign currency to exporters, in particular small and medium exporters, at internationally competitive rates.

Under the revamped scheme, in addition to the rate of interest being directly linked to London Inter-Bank Offered Rate (LIBOR), it has also been provided that export credit will be need-based and not directly related to collateral security. Among other important features of the revamped scheme are : making available a ‘line of credit’ for a period of upto three years on the basis of exporter’s track record, flexibility in regard to the method of assessment of credit requirements, disbursement of credit on the basis of a statement of orders in hand, on approval by consortium, member banks to simultaneously initiate sanctioning process, submission of original sale contract/order not to be insisted upon for handling export documents unless required as per LC terms and simplification of sanctioning procedures, etc.

With a view to closely monitoring implementation by banks of the simplified procedures, and to sort out any operational problem that might arise in making foreign currency credit facilities available to exporters liberally, more particularly small and medium scale exporters, The Reserve Bank has set up a monitoring group of bankers with Shri M.G.Srivastava, Chief General Manager of Industrial and Export Credit Department as Convenor of the Group. The other members of the Monitoring Group are :

1. monitor implementation by bank branches, of the RBI guidelines on February 28, 1999 on export credit in foreign currency and ensure that the system is in place at all centres, more particularly centres with concentration of small and medium exporters,
2. visit and interact with bankers and exporters/exporter-bodies to sort out the problems/ impediments faced by exporters especially small and medium exporters, in availing of foreign currency credit, and to set up a procedure for attending to exporters’ difficulties expeditiously, and
3. review periodically the working of the schemes and submit their findings to the Standing Committee on Export Finance (SCEF) chaired by the RBI Deputy Governor for further action.

A circular advising banks has been issued by the Reserve Bank on March 3, 1999.