Export Finance Scheme is a concessional short term financing facility provided to exporters through banks for exports of manufacturing goods and services especially value added products.

Objective:

To boost the country’s export by providing dedicated credit facility to exporters.

Salient Features:

Financing under EFS is available to;

Markup Rates:

Financing is provided at concessional mark-up rates. Currently markup rate is 3 % per annum.

Operations of the Scheme:

The scheme operates in two parts: Part-I and Part-II.

Part-I

› Exporters can avail financing through commercial banks on case-to-case basis at pre-shipment and/or post shipment stage against Firm Export Contract / LCs. The exporter has to show export performance equivalent to the loan amount.
› The tenure of the facility is up to 180 days with a rollover option for further 9 days. In case of availing rollover option for further 90 days, exporter is required to show export performance equivalent to 1/7% of the borrowed amount [SMEFD Circular no 4/2009]

Pre-requisite documents:

- Copy of Export Contract / LC
- Form ‘B’ – application for Finance by exporter
- Demand promissory note
- Undertaking

Part-II

› Each exporter is entitled to get annual revolving export finance limit equal to 50% of the export proceeds realized through export of eligible commodities in the preceding financial year (June – July basis)
› Exporters are required to show two times export performance annually of commodities eligible under the scheme against total loan (daily product basis) availed during the financial year
› The maximum tenure of the loan under part-II of the scheme is also 180 days which may be rolled over for another 180 days subject to showing at least 70% shipment of loan availed in initial 180 days

Performance based Mark-up Rate benefit:

› Mark-up are linked with performance; wherein lower rates are charged from exporters who achieve higher level of export performance. This benefit ranges from 0.5 to 1.5 percentage points for corporate sector and 1 -2 percentage points for SMEs depending upon the level of performance achieved.

Coverage of the Scheme:

› Financing under the scheme is provided to exporters for export of all manufacturing goods especially value added products with the exception of basic & primary commodities / raw material like raw cotton / yarn, crude material etc. as mentioned in negative list. [BPD circular No. 26 of 2003]
› Financing is available for exports of services, like:
    - Consultancy Services     - Software & IT Related Services     - International Fairs / Exhibitions

Fine:

In case of failure to show required export against borrowing and noncompliance with the provisions of the scheme, fine as prescribed under the scheme is revered.

Refund of Fine Procedure:

A refund procedure has been developed to examine requests of exporters for refund of fine in case of failure to achieve the required export performance due to force major events beyond the control situation.

Processing Charges:

As per SOC.