CrackitToday App

Interest Equalisation Scheme

Interest Equalisation Scheme:

The Department of Commerce has extended the Interest Equalisation Scheme for pre- and post-shipment rupee export credit for Micro, Small and Medium-scale (MSME) exporters till August 31.

  • Interest Equalisation Scheme was first implemented on 1st April 2015, to provide pre- and post-shipment export credit to exporters in rupees.
  • It was initially valid for 5 years, up to 31.3.2020.
  • The scheme has been continued thereafter, including a one-year extension during COVID and further extensions and fund allocations.
  • It is being implemented by the RBI through various Public and non-Public Sector banks that provide pre- and post-shipment credit to the exporters.
  • The Scheme is jointly monitored by the Directorate General of Foreign Trade (DGFT) and the RBI through a consultative mechanism.
  • The scheme helps the identified export sectors to be internationally competitive and to achieve a high level of export performance.
  • An eligible exporter has to submit a certification from the external auditor to the concerned bank to claim this benefit.
  • Banks provide IES benefits to the eligible exporters and claim a reimbursement from the RBI based on the external auditor certification furnished by the exporter.
  • Currently, the Scheme provides an interest equalisation benefit at the rate of 2% on pre- and post-shipment rupee export credit to merchant and manufacturer exporters of 410 identified tariff lines at 4-digit level and 3% to all MSME manufacturer exporters.
  • The Scheme has now been made fund-limited, and the benefit to individual exporters has been capped at Rs 10 Crore per annum per IEC (Import Export Code).
  • In addition, the banks that lend to exporters at an average rate of more than Repo + 4% would be debarred under the Scheme.