Exporters won't require CA audit to avail of 2% discount
April, 13th 2009
It may now be easier for exporters to borrow money at a cheaper rate under the discount scheme offered by the government in select sectors.
RBI, the countrys apex financial institution, is planning to do away with the mandatory requirement of submitting audit certificates from chartered accountants establishing the product being exported to avail the discount from banks, a government official said.
The government has also asked banks not to exclude those exporters from benefiting from the scheme who were already being given loans at a sub-PLR rate (a rate lower than the prime lending rate or the benchmark rate at which banks lend) due to their good performance in the past.
The decisions were taken at a recent meeting of bankers with the committee of secretaries led by the Cabinet secretary and senior RBI officials where it was observed that few exporters have been able to avail the 2% interest rate subvention given by the government as part of the stimulus package announced last year because of stringent norms.
Under the interest rate subvention scheme announced last year, exporters of textiles, handicrafts, leather, marine products, gems & jewellery, carpets and small & medium enterprises are allowed to borrow money from banks at 2% lower interest than what is charged from other exporters.
The government reimburses banks for the interest rate differential. The scheme was announced to help the sectors survive the global demand slowdown.
The commerce department has already given Rs 800 crore to banks for implementing the scheme. But in the meeting, it was observed that very little had been passed on to exporters, the commerce department official, who did not wish to be named, told ET.
Industry representatives, who had also attended the meeting, pointed out that the requirement for submission of CA audit certificates was an unnecessary hassle discouraging exporters from availing the subvention facility.
Since all manufacturers, including the small scale industry, the micro small and medium enterprises and the large manufacturers already have the required certifications given by the respective state government and Central government bodies, there is no confusion about the products they are manufacturing.
It was observed in the meeting that the requirement for producing a CA audit certificate to establish that the product that was being exported was covered under the subvention scheme was unnecessary and added to the costs of an exporter. The RBI has, therefore, agreed to do away with the requirement, the official said.
It was also observed in the meeting that banks were not extending the subvention to exporters who were already being given loans by banks at a lower rate because of their past performance.
We found out that exporters who were already being given loans at a lower rate of 2% or more by banks were not being extended the benefit of additional subvention.
The bankers were told that such exporters should also be given the discount as it was the government which was footing the bill, the official said.