Gold Card Scheme for Exporters

To simplify access to bank credit for exporters, the Reserve Bank of India has a scheme that provides preference in providing packing credit in foreign currency and term loans in foreign currency to deserving exporters. This article looks at the RBI Gold Card Scheme for Exporters in detail. Get your Import-Export Code through IndiaFilings

Objectives of the Scheme

Depending on their track record and creditworthiness, Gold Card holder exporters will be granted better terms of credit, including interest rates, than those extended to other exporters by the banks.
Credit applications will be processed at norms simpler and under a process faster than for other exporters.
The `in-principle' limits will be sanctioned for three years with a provision for automatic renewal subject to fulfillment of the terms and conditions of sanction.
Gold Card holders will be given preference for grant of packing credit in foreign currency (PCFC).
Based on their track record of timely realization of export bills, Gold cardholders will be considered for issuance of foreign currency credit cards for meeting urgent payment obligations, etc.
The charges schedule and fee structure in respect of services provided by banks to exporters under the Scheme will be relatively lower than those provided to other exporters.
Since the bonafide of the Gold Card holder is already established based on creditworthiness and track record, the norms in respect of security and collaterals may be relaxed while granting export credit under the Gold Card Scheme.
The banks may consider any other facility/benefit to the exporters subject to the fulfillment of extant rules and regulations applicable to export finance.

Criteria for Issuing Gold Card

All credit-worthy exporters with good track records will be eligible for the gold card scheme.
Exporters with a minimum track record of three years, which is continuously standard with no irregularities or adverse features, will be treated as having a good track record.
Exporters blocked by the ECGC, included in the RBI defaulters list, or making losses for the past three years, or having overdue export bills over 10 percent of the current year's turnover will not be eligible for the gold card scheme.
A Gold Card under the Scheme may be issued to all eligible exporters, including those in the small and medium sectors who satisfy the conditions.

Fixation of Credit Limit

Considering the exporter's anticipated export turnover, the bank can provide need-based business loan limits with a liberal approach. The in-principle limit will be sanctioned for three years with a provision for automatic renewal subject to fulfillment of loan terms and conditions. The banks would give gold card holders preference for granting packing credit in foreign currency. Further, banks will consider giving term loans in foreign currency for deserving businesses out of the FCNR funds. The banks can also provide interest concessions with a soft bias toward gold card holders through a transparent mechanism. Processing charges on loans granted to gold card holders should be lower than those provided to other exporters. Service charges at a flat rate of 0.1% can be charged on inter-bank foreign currency borrowing for lending to exporters. Further, a standby limit of not less than 20% of the assessed limit may be additionally made available to the gold card holder to facilitate urgent credit needs for executing sudden orders. Finally, all new proposals submitted by gold cardholders need to be processed with 25 days for fresh proposals and 15 days for renewals, and seven days for ad-hoc limits.

Rate of Interest

The applicable interest rate to be charged under the Gold Card Scheme will not be more than the general rate for export credit in the respective bank and within the ceiling prescribed by RBI. In keeping with the spirit of the Scheme, banks will endeavor to provide the best rates possible to Gold Card holders based on their rating and past performance. Regarding the Gold Card holders, the concessive interest rate on post-shipment rupee export credit applicable up to 90 days may be extended for a maximum period of up to 365 days.

Service Charges / ECGC Premium

The charges schedule and fee structure in respect of services provided by banks to exporters under the Scheme will be relatively lower than those provided to other exporters. The credit to Indian exporters should be at rates of interest not exceeding LIBOR + 0.75 percent. Suppose sufficient dollars are unavailable with the bank to lend to the exporters at a particular time. In that case, the bank may charge a service charge at a flat rate of 0.1 percent on inter-bank foreign currency borrowings. Given their creditworthiness, Gold Card holders may be considered by banks for exemption from ECGC guarantee under the Packing Credit Guarantee-Sectoral scheme of ECGC in deserving cases at their discretion.

Tenure

The Gold Card will be issued for three years and automatically renewed for three years unless there are adverse features/ irregularities in the account. In case of misuse of the Card or observance of any violation of the terms and conditions, the banks will have the right to recall the Card at any time.

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Frequently Asked Questions

Common questions about Gold Card Scheme for Exporters.

The RBI Gold Card Scheme for Exporters is a scheme introduced by the Reserve Bank of India to simplify access to bank credit for exporters. It provides preference in providing packing credit in foreign currency and term loans in foreign currency to deserving exporters based on their track record and creditworthiness.

All credit-worthy exporters with a good track record of at least three years, continuously maintaining standard accounts with no irregularities or adverse features, are eligible for the Gold Card Scheme. However, exporters blocked by the ECGC, included in the RBI defaulters list, or making losses for the past three years, or having overdue export bills over 10 percent of the current year's turnover will not be eligible.

Gold Card holder exporters are granted better terms of credit, including interest rates, than those extended to other exporters by the banks. Their credit applications are processed at simpler norms and under a faster process. They are given preference for grant of packing credit in foreign currency and considered for issuance of foreign currency credit cards.

Banks can provide need-based business loan limits with a liberal approach, considering the exporter's anticipated export turnover. The in-principle limit is sanctioned for three years with a provision for automatic renewal, subject to fulfillment of loan terms and conditions.

The Gold Card is issued for three years and automatically renewed for three years unless there are adverse features or irregularities in the account. Banks have the right to recall the Card at any time in case of misuse or violation of terms and conditions.

Yes, the applicable interest rate charged under the Gold Card Scheme will not be more than the general rate for export credit in the respective bank and within the ceiling prescribed by RBI. Banks will endeavor to provide the best rates possible to Gold Card holders based on their rating and past performance.

Since the bonafide of the Gold Card holder is already established based on creditworthiness and track record, the norms in respect of security and collaterals may be relaxed while granting export credit under the Gold Card Scheme.

Yes, the charges schedule and fee structure in respect of services provided by banks to exporters under the Scheme will be relatively lower than those provided to other exporters.

Given their creditworthiness, Gold Card holders may be considered by banks for exemption from ECGC guarantee under the Packing Credit Guarantee-Sectoral scheme of ECGC in deserving cases at their discretion.

All new proposals submitted by Gold Card holders need to be processed within 25 days for fresh proposals, 15 days for renewals, and 7 days for ad-hoc limits.