In order to provide liquidity support to the exporters, RBI has announced lines of credit worth Rs 5, 000 crore to the Export-Import Bank of India (Exim Bank) to further on-lend to the export sector. The tight position of credit market has also impacted Exim Bank that is facing difficulties in raising foreign currency funds to support exporters. The refinance facility by the apex regulator will ease the bank to extend foreign currency lines of credit to the exporters. RBI will provide funds in rupee which Exim Bank will swap in dollars and thereby disburse credit to the exporters. The refinance facility will be provided by the RBI up to March 31, 2010. It will be extended at the repo rate existing under the Liquidity Adjustment Facility (LAF) for a period of 90 days. Currently the repo rate stands at 6.5%, a level that is lowest since 2006. Exim Bank's Executive Director, N Shankar said: "The liquidity support is essentially for the government guaranteed lines of credit that have already been sanctioned. We are availing this liquidity support to make disbursements against already sanctioned loans. Hence, there will be no implication on the cost of lending. Since the line of credit is in foreign currency and the liquidity facility is in the rupee, we will take the rupee funds and swap it to dollars as and when required." In a statement issued by RBI it was said that the amount refinanced would have to be withdrawn and repaid within the period of 90 days. The money can also be rolled over at the end of the stipulated period. "The utilisation of funds will be governed by the policy approved by the board of the Exim Bank," the statement added. "The Reserve Bank will continue to monitor the developments in the global and domestic financial markets closely and will take swift and effective action as appropriate. The Reserve Bank will endeavour to minimize the stress on various sectors of the economy on account of the international financial crisis and the global slowdown. The policy objective is to ensure adequate availability of liquidity in the system and to maintain conditions conducive for flow of credit for all productive purposes, particularly to housing, export and small and medium industry sectors," the statement added. In its fiscal stimulus package, government has announced some measures that mainly focus on exports. These measures include an interest subvention of 2% up to March 2009 for pre- and post-shipment export credit for exports for textile, leather, marine products and for the SME sector. It has also cut the excise duty by 4% across-the-board and decided to declare an additional Rs 1,100 crore for full refund of terminal excise duty, Rs 350 crore each for export incentive schemes and supporting ECGC (Export Credit and Guarantee Corporation of India). Recently RBI has also announced refinance facilities for the National Housing Bank (NHB) and the Small Industries Development Bank of India (Sidbi). Lines of credit amounting to Rs 4,000 crore and Rs 7,000-crore are extended to NHB and Sidbi respectively.

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