THE concessional credit facility announced by the government to help exporters tide over appreciation of the rupee has run into difficulties, claim exporters. Several banks are telling exporters to pay full interest now and get refunds three months later as part of the concessional benefit announced in the package. Exporters have also been told by some banks the concessional facility does not mean interest rate goes below their floor rate — which, in many cases, is cited at 8.5%. Some entities like the Exim Bank have gone a step further by saying the directive to provide concessional credit covers only scheduled banks. The net result is disappointment for exporters who have been banking on the government’s export package to fight the adverse impact of rupee appreciation. “We are not getting the desired benefits from the government decision,” Delhi Exporters Association (DEA) president SP Agarwal said. The government had announced the banks will extend concessional credit to exporters from various sectors including textiles, readymade garments, leather goods, handicrafts, engineering products, marine products, processed agricultural products, sports goods and toys. Exports in the category were to get rupee export credit at rates 4.5% lower than the prime lending rate (PLR) on preshipment credit for up to 180 days. The concessional lending was to be made applicable for post-shipment credit up to 90 days. The facility was applicable during April-December 2007. Exporters have brought to our notice difficulties in availing concessional credit, Federation of Indian Export Organisations (FIEO) officials said. The Exim Bank, they said, feels the directive is meant only for scheduled banks. The reason cited by many banks for asking exporters to first pay full interest and claim refund later is the system formulated by RBI for compensating banks. Banks are supposed to get refunds from the apex bank to the extent of the concession provided by them on a quarterly basis. Therefore, they want exporters to claim refunds rather than get the benefit upfront. “What’s the use if we have to wait for refunds?” Mr Agarwal asked. “Exporters are facing a crisis now and there is no justification in asking them to wait for months to get refund for concessional interest,” he added. The other issue hassling exporters is they are being denied the benefit of credit at 200 basis points below PLR announced by the government. Banks are insisting they cannot let their lending rate go below 8.5%, exporters said. Therefore, the two percentage-point benefit is available in full only to those availing credit at rates higher than 10.50%. If an exporter is availing credit at 9% now, the concession is not going to reduce the rate to 7%, they added. “We are bringing the issues to the notice of the government,” Mr Agarwal said.