CASE

A Maharashtra based agro products exporter was taking working capital loan in foreign currency at 4% (LIBOR+200 to 250 bps). He wasn’t aware of PCINR/RPC, a packing credit loan available to Indian exporters.

SOLUTION

 MSMEs in India are eligible for an interest subvention of 5% and forward contracts accrue an annualized premium of 4-4.5% bringing costs down to below zero percent.

We suggested the client to switch from PCFC to PCINR which would entitle him for the interest rate subvention. PCINR loans are initially provided at higher rates of around 8-9% from the bank. We made him aware that he is eligible for getting the interest rate subvention of 5% reducing his borrowing cost from 9% to 4%. In order to further reduce this cost, we advised him to book forwards which would help him save the remaining 4% by receiving forward premiums.

VALUE ADDITION

Myforexeye advisors  were able to save 4% interest cost that the exporter was paying for his working capital needs and bring down the borrowing costs to zero.