Interest Equalization Scheme (IES) on Pre and Post Shipment Rupee Export Credit

Current Context: The Interest Equalization Scheme (IES) on Pre and Post Shipment Rupee Export Credit has been extended by the Reserve Bank of India (RBI) until December 31, 2024.

• This extension aims to support exporters, particularly Micro, Small, and Medium Enterprises (MSMEs), amid global economic challenges.
• Key points about the scheme:
• Interest Equalization Rates: The scheme provides an interest equalization benefit of 2% for merchant and manufacturer exporters of 410 identified tariff lines and 3% for all MSME manufacturer exporters.
• Fiscal Cap: For the financial year 2024-25, the fiscal benefits for each MSME are capped at ₹50 lakhs. MSMEs that have already availed benefits up to this limit by September 30, 2024, will not be eligible for further benefits during the extended period.
• Eligibility: The scheme is applicable to all scheduled commercial banks (excluding RRBs), primary (urban) cooperative banks, state cooperative banks with AD category-I licenses, and the Exim Bank.

Question:

1 What is the maximum fiscal benefit cap for MSMEs under the Interest Equalization Scheme (IES) for the financial year 2024-25?

• A) Rs. 50 lakh
• B) Rs. 25 lakhs
• C) Rs. 40 lakhs
• D) Rs. 75 lakhs

Answer: A) For the financial year 2024-25, the fiscal benefits for each MSME are capped at ₹50 lakhs under the Interest Equalization Scheme (IES).