In a move aimed at providing relief to exporters facing debt servicing issues arising from global trade disruptions, the Reserve Bank of India (RBI) on Friday rolled out a raft of trade relief measures, including debt moratoriums, which come into effect immediately, the Reserve Bank of India said on Friday.
The measures – including moratorium on eligible borrowers, extension of export credit duration and relaxation in asset classification – apply to RBI-regulated entities, including commercial banks, non-banking financial companies (NBFCs), primary cooperative banks and pan-India financial institutions.
This announcement comes days after US President Donald Trump announced that the United States would reduce tariffs on India, and that Washington was “very close” to reaching a “fair trade agreement” with New Delhi. India currently faces 50 percent tariffs, the highest of any country in the world, primarily due to the 25 percent “penalty” duty on purchasing Russian oil.
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Sectors and commodities such as organic chemicals, plastics, rubber, leather, carpets, apparel and accessories, footwear, articles of iron or steel, nuclear reactors, boilers, electrical machinery and equipment and spare parts, are eligible for ‘Trade Relief Measures’ from the RBI.
Loan deferral with simple interest accrual
To ease the burden on debt repayment on specific affected sectors, the Reserve Bank of India has announced moratorium or deferment of repayment of all term loans and recovery of interest on working capital loans, as applicable, maturing between September 1, 2025 and December 31, 2025.
“During the moratorium or moratorium period, interest should continue to accrue. However, interest demand should be on simple interest basis, without compounding effect, i.e. there will be no interest on interest,” the RBI said.
The interest accumulated during the moratorium or deferment period will be converted into an interest-bearing term loan which must be repaid in one or more installments after March 31, 2026, but no later than September 30, 2026.
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In case of working capital facilities, the regulating entity may, at its discretion, recalculate the ‘draw power’ by reducing margins or reassessing the working capital limits, during the effective period, the RBI said.
Extension of the maximum export credit period
The regulator also announced relief in export credit disbursement by enhancing the maximum credit period from 270 days to 450 days for pre-shipment and post-shipment export credit disbursed up to March 31, 2026.
In respect of packing credit facilities already availed by exporters on or before 31 August 2025, where the goods cannot be despatched, any regulated entity may allow such facilities to be liquidated from any legitimate alternative sources, including proceeds from the domestic sale of such goods or the substitution of the contract for the proceeds of another export order.
Asset classification and provisioning
The RBI added that the period of moratorium or moratorium, wherever granted, will be excluded by regulated entities while calculating the number of days in arrears (dpd) for the purpose of asset classification under applicable Income Recognition, Asset Classification and Provision (IRACP) norms.
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Under these guidelines, granting a moratorium, deferring installments and recalculating the “drawdown power” will not be treated as restructuring. The Reserve Bank of India (RBI) has also directed Credit Information Companies (CIC) to ensure that actions taken by regulated entities following these directions should not adversely impact the credit history of borrowers.
For eligible borrower accounts that were in default but classified as “standard” as of August 31, 2025, and where relief measures have been extended, a general provision of at least 5 percent of the total outstanding amount must be made by December 31, 2025, the regulator said.
The Reserve Bank of India (RBI) said regulated entities should develop a management information system on subsidies to borrowers. It will include, among other things, information relating to the borrower and credit facilities in relation to the nature and amount of the subsidy granted. They have to submit a bi-monthly report (as on the 15th and at the end of every month) to the Reserve Bank of India.
The regulator also announced relaxation of the Foreign Exchange Management Act (FEMA) on realization and repatriation of export proceeds of goods/software/services and advance payments for exports.
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An extension has been provided in the time period for realization and repatriation of full export value of goods, software and services exported from India from nine months to 15 months from the date of export from India
The Reserve Bank of India said that there will be an increase in the time period for shipment of goods from one to three years from the date of receipt of advance payment.
