The Reserve Bank of India (RBI) has announced several measures aimed at providing relief to export sectors hit by tariff, including debt moratorium, easing of access to working capital and relaxation in asset classification.

The measures, effective immediately, is set to mitigate the burden of debt servicing and ensure the continuity of business.

The 20 sectors eligible for the RBI’s trade relief measures include fisheries, organic chemicals, plastic, rubber, leather, carpets, apparel and clothing accessories, footwear, articles of iron and steel, aluminium, nuclear reactors, precious metals and semi-precious stones, vehicles, furniture, electrical and surgical machinery and equipment.

The RBI’s directions will be applicable to regulated entities, including commercial banks, non-banking financial companies (NBFCs), primary co-operative banks, all-India financial institutions and credit information companies.

The central bank’s announcement comes in the wake of the US imposing 50% tariffs on Indian goods.

Loan moratorium

For term loans, the RBI has allowed moratorium on payment of instalments falling due in the effective period between 1 September and 31 December 2025.

In case of working capital in the form of cash credit or overdraft, the recovery of this interest may be deferred during this effective period. 

“During the moratorium or deferment period, interest shall continue to accrue. However, interest application shall be on simple interest basis, without compounding effect, i.e., there shall be no interest on interest,” the RBI said.

The accumulated accrued interest during moratorium or deferment period will be converted into a funded interest term loan which shall be repayable in one or more instalments after 31 March 2026, but not later than 30 September 2026.

In case of working capital facilities, a regulated entity may, at its discretion, recalculate ‘drawing power’ by reducing the margins or reassess the working capital limits, during the effective period, the RBI said. 

Any such review, after the expiry of the effective period shall be based on regular assessments, it added.

“The proposed regulatory measures coupled with the credit guarantee scheme for exporters announced by the government could provide liquidity relief to exporters and help them ride out the near-term pressure on cash flows because of deferment of orders or payments,” Anil Gupta, senior vice president and co-group head of financial sector ratings at Icra, said.

Tenure of export credit period extended

The RBI has also allowed relaxation in the repayment of export credit. The maximum credit period has been extended from 270 days to 450 days for pre-shipment and post-shipment export credit disbursed till 31 March 2026.

In respect of packing credit facilities already availed by exporters on or before 31 August 2025, where dispatch of goods could not take place, a regulated entity may allow liquidation of such facilities from any legitimate alternate sources, including domestic sale proceeds of such goods or substitution of contract with proceeds of another export order, RBI said.

Asset classification and provisioning

The moratorium period or deferment, wherever granted, will be excluded by the regulated entities while calculating the number of days past-due (dpd) for the purpose of asset classification under the applicable Income Recognition, Asset Classification and Provisioning (IRACP) norms.

Under these directions, grant of moratorium or deferment of instalments and recalculation of the ‘drawing power’ will not be treated as restructuring. Such a measure, by itself, shall not result in asset classification downgrade.

The RBI also directed credit information companies (CIC) to ensure that the actions taken by regulated entities following these directions should not adversely impact borrowers’ credit history.

Provisioning

The regulator said for eligible borrower accounts that were in default but classified as ‘standard’ as on 31 August 2025, and where relief measures have been extended, a general provision of not less than 5% of the total outstanding should be made by 31 December 2025.

This provisioning may be adjusted against the actual specific provisioning requirements for slippages from these borrower accounts. “Any residual general provisions at the end of the financial year 2025-26 shall be either written back or adjusted against the provisions required for all other borrower accounts by 30 June 2026,” the RBI said.

The general provisions shall not be reckoned for arriving at net non-performing assets (NPAs) till they are adjusted against the actual provisioning requirements. Till such adjustments, these provisions shall not be netted from gross advances but shown separately in the balance sheet as appropriate.

“A large quantum of borrowers availing either of relief measures could potentially increase the uncertainty on asset quality for the lenders. A 5% provisioning on such loans, where lenders have given a relief to exporters could also result increase in increase in provisions, but unlikely to have a material impact on near-term profitability," said Gupta.

RBI said regulated entities should develop an MIS on the relief provided to borrowers. It will include inter alia borrower-wise and credit facility-wise information regarding the nature and amount of relief granted. They should submit a fortnightly report (as on 15th and at the end of each month), to the RBI.

Relaxation in FEMA

The regulator also announced relief in Foreign Exchange Management Act (FEMA) regulation on realisation and repatriation of proceeds of export of goods/ software/ services and advance payment against exports.

The regulator said the time period for realisation and repatriation of full export value of goods, software or services exported from India has been extended from nine months to 15 months from the date of export from India.

The time period for shipment of goods has also been increased from one year to three years from the date of receipt of advance payment, the RBI said.